pricingSo, I’m brewing a new business idea currently, quite simple - local business IT maintenance contracts.
Where I’m not sure is how to position myself price-wise. How much is reasonable? I’m thinking about a pricing structure as follows: (for SMBs)
For that the company gets so many “support tokens” to spend per month (not rolling), so for example a simple email “how do I” might be half a token. A remote session might be 1 token, an on-site say 3 tokens.
I would also throw in some incentives like annual health-checks etc. Could this structure work?
Am I too expensive, too cheap? - obviously my contract would exclude things like disaster recovery, viral attacks, acts of god etc (so i dont get lumbered with a massive tidy-up jobs lasting weeks) and of course I would set out an SLA. To make this pay, I would need something like 8-10 small-ish companies on board: 5-10 workstations each, 1-2 servers.
Some food for thought that I answered on another question: https://startups.stackexchange.com/questions/8613/process-for-implementing-support-contracts/8615#8615
Don’t charge by the task or you’ll drive yourself nuts - create a fixed hourly charge and stick to it - if its a small job and the customer calls you, then its their choice to spend the money. If you don’t value your time, don’t expect someone else to.
You need to be clear on what is and is not included. For example, you ask if those rates are too cheap yet its not clear if you are going to turn up on site. If you are, have you included your travel time? Those rates might be on the low end for London and the high end in other areas. Are you in a high catchment area (many businesses that you think that could use your services, or no?).
You need to research your local market - if you cannot find competitors, then figure out how much you’ll need to be profitable if you do 40 hours a month. Over the following months, fine tune your rate. Without prejudice and with respect, it won’t be easy - if you think 8-10 companies are each going to provide you ten hours work a week, I would question on how they survived without you.
Small companies are unlikely to generate enough problems to pay your rent and big companies are likely to have their own IT. It’s not going to be easy but I’m not saying it will be impossible. Just half your expectations, assume the worst so you can be excited when you are wrong =)
Oh! And liability insurance - if you have a clients machine in your hands and you screw up accidently, don’t expect them to pay for your mistakes. If someone trips on your toolbox while you onsite, that is your liablity. Its not expensive (I have liability insurance for just over 300GBP that covers me for non-physical work (meaning I cannot lift anything, but I can dance my fingers on the keyboards). Hiscox Insurance and Direct Line are just two that I suggest you obtain quotes from).
Read the points I raised in my other post linked to above and… Best of luck!
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