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The official "Starting my own business" thread, but need help with pricing!

T

tin10

Banned
Guys, I am proud to say I, at the age of 21, hereby call myself S-Tech Computer Services. I am starting my own business, and by January 1st, 2005, I plan to put it into full effect. I will be an in-home/pickup computer service person, also including web design, building computers, and many many many other types of service, in which I will list soon. I am doing this because in the town I live in, of 30k people, and a county of 60k people, there is but 1-3 computer repair shops, charging OUTRAGEOUS prices, and do a pretty crappy job (part of the business exploration/check my competition plans). Therfore, I have spoke and surveyed many people who think the service I will offer is long over-due and is welcomed by many, plus they think I will make a hell of alot of money at it.

So I am here today to ask you guys a few questions. My 1st question is a very important one. With myself performing services for customers, and not providing an actual product, do u think repairing, upgrading, servicing computers require me to obtain a sales tax permit in the state of TX and charge customers TAXES, or would it be perfectly legal to do this straight out of my home (plan to open a small shop later) and perform my services and charge my rate, and not have to pay the state TAXES on any of it? I really need to speak to a lawyer about this, but I thought I would ask the kind people here, who mostly likely a few of you do this yourself and could give me some pointers and legal advice on the matter.

My next line of questions would be this. I plan to get my business in simply this way. Instead of charging an HOURLY rate, I could charge a lower "job" or "service" rate. What I mean is instead of charing $xx amount of money for reformating and reinstalling windows PER HOUR, which the local computer shop here charges $55 per hr, I could instead charge a JOB rate, meaning, no matter how long I am there, the customer knows how much they are being charged. This may sound crazy, but I mean, this is how I plan to underdog the shops around here now, and gradually make my money and respect of customers and basically do a word of mouth and show the customer that "I am here to help you, and not take a huge chunk out of you wallet". So here is the question, or lines of questions I have. I want to know what u guys think I should charge for the following "jobs" or "services":

- A in-home/pickup fee - bascially getting gas money or something just for coming to there home/business(should I even do this fee or not?)

- A simple BENCHMARK fee - A small fee that would promise me I didnt travel to there place to not get anything out of it and test to see what the problem was, in case they think that its not worth there money to fix the problem(should I also do this fee or not?)

Now I am going to list possible scenerios of problems:

- Virus removal fee - I was thinking $75 since I would probably have to reformat, backup there stuff type thing

- Reformat straight up - if they seem to be unfixable because of anything, plus a reformat would be nice for them, a fresh new OS with NO junk on there - $75

- Upgrade or install hardware - if the customer buys hardware and I install it - $50 for first item, $10 per additional item

- Backup of there system - show them and do it for them in case they seem to have the need to do it - $50

These are just a FEW but very common issues for customers I have had in the past, well since I did do small jobs for people I knew in the past. Do you guys think I should charge a set rate of $50-75 per job on anything I do, or should I break down into different catergories? If so, possibly list yourself some scenerios and prices u would/already have charged in the past, your help will be much appreciated, and will not go unlooked from my wallet, once the cash flow comes in, I will help each person with there help they have done to me, by simply mailing u what I think your advice was worth, or even paypaling you for it. Although this might sound crazy, but I think that more people should be more appreciative of the advice given around here, so to all that help me, thanks in advance and I "will not" forget your help



For anyone who doesnt mind helping me or talking to me one on one, I have a chat room located at www.stechservices.com/chatroom thanks again!
 
but the fact of the matter is TRUST with the customer, if I do it by the hr then they might think I might be ripping them off if the JOB actually does take a few hrs to do, with them thinking its easy for me and should have only taking me half or less the time, and refusing or being ill about paying by the hr
 
I know who he is, he's the guy who just posted this same exact thread in GH.

Anyway, good luck with your business tin10. I think if you stick with it you'll realize why those shops charge such high prices. Been there, done that. In my experience, 95%+ of end users are absolutely clueless, and will pick your brain endlessly if you don't detect it early and prevent it. I hope this works out for you, but for me, I couldn't deal with the people aspect of such a business.

Bottom line, if you're a people person with LOTS of patience, and motivation, you'll do just fine.
 
Originally posted by: tin10
but the fact of the matter is TRUST with the customer, if I do it by the hr then they might think I might be ripping them off if the JOB actually does take a few hrs to do, with them thinking its easy for me and should have only taking me half or less the time, and refusing or being ill about paying by the hr
Click to expand...

The problem with a fixed rate is if you have to spend hours on 1 system(spyware/virus removal type) and you screw yourself over with a fixed fee.
 
Originally posted by: tin10
So I am here today to ask you guys a few questions. My 1st question is a very important one. With myself performing services for customers, and not providing an actual product, do u think repairing, upgrading, servicing computers require me to obtain a sales tax permit in the state of TX and charge customers TAXES, or would it be perfectly legal to do this straight out of my home (plan to open a small shop later) and perform my services and charge my rate, and not have to pay the state TAXES on any of it? I really need to speak to a lawyer about this, but I thought I would ask the kind people here, who mostly likely a few of you do this yourself and could give me some pointers and legal advice on the matter.
Click to expand...
This isn't legal advice, but you absolutely will owe taxes. Go to your state's Department of Revenue website and you should be able to find what is and isn't subject to sales tax. The last thing you need is to have your business become successful and have some bureaucrat smack you down with penalties and interest for not following the rules. You will also owe income tax on your earnings, so keep detailed records of all your expenses (including miles driven for business purposes) because you'll be able to deduct your expenses.

My next line of questions would be this. I plan to get my business in simply this way. Instead of charging an HOURLY rate, I could charge a lower "job" or "service" rate. What I mean is instead of charing $xx amount of money for reformating and reinstalling windows PER HOUR, which the local computer shop here charges $55 per hr, I could instead charge a JOB rate, meaning, no matter how long I am there, the customer knows how much they are being charged. This may sound crazy, but I mean, this is how I plan to underdog the shops around here now, and gradually make my money and respect of customers and basically do a word of mouth and show the customer that "I am here to help you, and not take a huge chunk out of you wallet".
Click to expand...

That's risky, but I don't think it's a horrible idea. Remember some of your customers will look for ways to exploit your "flat fee" system by trying to get you to perform multiple tasks once you are there. How will you handle that? Are you planning to do all the work in your home? Or all the work on site? It might be worth considering a flat fee for work in your home but an hourly fee for work done on site.

So here is the question, or lines of questions I have. I want to know what u guys think I should charge for the following "jobs" or "services":

- A in-home/pickup fee - bascially getting gas money or something just for coming to there home/business(should I even do this fee or not?)

- A simple BENCHMARK fee - A small fee that would promise me I didnt travel to there place to not get anything out of it and test to see what the problem was, in case they think that its not worth there money to fix the problem(should I also do this fee or not?)
Click to expand...
If you are going to charge a flat rate, then you need to charge for pickup/delivery. One way around the second issue is to say there is a $25 on site visit charge, whether or not they get any work done.

Now I am going to list possible scenerios of problems:

- Virus removal fee - I was thinking $75 since I would probably have to reformat, backup there stuff type thing

- Reformat straight up - if they seem to be unfixable because of anything, plus a reformat would be nice for them, a fresh new OS with NO junk on there - $75

- Upgrade or install hardware - if the customer buys hardware and I install it - $50 for first item, $10 per additional item

- Backup of there system - show them and do it for them in case they seem to have the need to do it - $50

These are just a FEW but very common issues for customers I have had in the past, well since I did do small jobs for people I knew in the past. Do you guys think I should charge a set rate of $50-75 per job on anything I do, or should I break down into different catergories?
Click to expand...

You should set your fees so that you end up taking in about $25 an hour. So if virus removal takes you three hours, charge $75. What will you do when a customer needs Windows reinstalled but they "can't find" their installation CD or key? A lot of people out there have pirated software and aren't going to want to hear you tell them they should pay.
 
Originally posted by: kranky
Originally posted by: tin10
So I am here today to ask you guys a few questions. My 1st question is a very important one. With myself performing services for customers, and not providing an actual product, do u think repairing, upgrading, servicing computers require me to obtain a sales tax permit in the state of TX and charge customers TAXES, or would it be perfectly legal to do this straight out of my home (plan to open a small shop later) and perform my services and charge my rate, and not have to pay the state TAXES on any of it? I really need to speak to a lawyer about this, but I thought I would ask the kind people here, who mostly likely a few of you do this yourself and could give me some pointers and legal advice on the matter.
Click to expand...
This isn't legal advice, but you absolutely will owe taxes. Go to your state's Department of Revenue website and you should be able to find what is and isn't subject to sales tax. The last thing you need is to have your business become successful and have some bureaucrat smack you down with penalties and interest for not following the rules. You will also owe income tax on your earnings, so keep detailed records of all your expenses (including miles driven for business purposes) because you'll be able to deduct your expenses.

My next line of questions would be this. I plan to get my business in simply this way. Instead of charging an HOURLY rate, I could charge a lower "job" or "service" rate. What I mean is instead of charing $xx amount of money for reformating and reinstalling windows PER HOUR, which the local computer shop here charges $55 per hr, I could instead charge a JOB rate, meaning, no matter how long I am there, the customer knows how much they are being charged. This may sound crazy, but I mean, this is how I plan to underdog the shops around here now, and gradually make my money and respect of customers and basically do a word of mouth and show the customer that "I am here to help you, and not take a huge chunk out of you wallet".
Click to expand...

That's risky, but I don't think it's a horrible idea. Remember some of your customers will look for ways to exploit your "flat fee" system by trying to get you to perform multiple tasks once you are there. How will you handle that? Are you planning to do all the work in your home? Or all the work on site? It might be worth considering a flat fee for work in your home but an hourly fee for work done on site.

So here is the question, or lines of questions I have. I want to know what u guys think I should charge for the following "jobs" or "services":

- A in-home/pickup fee - bascially getting gas money or something just for coming to there home/business(should I even do this fee or not?)

- A simple BENCHMARK fee - A small fee that would promise me I didnt travel to there place to not get anything out of it and test to see what the problem was, in case they think that its not worth there money to fix the problem(should I also do this fee or not?)
Click to expand...
If you are going to charge a flat rate, then you need to charge for pickup/delivery. One way around the second issue is to say there is a $25 on site visit charge, whether or not they get any work done.

Now I am going to list possible scenerios of problems:

- Virus removal fee - I was thinking $75 since I would probably have to reformat, backup there stuff type thing

- Reformat straight up - if they seem to be unfixable because of anything, plus a reformat would be nice for them, a fresh new OS with NO junk on there - $75

- Upgrade or install hardware - if the customer buys hardware and I install it - $50 for first item, $10 per additional item

- Backup of there system - show them and do it for them in case they seem to have the need to do it - $50

These are just a FEW but very common issues for customers I have had in the past, well since I did do small jobs for people I knew in the past. Do you guys think I should charge a set rate of $50-75 per job on anything I do, or should I break down into different catergories?
Click to expand...

You should set your fees so that you end up taking in about $25 an hour. So if virus removal takes you three hours, charge $75. What will you do when a customer needs Windows reinstalled but they "can't find" their installation CD or key? A lot of people out there have pirated software and aren't going to want to hear you tell them they should pay.
Click to expand...


If you can boot then you can get the CD key for windows and office.

If they do not have CD and had their "hacker" buddy load it and then change the CD key this could be an issue.
 
The thing you've danced around here is your business plan. I can tell by the language you've used that you do not have one written down. You need to do this FIRST. Find a couple online and emulate them. In it you will need to account for who you are (business wise) what you do, who your customers are, who your competetion is, what the prices you will charge for your various services will be and how you will grow, among the main topics.
As you investigate your competetion, you'll get a better idea of what the local market will bear in terms of pricing and fees. DO NOT FALL into the trap of pricing yourself too low. People are wary of businesses that are too far below the competitions pricing,(the too good to be true syndrome).
It may seem to be simply academic, but it will serve you better in the long run, as most independant businesses fail due in part to the lack of a plan. This plan will be essential should you need funding from a bank, or even a silent partner.
As my business professor used to say "A man without a plan, is like a ship without a course."

The advice about visiting your state revenue board is spot on. Better to be prepared than not , when it comes to tax liability and exposure. An accountant could also be useful here.

Any visits outside the home office should definitely have a flat "service call" attached to them. You might think of waiving it if the job reaches x dollars.
The local Dell retailer / service center here in upstate SC charges $90.00 to knock any virus / spyware out of a system and to re-install Win XX, and any software previously on the machine. They usually turn a box around in 48 - 72 hours.
Good luck to you. You are the core of The American Spirit.
< We need an American flag wavin' smiley.
 
I'm going to be doing the same thing (home business) but focusing more on networking that general troubleshooting. My co-worker's dad does sort of the same thing in a different state and he charges:

$425 for a Basic Home Wireless Setup (Linksys Wireless B Router and 2 PC/Laptop wireless B cards. Also charges $100 for each extra computer (hardware and install)
$525 for a Faster setup (Linksys G router and cards)

I think I could probably charge about Half that and still do fine but we'll see how it goes...

And I'll of course offer the standard SPyware or Virus removal, etc just as a perk.
 
make people sign a waiver saying, once you reformat it's not your responsibilty if they forgot to back up something or forgot to tell you.
 
Yeah, charge by the hour, it's safer for you that way. However, if I were you I would charge substantially less then the competition. In Anchorage, we have a few shops that offer repair, upgrade, etc. service. Most charge between $80-90 an hour! Yeah....for something a monkey can do.

I've been trying to talk to my buddy who was canned from one of these places to start up a business that offers the same thing but for so much less $$$. He's too concerned with making $$$ right now though and not looking to the future. C'mon, $200 for a Barton 2500+?!?! YEAH...haha

I'm almost tempted to do it myself. I could sell parts for a substantial markup, but still far less than what the competion is selling for, but more importantly, I could offer repair and upgrades for say $50-55 an hour, far less than the going rate and I would still make very good profit.
 
guys all this information is very very very helpful to me, but I dont understand why the state of TX charge tax on "serivce" or "labor" on things like this, I mean, when does this tax thing stop?
 
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