Copyright 2013 by Morris Rosenthal
All Rights Reserved
How to Start a Computer Business
Pricing and Selling a PC
You've sold your first PC to your mother's friend Doris, and then find out that whether you order it assembled or in pieces, there's not going to be much profit because you included Windows 8 in the price but forgot to add in the cost. This drives you to ignore the top two tiers of distribution and go straight to the small importers with the aggressive pricing. You know the stuff is good because it says so in the ebay product description. By going with the most aggressive pricing for each part, you figure you can scrape out a fifty dollar profit.
You order an ATX case, keyboard and mouse from one place; a motherboard, CPU, RAM, hard drive and Windows 8 from a second place; and a DVD burner, video adapter, DSL modem and LCD monitor from a third place. Even the guy on the other coast promises you'll have the stuff within a week. The next day, the ATX case and power supply show up with the keyboard and mouse, and the UPS gal wants a check for $60. "What's this?" you say. "The parts cost was $51." The UPS gal explains that the shipping cost was $5 and the COD tag allowing you to pay with a company check cost $4. You pay and go back to your spreadsheet to see where this is heading, and wonder why you didn't use your credit card or PayPal.
Three days later, the motherboard, CPU, hard drive and Windows show up from the middle of the country by Fed-X. You feel pretty good until you look at the invoice, which shows your credit card was billed for $255. Wait a minute, the parts total was $221. The bottom of the invoice shows a $29 item for 2nd day shipping, and another $5 for handling and insurance. You call the supplier, who reminds you that you wanted it by Thursday, and that he did tell you he was waiting for a shipment of RAM to arrive Tuesday morning. Well, at least you can give yourself credit that you bought the motherboard, CPU and RAM from a single vendor. Doing otherwise before your really know your vendors is pretty risky.
After assembling the parts that have arrived, you settle in to wait for the package from the other coast. It shows up after a week, exactly on the predicted delivery day. Great! You unpack the stuff to finish building your first PC and find the DSL modem is missing. You read the invoice and see that the modem was "backordered" and shipping separately. You run to the phone and call the vendor, who tells you, "Don't worry, it went out three days ago." "Call me next time before you backorder something on me," you yell at the voice. After you hang up, the voice says "Jerk."
Three days later, the DSL modem shows up. It's not the modem you ordered, but at this point, Doris is calling every day (she pre-paid). You begin to see where ordering everything from one nearby vendor, preferably with net terms (credit) and the cheaper shipping and handling costs associated with putting everything in one big box makes more sense than parting the thing out all over creation.
You put all the paperwork in a file folder labeled "Doris" and file it. Some vendors won't take defective stuff back without paperwork unless you have a real good relationship and can get the salesman to look it up on their computer system for you. Other vendors will bend over backwards to avoid getting a bad rating on a site like ebay, it all depends. You finish putting the PC together, load Windows 8, and everything is great. You load all the driver discs for the motherboard with integrated video and sound, the DVD recorder and the DSL modem, then you realize you forgot to include speakers in the price.
The LCD gives off an odor like burning plastic on an ocean breeze, but you figure that will clear up. You play your favorite shooting game for an hour to make sure everything works. The video drags and the sound on the cheap speakers you threw in is nothing to brag about, but you doubt Doris is a gamer. You wonder what a 24 hour burn-in really means, and if you should spend a hundred dollars on some testing software. Unless you have extra cash lying around, don't bother. Just leave the PC running overnight and check that it's not frozen in the morning. It's a decent test, and you're doing a lot more than most guys I've known.
You put the PC in the car and drive it to the customer's home. If you were a mail-order business you could leave it on the doorstep, ring the doorbell and run, but you aren't. You take the PC out of the box and plug everything together. Your customer turns it on, the Microsoft splash screen appears, so you leave your homemade business card and go home relieved that you only lost around $31 selling your first PC. You use a hobby knife to cut up the boxes that Doris didn't want and you put them out for recycling day. The foam peanuts you save, believing that eventually they'll come in handy - good luck.
The next morning the phone rings, your first tech support call. Doris bought an inkjet printer at Staples (they had it cheaper than any price you could find) and it doesn't work - Staples tells her it sounds like a computer problem. You warn your mother's dearest and oldest friend that if it's not a computer problem, you'll have to charge her your $50 field service rate, and she agrees. You arrive at her house, and immediately see that she's trying to use ancient typewriter paper in the printer and the paper isn't heavy enough for the feeder, producing all sorts of jams and "printer not ready or not connected" errors. Since you only spend two minutes in the house and it's such a silly problem, you can't bring yourself to charge her.
Doris calls you again to help her set up DSL from the local phone company. You drive out only to find that their "Welcome" kit included a free DSL modem, so you sheep-ishly take back the one you sold her (for which you've thrown out the retail box) and promise to take that amount off of your bill for today's service. You set her up with a free e-mail account and spend two or three hours teaching her how to use the e-mail and shop on ebay. There's an uncomfortable moment when she types "Windows 8 PC," into ebay's search box and gets back a list of computers cheaper than the one you just sold her at a loss.
A couple of months later, when her son visits for Christmas, he spends the whole time playing games and she calls to tell you he said the DVD drive is failing. On hearing the symptoms, you tell her that it's probably a virus her son downloaded while playing online games, and that you'll have to charge that elusive $50 field rate if you come out. She agrees, and you show up to find that the DVD drive is failing.
You go home, pull out the "Doris" folder and call the vendor, who gives you an RMA (Return Merchandise Au-thorization) number. You breathe a sigh of relief that the vendor is still in business, since you haven't talked to him in three months, and then send off the drive. After a week, you call, and he explains that he has to ship the drive back to his supplier, but they turn stuff around really fast, and you should have the replacement within two weeks. You give up and go on ebay to buy another DVD burner, paying with a credit card. It comes the next day and you install it.
Doris says something to the effect of "I hope this doesn't turn into a regular occurrence," and suggests that maybe you've bitten off more than you can chew in "your little computer business." Two months later, her original DVD burner arrives in a beat up package from some place you never heard of with a note saying they tested it fully and it worked for them. You install it in your own heavily modded gaming PC to test it and immediately smell smoke. Welcome to the PC business.
The 161 page paperback book "Start Your Own Computer Business" is available through your favorite bookstore or you can order through Amazon.com for $14.95, or buy the instantly downloadable PDF version for $11.95.