Set Prices That Leave Room for Quality and Profit

EPISODE 7 

Listen to Audio/podcast version

Set Prices That Leave Room for Quality and Profit

A price that wins the job but loses the profit isn’t a win.

Price should fund the service you promise. If it leaves no room for proper testing, good parts, insurance, training and the occasional difficult job, the customer may receive a cheaper invoice but a weaker service.

Why this matters

Look closely. This is where problems hide. Profitable pricing is not about charging as much as possible. It's about recovering the real cost, reflecting the value delivered and leaving enough profit to keep the business dependable. Customers benefit when the business can honour warranties and invest in better tools.

Follow the money

Here is the commercial truth. A sustainable price must cover delivery, warranty exposure, purchasing risk and the standard the business promises. Low prices can create hidden costs when technicians skip testing, poor parts fail or the owner performs unpaid recovery work. Price is therefore a design decision about the whole service. Customers should see why the offer is different without being overwhelmed by internal calculations.

Shop, callout or MSP?

Repair shop: A shop can use fixed prices for repeatable work and assessed prices for uncertain jobs, with clear quality levels for parts.

Callout technician: A callout technician should combine a visit or travel element with time and materials rather than hiding travel inside a low hourly figure.

MSP: An MSP should price responsibility, user count, device count, risk and service level, not only expected ticket minutes.

What happens in the real world

Here is what this looks like. Two businesses advertise the same storage upgrade. One lists only the drive and fitting. The other includes compatibility checking, data preparation, installation, firmware, operating system checks, performance testing and a clear workmanship guarantee. The second price is higher, but the scope is visible.

When a supplier issue occurs, enough margin remains to source an alternative and support the customer. The first provider has no room for the extra work. The difference is not greed. It's whether the price was built around a dependable result.

Price the whole job, not the visible minutes

A repair price has to fund more than the time spent touching the device. It must also pay for the business that makes safe, reliable work possible.

If the business costs £100,000 a year and has 2,000 genuinely billable hours, the cost is £50 per productive hour before profit. Charging £45 does not make you competitive. It makes each successful hour five pounds worse.

Add the margin needed for investment, risk and profit. Profit pays for growth, replacement tools, emergencies and eventually an owner who does not need to answer email from a hospital bed.

At £50, the business has not made profit. It has covered the assumptions. Add profit, investment and risk.

The Tech For Techs cost calculator makes this concrete. Its worked example has £2,197 of monthly overhead, or £26,364 a year. With the entered working pattern, that becomes £18.31 for each billable hour before profit. A 20 per cent target net margin lifts the price to £22.89 excluding VAT, or £27.46 including VAT. Those are example figures, but the lesson is universal: break even is not a selling price and VAT is not profit.

Tech_Business_Cost_Calculator.xlsx

Download XLSX • 21KB

Measure it or guess forever

Measure gross profit by service, not just turnover. A healthy price should improve the money left after direct costs without creating a large rise in complaints or abandoned quotes.

Reality check: Don't use low headline prices followed by surprise additions. Clear prices and honest conditions build more trust than a cheap figure that grows later.

Do this now: Choose one popular service and rebuild its price from cost, value and risk.

From my own experience

My Store Chips Computers went on to win local and national awards. Those awards did not come from racing to the bottom or trying to be the cheapest person with a toolkit. They came from building standards customers could see and trust. Quality needs time for testing, communication and proper handover. Price all of that out and you may win a job. Price it in and you have a chance of building a business.

No hiding. Answer these.

•      What quality standard does the price fund?

•      Which risks are included in the margin?

•      Can the scope be explained in one minute?

•      When was each price last reviewed?

The bottom line

Bluntly: Cheap work has an expensive habit of returning for a second visit.

Next week: Handle Discounts, Hagglers and Price Objections Without Panic.

About the author

This article was written by Mr Philip Griffiths of Tech For Techs Group Ltd, drawing on his own words, knowledge and first-hand experience of owning and operating a nationally award-winning computer repair business. It has been professionally edited and approved for publication.