You can increase your revenues and margins considerably through value-added services commonly associated with phone and computer repairs, like the sale of accessories.
The "Global Electronic Equipment Repair Service Market" was valued at $93.97 billion in 2020, and the valuation is expected to increase to $104.57 billion in 2021 and $181.72 billion by 2026.
This seems reasonable because there is an increasing need for repair services, especially personal devices. However, we know from experience that the margins on repair can be thin.
Apart from making repairs more profitable, you should be trying to diversify your revenue streams to supplement your repair business.
It might seem easy when you first consider it. For example, you can sell accessories or device protection plans (third-party warranty). Even so, it's best to take the time to understand your customers and the required investments.
If you primarily do screen replacements, sure screen protectors and phone cases make sense. But not all repair shops can find value in this, while others would be limiting their revenue by not offering more. A larger and more varied client base would mean opportunities to add new revenue streams. So tailor services to your business.
• Who do you want as customers? Put together services and products that add value to existing customers. You could also keep track of what customers have asked you for.
• How convenient is it to offer additional services with existing assets? You need to evaluate how much of your existing infrastructure can be reused in the short term.
• How much will I need to invest immediately?
• How will the new services benefit the existing business?
Sell Accessories in Store
Upselling accessories should be the most straightforward option for repair shops. There are a few reasons why.
- One, these are low-value items that you can offer as add-ons without the customer worrying about the price.
- Two, the margins can be pretty high.
- Three, you can set it up to require minimal upfront investment and take up relatively less space at retail locations.
Accessories for mobile phones, in particular, have a massive demand. The global market for cell phone accessories was $81.4 billion in 2019 and is expected to grow to $152 billion by 2029. There's also a direct connection between repairs and accessories. Getting a broken screen replaced is excellent motivation to buy a screen protector.
Repairs might be your primary expertise, but accessories sales could become your most profitable business.
There are, of course, some things to keep in mind. The most obvious one is inventory. You need to find a trusted distributor, and the idea would be to minimize risk.
For example, your parts or device supplier might have the ability to provide you with the accessories you want. Staying with the same supplier offers the opportunity to benefit from the trust you've already established because of the existing business relationship.
Then, there's your investment. The types of accessories will depend on how much you're willing to invest. Offering screen protectors, phone cases, cables, or chargers will make sense if you want to start small.
Always choose accessories for the most common devices in the market. iPhone accessories are more likely to be in demand. You can expand as the cash flow increases.
You should also plan to reinvest the sales revenue into inventory to keep growing. Of course, if you can cover the risk, the best source of credit is a business loan. Banks offer competitive rates for small and medium businesses, depending on where you are.
One way to calculate if you can afford a business loan is to estimate the margins you expect from accessory sales. Reach out to wholesale distributors and other repair businesses to get an accurate estimate.
Remember, you work in a catchment area. Numbers from a business even across state lines will skew your calculations. Consider all costs, not just what you're paying wholesalers.
If the margins can cover the loan's interest rate, you're good to go. Slowly, you'll benefit from economies of scale, and your margins will grow.
Online shopping is already taking revenue away from retail locations. So timing your upsell is important. It's not a high-value item. Customers will feel the need to buy something if you provide them with options. Bundle items together and offer a discount.
Plan it such that it is part of the repair workflow. Technicians are often poor a sales. But a cost estimate email is an excellent opportunity to offer bundled options.
So what do you do? You use a tool that can automate it. If you're sending an email, have the other options show up automatically. If it's at the time of invoicing, give your team the right software tool to offer and add items with minimal friction.
Most importantly, ensure you provide the sort of repair service experience that puts customers in the right frame of mind. If they're unhappy with the experience, an attempt to upsell would only be an annoyance.
Accessories to Sell
Your shelf space doesn’t have to be filled with just phone accessories either. There are plenty of accessories you can sell at your phone or computer repair business. Here is a list to get you started:
- Protective Cases
- Laptop Bags
The basic setup is the same, whether you sell big-ticket ticket electronic items, such as phones and laptops, or only accessories. You do need to consider a few key factors.
Key Considerations When Selling Online
First, do you have the time and people needed to pack and ship orders from online sales? Ensure that you have the systems in place to make the online sales portion of your business work.
You also want to consider what types of items you will sell online. Will these items be large, high-value products that are more difficult to ship and likely sell at a slower rate? Or, conversely, will you only sell smaller accessories such as phone cases, flash drives, connectivity cables, etc.?
Choosing the Right eCommerce Model
1. Your Website – The most obvious solution is to add eCommerce functionality to your repair shop website. It can be set up using any number of eCommerce platforms, but the most popular one is probably Shopify. Having control of the platform allows for higher margins because you don't owe anyone a percentage of your revenue.
It makes sense for SMBs and SMEs who have a customer base willing to come to you for their requirements. Otherwise, competing for online sales with the likes of Amazon and eBay might require significant investment into marketing efforts.
2. Dropshipping – You don't need to be a repair shop to do this, and you don't keep the products in stock. Instead, you purchase products from a third-party supplier who ships the items directly to the customer.
The most significant difference between dropshipping and regular retail is that the seller doesn’t stock or own the inventory. Instead, you use a wholesaler or manufacturer willing to fulfill orders and ship devices directly to customers.
Anyone can set up a web store and fulfill orders via dropshipping. Repair shops might be better placed to do it because you already know what products are most likely to be sold.
On the flip side, you're reliant on the supplier because you have no stock.
3. Sell on Amazon – You also have the option of setting up an Amazon store for your business. This gets you off the ground faster, using their infrastructure and existing customer base. Finding the time to prep and ship items to customers may be something that's just too expensive for you right now.
What you need to do is consider is the Fulfillment by Amazon (FBA) program. It's Amazon's version of dropshipping. In this eCommerce setup, you would send your inventory to Amazon, storing it in their warehouse. When an item is bought, they pick, pack, and ship it on your behalf. The downside is that Amazon takes a fee for this service, which reduces your margins. But the savings on setting up an eCommerce store and storage might make up for it.
Tax and Legal Implications
Selling online might have different tax implications for your repair business. In the US, most states require that you hold a retail certificate to collect and remit sales tax for brick-and-mortar sales.
When selling online, your customers could potentially be from all 50 states. The sales tax laws vary by state. Some states have no sales tax, but most states require that you collect and remit sales tax when you make online sales to customers in that state. This means obtaining a tax account for each state that has this requirement.
Extended Warranties and Protection Plans
When you perform repairs on electronics, you should offer customers an extended warranty or protection plan.
The extended warranty is an additional charge that brings immediate cash flow when a customer purchases the plan. Electronic products will always have a certain rate of failure. So the warranty will be used occasionally by a customer. More often than not, though, the warranty will never end up being used, ensuring you increase profits for your business.
Even though most customers will never need to take advantage of the warranty, it is still helpful. An extended warranty is a win-win for both your business and the customer.
Trade-Ins and Buybacks
Another source of revenue for your repair shop is a trade-in or buyback program. You pay a customer a fee to buy their broken or old device or accept it as a trade-in towards a new device. You then refurbish it and resell it for a profit.
Most people do not have the time or know-how to sell their old devices. Broken devices are often stored away and eventually end up as electronic waste. Trade-ins are a more environment-friendly option.
You could refurbish the device and sell a working device, or you can work with larger businesses that buy repairable devices in bulk.
Offer Managed IT Services
Repair businesses can offer excellent external IT support, especially for SMBs (small and medium-sized businesses). Your school district or local government offices probably don't have the budget for a full-time IT support team. The same is true for local small and medium businesses.
It would be easier for them to hire an external team to do everything from servicing their devices to setting up and maintaining wireless networks and any software that requires specialized skills. For you and most technicians, it would be a relatively easy task.
So why not open up an additional source of revenue using the same skills.
Become an Authorized Reseller
Apple, for example, has a program where you can apply to become an authorized reseller of their products. Successful repair business management is all about making the right decisions in all areas, sales included. If you can become authorized to sell Apple products, you are guaranteeing yourself a steady stream of customers.
These are high-value items, and you'll need to spend significant time and investment.
Apple is only one electronics brand that you can look to carry. Many PC brands are doing great things with laptop technology these days, and carrying any of the major brands would be a massive boost to your business. Dell, for instance, has rebounded with its laptop offerings over the past several years and offers an authorized reseller program.
Offering special and custom services is another way to get a leg up on the competition and boost revenue.
Custom Gaming PCs
Video gaming is a massive industry right now. Though the console war is waging between the Xbox and PlayStation, many gamers prefer desktops. Pre-built systems can often be quite expensive, and the chances of one of these systems having precisely the components that the customer wants are slim.
This opens for you the opportunity to build custom gaming PCs for your customers. Get a list of their requirements, allow them to set their budget, then you can use your expertise to make recommendations on CPUs, GPUs, RAM, and any other components, which you will then order and assemble.
Customers can avoid the OEM markup on a pre-built system by ordering the components individually. Instead, they pay a fee to you for building their dream gaming machine.
Few repair shows offer repairs that involve soldering components. Even minor damage to a component usually means the whole part or circuit board has to be replaced. That's how device manufacturers prefer it. Customers often don't want to pay for the whole part when it's cheaper for a skilled technician to repair the damage by replacing small components on the board.
An example is damaged charging ports, a common problem in smartphones. Charging ports are usually soldered onto the main circuit board. A technician who's got the skills to replace the port can save customers $100 or more.
Personal devices like phones and laptops now reflect people's style and personal brand. In addition, you can market to corporate clients who want branded swag. Keep in mind that the machine could cost you as much as $2500.
The electronics repair business has thin margins, but there are plenty of opportunities to supplement this through diversified revenue streams. Custom offerings such as gaming PC builds fulfill a specific niche. Selling accessories and electronics both in-store and online will add to your brand. And using your expertise to offer managed IT services is an excellent way to develop steady recurring revenue.