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Computer Reseller Seeking Answers

Posted on 2004-08-13
Medium Priority
Last Modified: 2008-02-26
Hello all, and thank you for reading...

  I own a small computer repair business in Southern California and I am taking the next step, resale. I went and got all the proper permits, and I got accounts with Ingram Micro and PC Wholesale. My question is this...

  How do you actually make a profit in resale? I look at the prices at the wholesaler's websites and they aren't too far from retail prices. I am getting a little frustrated, needless to say. I would like to know couple things:

1) What is the average price markup from wholesale to resale?
2) How do small computer shops actually make a profit selling computer parts?
3) How do some computer shops offer such low prices, I can look at best buy and find lower prices than my wholesalers offer.

Thank you-
Matthew Wadsworth
The Computer Guy
Question by:The_Computer_Guy
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Accepted Solution

rockportmedia earned 1000 total points
ID: 11797540
Dear Matthew Wadsworth,

I share your frustrations and I have the following to offer:

1) What is the average price markup from wholesale to resale?
A: Keystone or the MSRP.

2) How do small computer shops actually make a profit selling computer parts?
A: It's hard to make a profit when your looking at the online shops that sell for below what you can buy it yourself. Target an audience that is not yet online. The 40 year old plus crowd is half online but above 45 not many people know how to use the computers. If you ad a value to your product such as personal service, customer service people will pay more. Also note that because you look online does not mean your customers are looking in the same place. You have probably looked at 100 websites selling the same products because that's your thing. Not so for the regular joe/jane at home that will buy from the first person that is informative, helpful and nice! The profits will come when you find your niche. (eg The Purle PC) or whatever makes you different.

3) How do some computer shops offer such low prices, I can look at best buy and find lower prices than my wholesalers offer.
A: Bulk purchases from distributors or from the manufacturer themself will do the trick. You should check out the book "22 Immutable Laws of Marketing" regarding getting market share and why doing the same thing as the guy next door might not make you a rich man or a profit for that matter. Notice Dell had the custom PC market cornered. Gateway stopped making customs and Dell was riding almost solo. Then came Alienware which is a "high end" custom PC maker. They found a nich and expanded from the niche. Find yourself a niche and expand from it.

Good Luck
LVL 10

Expert Comment

ID: 11798052
Matthew one word these days VOLUME. Very hard to make a profit. Sometimes Ingram is more expensive than newegg. The only other way Service rough market to get into. ALso do not keep a large inventory unless you have a quick way to unload it. Rock as the niche IDEA gotta find one still very competitive people have been coping ailenware for a long time now loosing there shirts in the process. If I were you just experiment and take it slow dont sink too much money into it right away.

Author Comment

ID: 11798156
Thank you guys for the responses.

  I remember when I did the ordering for the music store I worked at, the markup was usually about 100%. Things are way different on this end of the retail spectrum. I think I am better off just doing the repairs, but I think I can still just keep parts on hand for replacement.

  What I was really hoping to do is build like 5 or 6 systems, and get rid of them on ebay or something, in hopes that would bring in enough profit to build even more, and soon there after have them paying for themselves. Guess I am wrong.

-Thank you
-Matthew Wadsworth
-The Computer Guy

LVL 14

Expert Comment

ID: 11798187
One way to make a profit is to "up" the service.  The company I work for won't match prices with local retailers, instead we come in a little bit over the prices of Dell.  Then we point out that you usally have to pay shipping (Dell is usually another $150 for shipping) and then we point out how puny the hardware is in low-end Dell's and then we we sell our computers by pointing out our "brand name" components (we learned long ago the perils of using cheap hardware) and then we send a tech onsite to do the setup (free).  Initial setup of all hardware (computer, monitor, printer) is free, we charge extra (top dollar) for file transfers and internet or home network setup.  We usually don't have to "push" the file transfer or internet setup service as most of our customers request it.

Expert Comment

ID: 14127887
Hello Matthew,
I am not sure if you will get this message, but I started off like you two years ago, and when I signed up with ingram Micro and techdata, the prices were very close to the retail.
I looked at second hand computers, off-lease, and refurb.... was not bad.
You should join any of the network IT wholesaling companies and sell and trade through them... you can get good deals as you connect with many dealers worldwide.... some sell new too.
I am affilated with one "Please note I am not advertising for them else I would give you my promo code"
itwholesalers.com there are many others but these are the cheapest.

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