tech-company, united-states, legal, pricing, resaleI am 15, and I’m looking to start a company with some friends. We have established we want to build computers and we know how.
Do we have to follow the list price for parts that we sell? Or can we pick any pricing we want? For example, can I sell an i7 processor at $47? Will I have to pay Intel money? Or get a license?
Yes, you can pick any price you want. The minute Intel sells an i7, it no longer controls what happens to that second-hand i7 down the road. It can be resold at will and at any price point by its subsequent owners, without any considerations related towards licensing or such.
There are periodic jabs at this related to intellectual property in a way or another. For instance:
http://arstechnica.com/tech-policy/2014/11/how-an-ebay-bookseller-defeated-a-publishing-giant-at-the-supreme-court/
But as you can see in the above, even the Supreme court upheld the right to resell (in this case, to the US from a different country).
There also are cases where you currently cannot resell. Namely, when it’s tied to a service. For instance, it’s impractical to resell an aBook or a song you bought on iTunes or Amazon. But even in those cases, we may eventually get there.
I don’t know of any kind of regulation (on really free countries!) that tell you for how much you can or cannot sell something that belongs to you. There are a few restrictions around the world (usually on desperate countries that don’t do their macroeconomic homework) where they limit the price to a maximum for some, or even all, goods.
With that exceptions, you can sell anything you want at any price you want, given that you pay your taxes on it, if they are applicable. If you want some answer specific to your country/region, edit your question with that information and you might receive some narrower answer.
Do note that if you buy a physical product (like a processor), then it belongs to you. But if you only have a license to use the product (the case with software), then something other may happen entirely. With a software, being an End Use License Agreement, there might be restrictions on what you can or cannot do with the software, i.e. you might be forbidden to resell it. That is really very region-specific and not as ubiquitous as the hardware thing.
You are free to set your prices. The problem is you have to be aware that your customers can very easily compare prices with your competitors. So if you have priced a unit at $400 and your competitor is selling the same thing for $300. They they may go to them. What you can do if you want to charge a higher price than your competition is add value adding services to your product. For instance, you offer a parts replacement warranty or a free tech support or free shipping or you have better customer service. If you list these things with the price, the customer can see why you are charging a higher price. Pick your value package carefully because the cost of maintaining them run over a period of time and should be higher than your profits. Keep your prices and package competitive.
Some things to keep in mind when reselling
You can get bulk pricing. If you talk to a big vendor and are ordering big quantity, you can get a better price. Remember the difference between what the customer pays you for it and what you paid to your vendor is your profit. The less you can buy it at and the higher you can sell it at, the higher your profit. Always ask for a discount and mention that you may become a long term buyer if you get good rates.
Negotiate warranty. See if your vendor honors the warranty on the parts you buy. That way if a customer returns a part under warranty, you can forward it to your vendor to get a free replacement. Otherwise, you may have to bear the cost of this yourself
Negotiate payment terms if possible. This may not be easily when you are small but there is little harm in asking. If you can get a credit period from your vendor (30 days, 60 days, 90 days etc) before you have to pay your bill, you may get paid by the customer by then and you can have money left for other things such as advertising.
Have a good brand and stand by the brand values. Consistency creates a reputation and that having a brand values helps you be consistent.
You do not require a license from Intel or your parts. BUT some big companies have a “authorized dealer or distributor” programs. For instance here is a list of nVidia’s authorized dealers - http://www.nvidia.com/object/pf_distributors.html. Being an authorized dealer gets you some benefits from the company. Discounts, warranty, first crack at new products, information and updates about products etc. Some of these programs cost money some don’t speak to the company to find out. Being an authorized distributor gives you some credibility with your customers, but you don’t have to be one to resell.
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