Once upon a time, there was a humble community of cellphone repair shop owners. They had families, kids and dreams of having it all. But burning the midnight oil doing repairs, their personal life suffered.
However, they continued to hustle. They put more hours than ever into their shop. They took everything they could on themselves because they were over-possessive about their business, believing no one else could do justice to it. Over time, they started becoming unhappy, lethargic and hopeless.
Seeing how little they could manage to feed their families, they began to increase their prices. They began to put their needs before those of their customers and employees. They began to focus on instant gratification over long-term planning.
And then came the worst! Their shops started shutting down, one after the other. Those that remained struggled. No one knew what they could do to make a decent living.
Around that time, a group of men came forward, proclaiming to be the messiahs of the cellphone repair shop community. The unbelievers shunned them and told everyone they were spreading lies. But a small number of people saw truth in them.
Gradually, each of the messiahs with their followers went on to grow their repair businesses to great heights and achieved success. And then they lived happily ever after.
You may be one of the unbelievers, but for those who believe, we present the 10 Commandments of Cell Phone Repair Business!
COMMANDMENT # 1: Thou Shalt Not Over-charge Your Customers
We get it. Your shop is in an expensive area, your overhead charges are huge and your prices reflect that. It makes sense.
But when you are working out of your own house or a small kiosk, where you aren’t paying a lot on expenses, charging very high profits is considered going astray.
What you should do is find out what your per-hour cost is and offer competitive prices accordingly. If you don’t know how to price your services, get help and figure it out.
You can use your POS software to track your weekly or monthly expenses. And then divide it with the number of hours your shop was open. It is important that you know exactly what your cost is. Only then will you be able to price your services correctly.
Usman Butt, the CEO of RepairDesk emphasizes the importance of knowing the cost of your business. Because if you know what your cost price comes up to, you know how much of a discount is acceptable.
For instance, if a customer comes in and insists on a $10 discount, you may not give it to them and lose a customer. But if you knew that $10 will just minimize your profits a little, you may consider giving the discount and keeping the customer. This way, you can earn from this customer for a long time to come by giving them a one-time $10 discount.
“You don’t want to lose a customer because he wanted $10 off and you could have given him an off and made that money from up-selling the customer, by getting a referral every one or two months, or getting a review. So I believe that if you’re a great technician, great, but you are in business to make money, and grow your business.”
So, knowing your per-hour expenses is crucial.
Likewise, make sure you’re not pricing yourself out of the industry. So, do your market research. Check what your competitors are charging. And see how you can offer competitive prices. Your end goal should be to work in the best interest of your customers.
Make sure you’re not priced too low either. Because that will bring down the prices of other cell phone repair shops, making it impossible to earn a living in the industry.
Timothy Phelps of the Techy franchise has devised a price guideline that they stick to. His franchises follow the same guidelines even when the prices increase or decrease. So, for a repair part that costs less than $50, the labor charged is $75. Likewise, if the part costs more than $50, a $100 labor is charged and so forth.
For Timothy, what’s important is the experience you give to your customer because you want to retain the customer for life. And you should do what you must to achieve that.
“It’s all about experience. When you give into these customers, it’s about the experience and you want to gain those customers. It’s all about customer value life. So, you want to do whatever it takes to obviously gain that customer. But you’re selling an experience, more than just a product. And so you have to understand that more than anything.”
So, be transparent with your customers about the repair process. Treat them like you care about them, like you know the agony their broken device is causing them. And they will keep on coming back to you.
Israel Quintal of AdCentral goes further into pricing and insists on a pricing model that reflects the demographic that you’re targeting. So, for instance, if your shop is close to a college and your target audience is college students, keeping your prices on the low side is probably a good idea. But if your shop is in an upscale area where you’re targeting an older, working demographic, you can charge higher prices.
Moreover, Israel designs his pricing around up-sells. He brings the profits to a minimum to lure the customer into his shop and then earns from up-sells. However, he says this pricing model requires active supervision to make sure the ticket average doesn’t fall too low. Because if it does, that means you’re going into loss.
“Now, when they come into your shop, our job is to up-sell them. So, we know what our ticket has to be in order for us to keep this model going. And this is an active monitoring, where if for some reason the ticket average goes below what it should be, then it’s a red alert. Something is not happening.”
You can also stock multiple qualities of the same item to cater to all your demographics out there and teach your employees to up-sell. For instance, there are some customers who do not care about the price, but rather the turnaround time. And then there are those who will go for the cheapest option irrespective of the quality.
For jobs like screen replacements, Israel suggests keeping different qualities of screens. So, when a customer walks in, you ask them a few questions to understand which demographic they fall in.
- Is the customer really concerned about the quality?
- Are they particularly concerned about the turnaround time?
- Are they price-conscious?
Once you’ve figured the above out, you offer them a screen replacement best suited to their persona.
Moreover, when you’re pricing your repairs really low, you should be prepared for the influx of orders. You must know how to handle that kind of growth. Because if you don’t have enough technicians to do the repairs, you lose out on the opportunity. So, make sure you have a POS software with an efficient ticketing system so you can create tickets speedily and you and your customer are updated on the status of the repair in real time.
Israel insists that pricing isn’t the end all game. It is a means to a strategy. For some cell phone repair shop owners, going really low on the prices won’t work. For others, it might work. Whatever you choose to do has to ultimately align with your goals.
Because there are cell phone repair shop owners who are happy with one shop and do not wish to expand. And there are those who want to increase their revenue exponentially. So, whatever goal you have in mind needs to compliment your pricing strategy.
“I think that price is not everything either. I mean, I think price is the means to strategy, right? But we cannot say that because you’re not cheap enough people won’t come. You can build an amazing brand. You would just know what your limitations are.”
So, pricing your repairs is a tricky business. However, the takeaway from Israel’s experience is that you need to define your goals and know your per-hour shop expense. These two factors should determine the price of your repairs.
Ahmed Abusharbain of UppLuck shares his experience from when he had a repair shop. He says a lot of repair shop owners price their repairs very high because they don’t have a lot of income and are desperate. And that’s one of the biggest mistakes you can make.
You want to retain customers, even at the cost of your own profits sometimes.
“I don’t think anybody wants to charge a lot for a small repair. But when you don’t have income, you’re desperate. You start making mistakes and that’s a big mistake, chasing customers away instead of the keeping them in the house. I’m speaking about my retail days. I would satisfy the customer, even if I made a little bit, just to make sure that he brings me more customers.”
We have 9 Commandments left that will show you the right way! So, hang in there and look out for Part 2! And in the meantime, check out how you can score a school district contract.