Professional computer builder questions

[ameyer75]

Hey guys. First real post on here and I'm sorry if this has been address, but I wasn't able to find it through some quick searching. I'm looking to try building/upgrading computers for customers but I don't really know anything about pricing said builds or upgrades out to customers. If I went a different direction and just do software/hardware support, how do I price customers for my work? Are there any best practices? Last but not least, is it commonplace for professionals to keep old parts they remove from a customer's computer, say, an older GPU after upgrading to something newer?

Thanks for all of your help!

 

[Ralston18]

Do you expect to immediately make a living building professional computers?

Or work up to it while working part or full time at your regular job?

What income do you need/require from the business to pay bills and reasonably (relative) maintain your life style?

Use your current income. If you make $1,000 USD per month then the "profit on one computer would need to be $1,000. If two computers per month, then you would need $500 per computer.

But the customer's price must include the parts, etc.. And you must allow for other expenses: consumables, tools, shipping, travel, etc.

Does not matter per se if you build and/or provide support services.

The concept is known as a "Breakeven Analysis". Crunch some numbers. Go low with income, high with expenses. Best case, expected case, worse case, situations.

Plan on 80 hour weeks. An "easy" 1 hour repair response can quickly become an all night nightmare.

Charging by the hour: Take your current 40 hour per week salary and double or triple. You can charge by service (e.g., adding memory) - some flat amount if you wish. Again, a 1 hour job could end up taking much, much longer.

After Breakeven Analysis you must look at cash flow. Your suppliers will want their money up front. Your customers will not want to pay you until the work is satisfactorily done. And if the customer is a bigger business they are all too likely to drag out and hold off paying you. And your rent is due....

Do some research in your area. Look for organizations that are there to help (hopefully for free) small business start-ups or struggling existing businesses.

Your idea is not at all unusual and many people try starting all kinds of small businesses every day.

I am not being negative although it may seem otherwise. All in favor of your hopes and dreams. But go into them realistically and understand the risks.

Almost every small computer shop in our area is now gone. The ones that are left - unfortunately not much hope for them. I have visited a couple as I do prefer to support local small businesses. But what they offered was much less at significantly more cost.

 

[ameyer75]

Do you expect to immediately make a living building professional computers?

Or work up to it while working part or full time at your regular job?

What income do you need/require from the business to pay bills and reasonably (relative) maintain your life style?

Use your current income. If you make $1,000 USD per month then the "profit on one computer would need to be $1,000. If two computers per month, then you would need $500 per computer.

But the customer's price must include the parts, etc.. And you must allow for other expenses: consumables, tools, shipping, travel, etc.

Does not matter per se if you build and/or provide support services.

The concept is known as a "Breakeven Analysis". Crunch some numbers. Go low with income, high with expenses. Best case, expected case, worse case, situations.

Plan on 80 hour weeks. An "easy" 1 hour repair response can quickly become an all night nightmare.

Charging by the hour: Take your current 40 hour per week salary and double or triple. You can charge by service (e.g., adding memory) - some flat amount if you wish. Again, a 1 hour job could end up taking much, much longer.

After Breakeven Analysis you must look at cash flow. Your suppliers will want their money up front. Your customers will not want to pay you until the work is satisfactorily done. And if the customer is a bigger business they are all too likely to drag out and hold of paying you. And your rent is due....

Do some research in your area. Look for organizations that are there to help (hopefully for free) small business start-ups or struggling existing businesses.

Your idea is not at all unusual and many people try starting all kinds of small businesses every day.

I am not being negative although it may seem otherwise. All in favor of your hopes and dreams. But go into them realistically and understand the risks.

Almost every small computer shop in our area is now gone. The ones that are left - unfortunately not much hope for them. I have visited a couple as I do prefer to support local small businesses. But what they offered was much less at significantly more cost.

So... This would be more supplementary income with the expectation that I would want to continue to grow the business. I currently work a full and a part time job, so it would have to be part time until I was able to leave one of my jobs.

I guess as far as the Breakeven Analysis, I wouldn't know until I started getting a sense of how much business I could do. Would I, instead, calculate the Breakeven point as my income from my part time job?

I guess I'm most confused about how to deal with pricing. For example, say I'm building this computer https://pcpartpicker.com/list/dwmvWD for a customer. Obviously, I don't sell it for less than the computer costs, but how much extra do I charge to turn some extra profit? I'm not really sure what industry pricing standards are for labor. Is it a situation where I should charge $100 to build, regardless of the time constraint, or should I charge $X an hour?

I'll look into some organizations that help with this sort of thing. I honestly wasn't really even aware of that being a thing until your post. I just assumed you came up with a business plan, then went to the bank and applied for a loan.

 

[Ralston18]

It is not how much business you can do. It is how much business you can do to cover your expenses.

And a loan makes it all the more difficult as you will need to have some collateral. Something the bank will take if you cannot repay the loan.

Preparing a business plan takes a considerable amount of work. And all too often the preparer discovers that things are not going to work out. New plan needed. There are many guidelines to be found about how to do a Business Plan with various formats and methods.

What must be shown or proven within the Business Plan is that the business is likely to succeed. Banks know what to look for and they are, by nature, very conservative. Low risk takers. If you are putting in $10,000 and asking for $5,000 the bank may go along provided you have collateral to cover the $5,000 being borrowed. Your immediate risk is $10,000 and overall risk = $15,000. Bank is covered.

Visit some local "big box stores", look at the online prices for computers similar to what you expect to build.

Compare those prices to just what the parts may cost you.

Using your part time job as the basis for your labor costs is a reasonable place to start from. Does building the computer become profitable if it takes 4 hours at 3 x your part time hourly rate? Labor + costs = Price to customer.

Labor is tough to estimate. You might build one computer in a few hours. And then the next one, even if identical, has issues and it takes two or three times longer to complete. You cannot add that extra time to the pricing. You lose the income.

The best you can hope to do is figure worst case, expected case, and best case situations. And all may average out to "expected" given enough computer sales and time.

And remember. If you sell a computer you will have call backs from unhappy customers. Rightly or wrongly you will be expected to fix things that go astray. So more time is taken up fixing something when you are trying to complete and deliver to someone. You will lose profitable hours very fast.

There are multiple participants in this Forum who are doing or have done what you are planning. Hopefully a few of them will post additional comments and suggestions. Based on their experiences and lessons learned.

Do not risk or expose yourself investing more money than you are willing to lose. And that investment includes your time.

An option: build a PC that you believe is a good system based on components and specs. Keep track of the costs and time taken. Price that computer and try to sell it. See what feedback you get.

Someone here may ask you to propose a computer for them. See what you can do and provide a price.

You will learn a lot about what it all means and the risks involved.

 

[smorizio]

when i was a tech at micro center a long time ago. you had to be a plus cirt just to be hired as most comp back then to repair there printer and computers needed that and there vendor training. (online or class). if no one at the store had a product cirt we could not repair or order parts for the unit. I would start first by emailing vendors see how you now become a repair shop for there product or if they want there product now ship to there repair depo. with lenova laptops there warranty covers shipping to and from there depo. so most of those laptops are going to be repaired by the vendor. on warranty and cross shipped printer and monitors. you have to send the bad part back under warranty or the vendor will charge you for the core part. in most states just like auto repair the shop by law should be handing you a bad part when you get your car repaired unless there a core charge. also look at your state laws on abandoned items. all shops sometime have this with old units....customer says yes they want it repaired then does not after the work is done. they leave there old unit in the shop...you have to in most states send register letters before you sell or part off or lein the owner. in computer lawsuits on shops the item a shop has to lock out for is data loss/recovery. say a dead pc comes in...no post on quick bench test. you want to have on your repair print out a spot for the person to sign that your not responibale if data loss if there hard drive is fried. same if they bring in an old pc and want data moved.
most towns have sba offices. stop in to your town hall see if you have to register as a dba and it cost.
you want to open at local biz bank or credit union accounts for just the biz. dont mix funds if the shop fails and you used a mix account you can be personal lib for some of the biz cost.