To make your computer business more profitable, you need to start providing service to businesses, not consumers. This article will show you why providing service to businesses is more profitable than providing service to consumers in your computer business.
Retail-oriented customers need service once or twice a year and don't need your service on an extended basis, but businesses are a different story. Let's say that your goal is to produce $200,000 a year in pure services revenue for your computer business. Here are two choices you have:
In depth: retail-oriented clients
Choice A is providing business to consumer service (B2C). This person may spend $250 a year in services (or product margin) from your shop. That money may be spent on a hard drive upgrade, a repair, installing Wi-Fi equipment, running a Cat 5 cable in their home office, etc. You'll need a lot of customers at $250 per customer to reach $200,000 a year-800 to be exact.
If you're just selling the products and you don't have a lot of after-sale post-support, that customer volume may seem manageable with just a small staff in your computer business. Keep in mind, though, that these retail customers are going to need a lot of handholding. Plus, what is it going to cost you in terms of advertising, promotional, and marketing dollars to be able to get those 800 customers in your computer business?
Next, look at labor costs. How many technicians and system engineers will your firm need to be able to deliver adequate "free" or "paid" support to those customers? (Also, bear in mind that retail computer store service is generally billed at much lower rates than commercial small business service).
In depth: business clients:
Now, look at choice B; business customers (B2B), who are committing to spending a minimum of about $1,000 a month-every single month. That's a $12,000 a year minimum per customer.
Do the math. You'll see you only need about 16 or 17 of these customers to reach your goal. This is a whole lot more manageable in your computer business, even with one or two system engineers, or with just one or two high-level technical consultants.
At $12,000 per year, these businesses are no longer transaction-oriented, one-shot-deal customers. At $1,000 per month commitment . that's a real client! Plus, you'll also have a lot less non-billable time. You end up "eating" more hours and more time on the tiny jobs, the $100 and the $200 and the $500 customers, than you will with the ones that have extended maintenance over an extended period of time.
The Bottom Line about Your Computer Business
In this article, you've been introduced to the advantages of providing service to other businesses in your computer business.
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