Pricing Your Services - Start & Run a Computer Repair Service (Start & Run Business Series) (2012)

Start & Run a Computer Repair Service (Start & Run Business Series) (2012)


Pricing Your Services

Once you know what services you want to offer to your targeted customers, you need to get an idea of what it will cost for you to provide these services.

1. Calculating What Your Time Costs

You may have started your business in your garage (a starting place shared by many successful companies) to reduce your overhead. Your first customer calls and you decide you’re going to charge $49 for one hour of labor. How much money will you make? It is tempting to say $49; after all, that is your gross profit, but in truth, your actual profit takes into account all the other money you are spending for the month. The question becomes, “Can I be profitable at $49 per hour? If I get enough customers, what is the maximum amount I can make at this price?”

Fortunately, there is an easy way to answer these questions. The easiest way to calculate this is to total all your business expenses and then divide that by the number of paid hours you expect to work.

When you calculate this, you can see that if your expenses are up at $2,000 per month (which is very high for a small business without a retail location), the cost of doing business each hour is $11.63. This means that if you have customers paying you $49 per hour, your profit will be about $37.37 per hour or approximately $6,400 per month after expenses!

This also tells you how much you can lower your price to still be competitive. Obviously, any service that costs only $20 per hour will be priced too low as this will leave you around minimum wage for your hard work! Determine what your expenses are per hour and from there you will understand your pricing minimums.

2. Calculating Flat-Rate Services

In computer repair, calculating flat-rate services is one of the harder measurements to accomplish. Let’s say that you are “working” on a virus removal. You may spend a half hour at first getting around the viruses, installing scanning tools, etc., but after that, you may no longer be staring at the computer. Instead you will have kicked off scans that run for hours with no interference from you. However, you have to be on-site to watch the systems and make sure that the next tool is started on time. So, if the computer takes two to three days to complete all these scans, how much time did you actually spend? How much time should you charge the customer or, in other words, how do you price the service?

One you know who your customers are and what your competitors are offering and for how much, you are ready to create your service list. To do this you need to define the following:

• What is the service you are offering?

• What is the description of the service? (Make sure to think about what work this includes and does not include.)

• How much of your time will it take to complete the work?

• How much is the charge?

Once you have completed a sample list, you may want to make an abbreviated version for your desk or office. For this version, you can eliminate the description and time estimate (which can vary based on the actual computer and could be misleading if any customer saw it) and just keep it simple.

3. Estimating Custom Work

If you are completing a service or a type of service that you haven’t priced before, try to keep the work in line with your other prices. In general, let the customer know the expected price up front and give yourself some room for error. For example, if the service you want to offer will take you three hours or so of straight work, you may price it around $159; but if you think that there may be more custom work involved, you may let the customer know that the bill can be as high as $199 to give yourself some wiggle room.

4. Check Your Pricing

Once you estimate your prices, you still need to determine if your prices are reasonable for your market. There are a few factors that go into competitive pricing:

Retail versus home-based business: In general, you can charge more if you work out of a retail storefront than if you are working out of your home (because the overhead is lower, people expect to pay less). If your prices are the same as a local computer store, they are probably too high.

Compare your pricing to big-box stores: Your pricing should let your customers know that you are providing significant savings over the big-box stores (you may even want to put this in your ad). Your prices should be at least 20 to 30 percent less; in some cases, you may want to reduce your prices even further compared to the big-box stores.

Compare your prices to others in your advertising space: Another place to check your pricing is where you plan to advertise. If everyone else in that market is either much higher or much lower, your prices may need to be adjusted.

You may also want to add an hourly rate. This will allow you to expand to services you haven’t anticipated. As you work with your customers you may find that they have problems that you can solve, but it is not a service on the list. For these items you can simply estimate the amount of time the work will take and charge by the half hour with a half hour minimum. For instance, when we first started, we had a few people that came in asking for driver updates. At first, we completed this service as a half-hour labor. Eventually, we listed it as a separate service.