I’m a college student with no income besides scholarship refunds, and I’d like to make some pocket money. I’m the kind of oddball that price-shops for computer parts even when I have no plans to buy anything, and I figure there must be at least a few people in a school of 10,000 people that are looking for a new desktop system. As long as LCD monitors aren’t involved, it’s pretty easy to beat the major brands in terms of cost, and there’s the added bonus of knowing that the parts used aren’t second-rate generic junk.
Of course, I don’t have a warehouse full of parts, so I’ll have to order the parts online, which means I’ve got to pay out of pocket. If the buyer backs out, I’m stuck with a computer I don’t need and out a few hundred dollars until/unless I can sell it. I think that a reasonable solution is to ask for a certain percentage of the final price in advance. That way, if the buyer backs out for any reason, my bank account isn’t totally empty, and I can sell the system at a reduced price to entice buyers and still make some profit out of the deal.
What would be a reasonable percentage to require in advance? It should be low enough that the buyer won’t think I’m going to skip town with his money, but high enough that I’m not totally boned if the buyer backs out after I’ve ordered the parts. 20%-25% seems reasonable to me.
It seems like a good idea to have something in writing and signed by the buyer when this amount of money is involved. A return policy, for instance, is probably something I should think about. Is there anything else I should consider putting in writing?
Personally, I’d price everything out, find out what it would cost me to build the computer, explain what your going to put into the computer, tell them how much you want for it, and ask for it all upfront. If your having enough money trouble that you want to do this to make money, you probably don’t need to worry about a customer backing out on you. If this really goes as well as planned, after you put together a few computers you’ll probably be trustworthy enough that people won’t have a problem giving you the money up front. Hey, it’s $500 now and wait a week or two for your computer or $1000 at Best Buy. Let them decide. One thing though. One reason I don’t usually build computers for others is that if you build it, you’re tech support. Be prepared for those late night tech support calls from friends when the computer (wheather your fault or not) starts acting a little wonky. If it turns out to be a problem you can’t fix they may want their money back. You may want to make sure they understand that if something goes wrong with the hardware you’ll replace it, but if there a software problem their on their own, or at least you won’t have to be responsible for it. That’s REALLY broad but the basic idea (so if a fan was mounted crooked and get’s really loud or breaks you’ll cover it, but it’s not you’re problem if they only sprung for 128mb of ram and can’t figure out why it crashes when their running 18 things at once and they try to fire up Sim City and print out a dissertaion.)
I’d just like to point out that this is more or less how Michael Dell started out and he’s now a multi-billionaire. Of course he did this a couple of decades ago and managed the business well since then (and there was probably an element of luck), but he sold computers out of a dorm room at the University of Texas as an undergrad.
I did this in college.
Selling new systems is dumb. I know it seems like a good idea to you right now, but once you’ve worked in that part of the industry for 3 months, you’ll understand that sentence.
In order to compete with the big boys with equivalent quality of hardware AND legal copies of needed software, I had to drop my prices. And drop my prices. And drop my prices again.
In the end, I was making nowhere near your 20% margin on the hardware. And I had costs for maintaining warranties. Running around town fixing every failure the 50 PCs you sold last quarter have had can keep you busy. It’s like the opposite of the residuals an insurance salesman gets… the product keeps taking and taking from you until it is out of warranty.
Here was my revelation: the industry is too efficent and too stream-lined for you to ethically make a worthwhile amount of money by selling new PCs to consumers.
You will either have to break the law in acquiring your parts or handling your customers if you expect to make substantial money on new PCs in 2004. Or you’ll just have to overcharge. Ethically, I don’t care for preying on the ignorance of others to make my living.
When Michael Dell got in the business, PCs routinely went for thousands and thousands of dollars. Now you can get a heck of a PC for $600. I’ll bet Dell was making $700 per PC and undercutting his competitors who were making 1200 per PC.
The way to succeed in PCs is by offerring services, not by offerring hardware. To the extent you sell new PCs as a *way* to later sell your consumers high-profit, low-effort items such as RAM upgrades or services such as virus scanning and removal, you are making some sense.
As you move up the food chain, the way to make money in computers would be to come into a small business and sell them a business system... something that fits with their line of business and makes them money.
A new accounting system would be the classic example of a business integration story that puts in your pockets. Also going into a business with no LAN and installing a LAN… that’s another way to make a few $, and quickly.
Billing $65 an hour to fix a troublesome problem and (legitimately) taking 2 hours used to be a great way to do things. I don’t know if that would still work in a world of $400 computers, but I suspect it might.
And of course, when you discovered the customer needed a new power supply, you could always mark up their new power supply $15 and charge half an hour for the installation ON TOP of the diagnostic fee.
That’s my input. Take it or leave it. Hope it helped you.
I can’t over-emphasize what Joey P said. It’s all about support, and that will bite you. Not to mention, selling PCs is now a low-margin business. I wouldn’t be surprised to see you making 50 bucks 50 bucks per sale (assuming you’re comparable with the Dells of the world). And when someone can’t get Word to work the way they want, guess who’s getting a call expecting you to solve it for free? Far worse, when someone’s hard disk dies, guess who’s getting an angry midnight call?
It’s a hard business. If you do the math, you may find you won’t make much more than you would at McDonalds. On the other hand, the skills you’ll develop building a business, marketing, selling, purchasing, and supporting will be far more valuable to you in years to come than knowing how to work the fry machine.
If you really want to sell computers, you could always just resell them. Buy them from a reputable dealer on the internet (like Monarch Computer ) and then just sell them to the other people for a small markup. They would provide the tech support for you, and if anything is ever wrong all you’ll have to do is take the part and send it back to the manufacturer for them.
To add to that with an example. When some people I knew asked my advice on a computer, I told them specifically that I CAN build them one, but I WON’T do it. The reason I gave them is that if they call me with a problem I will try to fix it, but I’d much rather feel bad telling them to call tech support (because I can’t or don’t want to fix the problem) then feeling obligated to fix it myself.
I think what would be much more valuable to you is to offer upgrades and services. Put up fliers around campus that you’ll install new hard drives, memory, operating system upgrades, install programs, remove viruses (though you may want to stay away from that one, if you don’t get it compleatly or the person downloads it again you’ll find yourself back a million times “What did I say about going to that site and downloading that program…and what did you do?”). You could also offer training, go over and teach someone how to set up a power point presentaion. Install high speed internet for them once they received the free install package. I would suggest going over to Best Buy and getting a copy of what they charge for similar services and undercutting each service by $10 or $20 if you can.
Upgrades etc. is the way to go. You are on campus and can compete with BB or someone having to come on campus and make an add on service call charge. Many colleges/universities have a student bb where you can advertise. Best advertisement is a satisfied customer once you get started. Good luck.
Yeah, I did this with some buddies. We even got a vendors license to get the best prices. It didn’t work.
Even though we sold stuff, the support was worth 10x more than the money. We even get calls now, 3 years later, demanding support.
Best way as I see it is to charge for tech support and upgrades/installs. There are going to be plenty of people who don’t know anything about their PC and may want “in house” service many stores won’t do.
I’ll have to agree 100% with Jonathan W. here. You sure hit the nail on the head. It was a great idea 10 - 12 years ago, when a 386 DX-40 was selling for $2000 or so. I got into it just as a matter of economics (read poor). One thing lead to another and before you knew it, I had two full time jobs. Nothing like trying to field a support call at 11:00 p.m. When the big manufacturers started to drop prices, I bailed out. I did the service and upgrade thing for a few years, simply because many of the “repair” shops would charge obscene amounts of $$ to fix a very simple problem, and I hate to see the “little guy” get screwed just for having a minor problem repaired on his/ her computer. However, two very positive things came from this experience. First, I gained an extensive amount of computer knowledge. But most important, when I did a hardware upgrade (motherboard, hard drive, etc.), 99% of the time, the customer didn’t want the old parts back. From these parts, I would build some vary basic systems, and donate them to local needy families, or anybody that really needed one, but just couldn’t afford it.
Last year, I bought a new Dell. I hope that I never see the inside of a computer again.
That’s my story, and I’m stickin’ to it.
I have to agree with the rest. You won’t make money trying to compete in the full system market, so upgrades are the thing.
Here’s something I’m working on- case mods. Just switch all the components from an old machine into an Alienware box or something with a lot of neon, and mark it up for the time you spent on moving the parts.
Video and sound upgrades, extra memory, virus and spyware removal, and your tech support services should make decent money. Make a contract spelling out what you cover and what liablilty you assume, and sell it to users so that the midnight support call is worth your time.
Since you’re on campus, find out what game is the rage locally and offer upgrade services to optimize computers to play that particular game. A good job on the first few will bring in all their friends, who just have to have the same update…
Well, there’s my 2 cents. Hope it helps- you have a lot of good advice here from all the other posters.
That’s what I did, and there’s still people willing to pay that kind of money for evening and weekend housecalls. Ignore the mooks who want to pay you 20 bucks for an evening, and start building a nice client base made of wealthy middle/upper class folks.
As if you need to hear it from someone else, I’m going to tell you that Jonathan Woodall hits it right on the head.
In the early 1990’s, a buddy and I set up a small business selling new systems and upgrading older ones. We also set up vendor accounts with component sellers in our area for the best prices. Things went pretty well for awhile, because we were selling well-tested and burned-in systems and we gave new computer users six hours of free training so they knew their way around their PC somewhat before they were on their own.
It also helped that he did the tech support during the day (I worked days at my regular job) and I did tech support at night (he worked nights at his regular job.)
Tech support was still a nightmare. We had to deal with the customers and the manufacturers, and combined with the six free hours of training, we ended up starting strong - good sales, good profits - but just scraping by in the long run. Eventually, as computers became more of a commodity and less of a specialty item, the prices dropped until we couldn’t even hope to make the 20% you’re shooting for.
My buddy backed out of the business as things fell off. I stopped selling PCs and focused on providing software consulting and hardware upgrades for “middle/upper class folk”, as Anonymous Coward quite aptly describes them. That’s worked out pretty well.
Another thing you might consider is studying up on the various spyware/malware/virus threats that are out there and offer your services in removing them. There’s a lot of money in spyware removal, firewall setup, etc., and that’s another field that has paid off quite well for me.