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Should I Charge Businesses More?
The question “Should I charge businesses more?” recently came up on the Technibble forums and the short answer is yes. Heres why:
Quicker Response Expected
Most businesses now days rely on some sort of computer system for their essential day to day work. It doesnt matter if its just the accounting machine in the back or the point-of-sale system in the front. It is usually essential to their operation.
If an essential system goes down they are losing money every moment you are not there and because of this, businesses wont blink twice at some sort of priority/business fee that gets you out to their business sooner. Think of it like this, if a business makes $2000 a day, they are open for 8 hours a day and one of their essential systems wouldn’t boot up this morning. They are losing $250 per hour you are not there so they aren’t going to contest your increased fee of $120 per hour for businesses over your $100 for home users.
Of course, its not always possible for you to get out to business clients in a reasonable amount of time so it is a good idea to get them on a preventative maintenance contract to fix things before they happen and therefor avoiding a “losing $250 per hour” emergency.
Higher Cost of Insurance & Higher Chance of Being Sued
Most computer repair businesses working with home users can usually get away with just General Liability Insurance that protects you from things like bodily injury, property damage, personal injury and advertising injury. However, if you are working for businesses, it is wise to step it up to Professional Liability Insurance which covers you for errors and omissions resulting in loss of client data, software or system failure, claims of non-performance or negligent oversell. Of course, this extra coverage will cost more so you should have a higher cost for business clients to cover this. If you need insurance, check out TechInsurance.com
Invoicing and Accounts
There will be few businesses that will pay you cash on the spot for your repair work so that adds in the extra work of having accounts and invoicing. I personally try to do all my invoicing and chasing up work as a big batch but that still takes me an hour or two, which I cant bill for even though I am still working.
So, should you charge businesses more? Yes, you should. They cost your business more though insurance and unbillable time and they also expect you to be onsite quicker. However, don’t let this turn you off business clients because they can also be the most lucrative clients because they need network setups like servers and VPNs, backup solutions and have employees who like “free” screen-savers and toolbars.
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Having worked in the public sector for the local county IT department I have seen how truly unethical maintenance contracts are. They are a scam meant to charge outrageous prices for substandard service. Likewise I’ve been a developer working for a company that provided enterprise solutions to government and we also provided maintenance contracts and saw first hand how we ripped off one county agency after another with a ridiculous feature request fee structure.
@Dan
“Having worked in the public sector for the local county IT department I have seen how truly unethical maintenance contracts are.”
I take offense to that broad stroke of the generalization brush you used there.
“They are a scam meant to charge outrageous prices for substandard service.”
Really? Well, my customers are rather happy. I charge $1,100 a year from up to 5 PCs, so that breaks down to $18.33 a month per PC. Not one complaint yet.
“Likewise I’ve been a developer working for a company that provided enterprise solutions to government and we also provided maintenance contracts and saw first hand how we ripped off one county agency after another with a ridiculous feature request fee structure.”
Just because THEY are overpriced and substandard does not mean ALL of them are.
It does make sense to charge businesses more, however your time is your time, and you can end up not getting regular corporate business by pricing yourself out of the market, whilst getting worked over by mrs housewife who is a terribly demanding and computer un-savvy client, that will take up hours of your support time for nonsense.
Curious to know if anyone in Canada is up on the legal minimum amount of insurance coverage for someone in our field?
Sorry – meant to say
“Curious to know if anyone in Canada is up to date on the legal minimum amount of insurance coverage for someone in our field.”….
Less confusing way to say it may be:
– Legally – how much coverage do I need??
thx
Great insights Bryce.
What about one-man businesses and home offices? Do they get charged the same business price as a larger office?
We base our fee structure on response times rather than client:
– same day
– next day
– next business day
– drop everything and get your butt in here now!
etc.
————
Basically, if we can schedule your tech, you get a break. If you demand (or require) immediate (or close to immediate) response, you get charged a premium.
As far as charging businesses more, I can’t really comment since we try to avoid general non-business customers whenever possible. The only exception we make is if a business client needs help with his/her home machine – or is a personal friend of a business owner. In that case we will support it. We market it as sort of a perc – and even though we charge for onsite time, they all seem to feel it’s a good deal. The business owners especially appreciate the ‘friend’ coverage because it makes them look like they “have connections.” We also pick up new business clients that way because business owners tend to be friends with other business owners.
And yes, we do charge a little less for these calls even though they’re a bigger pain than most of our regular requests because we view them as marketing and goodwill actions rather than revenue opportunities.
@yfncg, I will still charge the same if it’s a one man or home business because the risks and invoicing is still the same.
@votre, I like your charging style. I could see it working well.
While business customers require more time and effort the problem is that in the mind of the customer it seems that they are being charged just because they are a business even if the work is the same. When I was working in the business I tried charging by the type of work I was doing. That way the businesses can see that the type of work that has to be done is of a higher level of complexity
This article just reminds me that I’ve raised my home user rates twice in the last 2 years and my business user rates only once. While I’m trying to pick up a greater proportion of business users, it’s funny because the higher home rates haven’t had as much of a deterrent effect as I’d expected. I think people are just happy to have someone who comes with great references and will pay accordingly.
@Dan-
I have to agree with Ron that you are using far too broad a condemnation of service contracts.
For some reason, government and community agencies seem to pick up a disproportionate number of shoddy suppliers. But I truly believe that the way most government and community agencies behave when it comes to procurement (i.e. go with the LOWEST bid) has a lot to do with it.
When somebody makes it abundantly clear that price is their absolute overriding purchasing factor, they’ve pretty much ‘flipped the bird’ at those of us who pride ourselves on providing quality support. And we flip it right back – because we will walk away from any business that doesn’t make sense for us or our clients.
My company no longer responds to RFPs or RFQs from our area’s local governments because all they want to talk about is price and little else.
And no matter how carefully we went over our bid to keep costs down prior to submitting it, we’re invariably told “you need to come down another 30% if you want to get this contract.”
Eventually we gave up on trying to deal with all the ‘government mules’ sitting behind those gray metal desks piled high with paper.
The best I can say to all those ‘public sector’ people who keep getting burned on service contracts is this: If you keep looking for the lowest prices, and nothing else, then all you’re going to wind up attracting is the bottom feeders.
I once saw a sign in a gift shop up on Cape Cod MA that summed up how any reputable company feels about the issue of pricing:
We have no quarrel with those who sell for less. They should know better than anyone else what their stuff is really worth.”
;-)
@Edward
businesses can see that the type of work that has to be done is of a higher level of complexity
Personally, I think that business support issues are less complex than most home computer problems.
If I was given a choice between to diagnosing and fix a Win2k3 server problem, or trying to figure out why the latest NVidia driver install crashed Junior’s PC and now he can no longer get into his iPod or play Spore – I’ll take the server problem any day.
Business systems don’t run into anything like the bizarre problems home machines do.
Even fixing an Active Directory or security policy issue is nothing compared to what you often need to go through to troubleshoot and fix problems with games or multimedia apps.
Just my tuppence. ;–)
I’d say that it depends on the skill sets needed. Network and Server admins can get away with charging more than your average PC Tech. If I sent a PC Tech out to a business where they have servers, networks and other higher end infrastructure… and that PC Tech wasn’t able to do the work… we wouldn’t have a happy camper.
I believe quite the contrary, that home users should be charged more. If I had I preference I would be busy enough to not deal with home users at all. They are a bigger pain in the rump. While they usually have cash or check in-hand, the check may have a greater chance to bounce. Home users want everything for free. They grossly de-value your efforts, and they do it because they consider a new computer cheap and a good alternative to several hours of your service. Also, they don’t understand that bleeding edge hardware and all software can just be funky sometimes, and you just gotta live with it. I agree with Votre, home users usually have nonsense to waste your time with, and they just don’t want to pay for it. They also think the neighborhood “wiz kid” or their grandson in college who will do the job for free or significantly less is a good option.
Businesses, on the other hand, generally know how important your efforts are, value their data and work efficiency, do not question your judgement or recommendations, they understand that technology isn’t perfect, and they tend to gripe significantly less (if at all) about your billable time.
Additionally, you can charge businesses for ALL OF YOUR TIME.
If you need to spend an hour doing an audit of their network and hardware just to make it easier on you next time you are there, bill them! They like that! If you spend 4 hours that’s ok too just give them a heads up first, SET EXPETATIONS.
If you have to spend extra time documenting your work and creating more detailed invoices or whatever, do it while onsite or otherwise within your billable time. That’s OK.
If you don’t bill them for phone time, YOU SHOULD. THEY WON’T complain. There are two things that can keep this a smooth and easy avenue of profit. First, ensure they have a designated person to deal with you who approves all calls first or calls you directly. This way a crazy employee won’t call you repeatedly for stupid stuff running up the company’s bill. Also, you can include xx amount of phone time in a service contract. Additionally, to keep your own sanity and their call volumes lower (if you want this,) bill in 15 minute increments. If they call for a quick and dumb 2 miunute question, they will know that call is going to cost them ($22.50 at my labor rates.)
Ever try to bill a home user for phone time? Just how easy is it to get that credit card # for you? Heh.
I worked for a company long ago that was called out by a client for charging businesses more. None of these “reasons” made sense then, none do now. If you spend more time with businesses, then you bill them more time. You DO bill hourly, yes?
Also saying you charge more for business because they are priority of home users is bogus, what if your currently working on another business? If you need to drop your work *right now* and make them a priority, then you can charge extra for that, but charging more because they are a business is a blatent RIP OFF.
If you charged home users more, it wouldn’t be a rip off because you KNOW you will spend more unbilled time supporting them. But still I don’t.
Case in point, a day I had last week. Spend diagnosis on laptop plus (2) 30 minute phone calls with home user and still can’t figure out her problem (she thinks her ex-husband is spying on her somehow) and return a perfectly good laptop with no work done, nothing billed – she is freaking out because her trial office expired and thinks her ex-husband who borrowed it once has put a 25 digit “password” on it. She won’t listen to me, won’t buy office, and won’t accept that no one has put spy software on her laptop that communicates with her blackberry to send personal info to her husband.. but she also doesn’t want to pay for a format/reload to put her mind at ease. Then I am riduculed upon returning the laptop because she was told I could tell her everything her husband did with the laptop while he borrowed it 2 months ago … AND FOR FREE appearently.
Then I get a call from my most recent business customer, still with no contract, who has paid me $2700+ YTD for much needed services, and needs me to remote into his exchange server and see what I can do about their spam issues. Woohoo! Gladly! I go back home and get comfortable, remote in at my leisure and did my thing, and sent a semi-detailed invoice. By Monday the check is in the mail! Sweet!
My ONLY price variations are that I will charge a business a slightly reduced hourly rate provided they have a current contract with me for managed services / remote monitoring.
Long story short, don’t RIP OFF businesses, if you do you are a FOOL (and you don’t know how to bill properly either.) Remember they are your money maker. Home users just can’t produce the repeat business you need. Businesses have more gear, more users, and will call you repeatedly. If they don’t, then I guarantee you they are calling your competition.
Having additional thoughts on this, I just want to reiterate my point about invoicing and documentation. YOU CAN BILL FOR THIS. As I said do it while onsite or otherwise within your billable time if you are working remotely.
Ever had an appliance repair man, installer, or other home service professional at your house? Watch them next time. They write up the bill right there and then, before they leave the premises. Look over their shoulder, they estimate extra billable time for that paperwork too. No one ever complains!
I also use many notes on their invoice that I will in my personal documentation on that business and it’s work history. Businesses love it when you document anything about them even at extra billable time, because all you have to do is explain to them how that helps you get work done more efficiently next time you are there.
The last company I worked for before going at it myself (again) did what I can only dream of right now, they refused all home user work (except of course the owner of a business that was our clients.) My boss went to an out of state seminar last year on switching to a new point of sale software. While there he was talking with other businesses in our field at the event and learned that we (and one other business) were the only people not billing for invoicing/documentation time. Everyone that billed for invoicing and documentation had over 10 employees and were doing well. Us and the other small business had fewer than 5 employees, we both had trouble billing more than 4-5 hours/person in a work day, and both had trouble with our growth potential because of this.
What does that say? So after this, we switched to a billing model that resembles more closely that of an attorney. Hey, they truely have the right idea! Since many of our clients were in fact attorneys, they should be understanding! (Actually, to my knowledge, no one even noticed!)
I almost forgot the insurance point. You have a basic insurance (if at all) for what you want to be covered for. It’s non-sense to think you should be covered for more if you are doing work for businesses. If they sue you and it’s for big money, there isn’t a good amount of insurance to have! In that event, keep your minimum insurance and be sure to INCORPORATE your business, preferably sub-chapter S to avoid double-taxation. My accountant recommends the S-corp over an LLC, because although taxes are more complicated you can avoid paying a certain amount of taxes altogether like that a social security you’ll never see when you retire. But I digress. Both C or S type Incorporation or an LLC (Limited Liability Company) means you aren’t personally responsible if you are sued.
So if your insurance has to pay a few grand, fine, keep truckin. Otherwise if you are sued for mega bucks, then your business goes bankrupt, maybe you loose a few grand in assets or profits that your business technically owned, but your are incorporated so you just abandon the business with no personal responsibility to you, and you start a new business with a similar name. Simple as that. Most lawyers will know this and if they aren’t slimy and are paid a regular retainer anyway, they will advise their clients not to bother with suing you because they know damn well they can’t get anything from you if you are incorporated and manage your funds the right way.
/rant off
Absolutely, There is more risk involved and more can go wrong when working on corporate computers/networks.
Make sure you have a good contract to cover your butt and make sure they have backups of all their data -or- insist that they let you back up their data.
Don
I don’t know if that’s such a good idea. If you have no competition you can charge whatever you like but if there is some competition you should go araound doing stuff like that.
I would definitely say that you should charge businesses more WHEN possible. When you are working for a business, you are fixing essential components that the business will most likely not be able to work without and as the importance of the job increases, so does the pay. So definitely they should be charged more.