Price structure for my business

[adrian]

Okay, instead of having this in every topic I post in, what about having it here? The discussion topic is about my pricing for my business. It all started with this post. I originally charged a set fee of $20 for a session of computer work (virus/spyware scan, RAM upgrade, basic internet tutorial) and my (unwritten) prices are still low because I know that three of my clients can't afford the prices the big boys ask for.

Here's the current prices for my updated website:

Service Fee: $10/unlimited time

Hardware
Hardware installation: $15/hardware
Hardware cleaning: $5/computer


Software
Basic virus/spyware scan and removal: $10/session
Software (re)install: $5/software (must have software)
Tutorials: $5/software

Question: Are these prices too low, even for a startup business like mine, or should I raise them? What would you pay for computer service?

[Leo Lakio]

Re: Price structure for my business

Service Fee: $10/unlimited time

Ai-ya, you really DO want to get ripped off, don't you? Someone gonna call you and hassle you over every little thing, for months and months, and you can't charge 'em any additional service fees, 'cause you said "unlimited time"?

Adrian - you are really gung-ho about launching your independent business as a computer tech, and that's really exciting to see --- but I think you are making a number of mistakes as a start-up, due to your enthusiasm. I really think you need to do some more consulting with experts who can help you avoid a lot of problems. People who can consult with you on business plans, promotional strategies, financial structures, etc.

Does UofH provide any kind of Extension program that would offer this help? How about the school you attended; do they have follow-up services for those who are launching their own careers? Does anyone else know where we can steer our friendly doc, so he can be as successful as possible?

[nachodaddy]

Re: Price structure for my business

Adrian;

I don't know your business but what I do know is that your price structure is working out to @ 10/hr face time, which is probably going to work out less than minimum wage in the long term.

I would find out what your competition is doing and find out their price structure and adjust accordingly. You gotta eat, man. Price is only one facet of business, don't start off being a bottom feeder. Think value, AKA what you customer gets for their dollar.

[tutusue]

Re: Price structure for my business

Adrian...Off the top of my head, I think you'll be opening yourself up to a couple of problems. 1) you'll get a lot of riff-raff for customers who'll drain you dry and 2) you'll lose those potential customers who feel one gets what they pay for (low pay=low service). Just my 2 centavos!

[scrivener]

Re: Price structure for my business

I think Adrian has the right idea. Of course, I'm absolutely lousy when it comes to money and have chosen teaching as my career.

Adrian, you are in a nice position right now. You think you have what it takes to make it, but you don't really know yet. Luckily, you don't have to make a living at this just yet. You don't have a rent or a family or car payments or a girlfriend. See what the market is like, see who your clientele is going to be, and see if this is indeed what you want to do with the next few years of your life. Leave your prices as they are, or at least where you feel comfortable.

I gave you a referral. My friends needed help, and I knew you'd do a better job than I could do and you'd do it more quickly than I could have. I was right, too. My friends were extremely appreciative of what you did for them, and because they knew what you were worth and because they considered what you did for them worth more than what you were asking, I believe they paid you a bit more than what you quoted. This couple is exactly the kind of people you want to help, because what they need from you is too difficult for them to do themselves and very easy for you to do for them. They were almost certainly going to be repeat customers. You did good work, and I was proud to have referred you to them.

Your inability to help them later was bad, but hey, if geography or availability are issues you need to work out, that's part of what you need to think about in these beginning stages of your career.

When I began teaching, I took a part-time position because that's what was available. It meant having to work until 2:30 in the morning at a cafe four nights a week, but I did it because I needed to prove to someone that I could do the job. You won't have to get a cafe job. I say go with what feels right and see what happens.

[craigwatanabe]

Re: Price structure for my business

Your inability to help them later was bad, but hey, if geography or availability are issues you need to work out, that's part of what you need to think about in these beginning stages of your career.

I had to laugh when I read that part Scrivener. What a stellar writeup then that last paragraph almost made my cup o noodles come out my nose. (food of techies)

[scrivener]

Re: Price structure for my business

...almost made my cup o noodles come out my nose.

So this is what early retirement is like? It's not exactly what I pictured.

Then again, I don't think I have to worry about that.

[Pomai]

Re: Price structure for my business

Adrian, please consider the advice I gave in the other thread about FREE business counseling from SCORE. I'd have my father personally help you (one of their volunteer counselors), but he's currently suffering a serious health condition.

Really though, give SCORE a call. They'll assist you with a properly-structured business plan, for FREE.

[Miulang]

Re: Price structure for my business

Most shops charge $50-60 to just tell you what's wrong, and then the clock starts ticking when the customer authorizes the repair (time + materials, you could make your pricing per job based on your estimate of how long it would take [your time] and the cost of materials).

You're going to go broke with the rates you're charging, unless in your promos you advertise these as "limited time offers" just so you build up your clientele. Since you're driving to your customers' homes, I'd suggest you figure out a mileage charge too (like 50 cents/mile from your home/shop to the customer's location). People will pay extra because they like the convenience of not having to take their equipment to a shop to be fixed.

Miulang

[Linkmeister]

Re: Price structure for my business

Beginning January 1, 2006, the standard mileage rate, which is the amount employers may deduct for the reimbursement of employees who use their own cars for company business, will be 44.5 cents per mile for business miles driven.

From a Human Resources site: http://hr.blr.com/display.cfm/id/17119

Keep a log, guy. It adds up, particularly if you're all over town.

[scrivener]

Re: Price structure for my business

Adrian, you're looking for people who are (a) often desperate and (b) pretty clueless. I mean, no offfense, but most of the services you're offering are things neither you nor I would ever consider paying someone for. Tech stuff confuses them. Adding to the confusion by charging milage or other kinds of added-on fees is not going to help. Your flat-rate idea is good, because it is clear and people will either agree to it or not based on whether or not they think it's a good deal, not because they're too confused (or too afraid of being ripped off) to make a decision. We've all written checks for some kind of service (usually auto repairs!) because we needed the repair, feeling a nagging sensation where our usually informed, buyer-beware personae reside. Nobody likes that feeling. Don't put your customers in that position.

[craigwatanabe]

Re: Price structure for my business

So this is what early retirement is like? It's not exactly what I pictured.

Then again, I don't think I have to worry about that.

No really you should strive for that moment. I tell you cup o noodles up the nose is something you'll remember for life. But watch out for those peas...that'll kill ya.

I agree with Scrivener, I like the flat rate idea but if you're going by the hour, make your first hour meaningful like $20 the first hour then $10 for each additional hour up to so many hour then tier it down for extended troubleshooting so the customer won't pay more than what the computer is worth.

[Miulang]

Re: Price structure for my business

Take a look at the list of services that the Geek Squad (Best Buy) offers. I have had acquaintances who are somewhat computer savvy use them and they have all been very satisfied with the service. Geek Squad charges a flat fee for each of the services they offer.

Miulang

[Pomai]

Re: Price structure for my business

Oh, there certainly are CLUELESS computer users out there. My cousin was a principal of an elementary school in Kona, where she told me one older teacher first thought the mouse was supposed to be used as a foot pedal (like a sewing machine)!!!

[Linkmeister]

Re: Price structure for my business

Adding to the confusion by charging milage or other kinds of added-on fees is not going to help. ... Your flat-rate idea is good, because it is clear and people will either agree to it or not based on whether or not they think it's a good deal, not because they're too confused (or too afraid of being ripped off) to make a decision. ... Don't put your customers in that position.

I didn't mean add the mileage to the price directly. I meant build it into the fee, or at least keep in mind that it costs you money to go to the customer's home/business.