Computer Business, Need advise:D

[alex.morris09]

I am looking to start a small business building and selling computers. I understand it is quite risky, and I am not going to make that much profit, but I have a few questions that I would like to know. I am only 15, so there will be some obstacles. I am capable of building these computers, as I have built my own in the past, and I am constantly building them and repairing them for freinds and family.

The gaming rig I am planning to sell is listed below with part prices from SCAN.co.uk, It was part of a spreadsheet so it is quite messy on here.

Intel Core i7 2.66Ghz 920 £217.17
Gigabyte GA-EX58 £134.17
Corsair 6GB DDR3 XMS3 £55.63
2x Gigabyte GTX 285 in Sli £541.16
1TB Samsung £64.29
Vista Home Premium x64 OEM £73.15
850w CoolerMaster M850 £108.40
2x Pioneer DVR DVD-RW £32.58
CoolerMaster Cosmos S £132.89
Crysis Warhead bundled £14.72
Delivery SCAN £15.24

Subtotal £1,389.40
VAT (15&#37 £208.41
Total Cost £1,597.81
Total Price £1,799.99
Total Charges* £85.87
Total Profit £116.31

*Charges include ebay final price charges, and paypal charges.

The total markup is 13%, and then I rounded it up to the nearest hundred (£1799.99), but I am tempted to change the price to £1849, as the profit is not that great. But £1849 seems so much more. Is this a good deal?

Also a quick question if you could answer it, would the PSU be sufficient for the GPU's? I am presuming they would be. But if not please leave e a quick comment.

For delivery I am planning on charging £19.99 and sending it via UPS 48h, but I would say a week, as I need time to recieve parts and build the computer. I was thinking about shipping the computer in the cosmos original case box, with extra Polythene for protection, and a seperate box with all hardware instruction booklets, and driver CD's for recovery. Would the computer be safe this way. I am sure some of you have received computers in the post. How did they arrive?

I am going to use my parents PayPal as it would be a large risk getting money frozen by them because I am under 18.

For support options I am going to offer 14 day return, if they pay postage back. And 6 months eMail support. I cannot offer 3 year warranties like Dell and such, and I think this is where the risk lies.

The final one, which I don't know if any of you will know about is VAT, I have decided on buying the parts from SCAN inc VAT, does that mean I could just sell them on eBay willy nilly without having to worry about VAT, or would I have to register the business and buy them exc VAT and sell them inc VAT and give it back to the Tax Man? Not something I know about, and that last paragraph probably didnt make any sense but it was worth asking.

Anyway I hope some of you can help, obviously I don't expect one person to know all the answers, but just one of them would help.

Any advise welcome

Cheers Alex

[Pingu2003]

1st of all whats a Gigabyte GTX 285x2 (i take you mean 2 x gtx 285)

2nd of all selling full high end systems on ebay or anywhere else is going to be difficult, people spending that sort of money want parts they chose, not something someone else chose for them, thats one reason why companies sell systems cheaper than buying in parts.

3rd its worth going down to some of these computer shops and seeing if you can get a trade account
(can be fairly easy even if your peeps have a non related business), you'll get maybe 5% - 10% discount

4th 14 day warranty is not going to cut it, if someone is going to spend over £1500 on a new system they would want at least 1 year warranty (which you should be able to pass on as you will still have the warranty on the parts)

5th you mentioned dell, now and again they have top spec i7 systems for approx £600-£800 with a nice 20-22" screen, even adding a top end graphics card or 2 will save the customer a good £500+ over your spec

6th how have you calculated the paypal / ebay fees?

i think £1800 of funds incurs £61.40 of paypal fees
(http://www.rolbe.com/ppcalc.htm)

not sure about the ebay fees

7th if someone wants to spend a big wad on a pc I don't think they would want to restrict to the pc parts your offering, e.g. they might not like the case, prefer a different psu or graphics card, or might want vista 64

8th unless things have changed at scan, I wouldn't hold hopes on receiving everything within a week, there can be delays in receiving parts which will annoy your customers

9th about pnp, make sure that you take some insurance but then again insuring to £1500 can cost a lot

10th sending pre built systems can be a problem, a simple sata cable might just pop out in transit and the other end probably wont be too happy with you asking them to open up, also ive had a system sent to me with the cpu heatsink still in place, but during transit it dislodged and destroyed the whole system in the process

11... well im going now but im sure others can fill me in

[Splash]

You want my advice? Forget about it. The big box shifters have the market sewn up, and you can't compete with their economy of scale. Let's say for instance over a year you manage to sell 30 PCs - as the retailer (effectively) the warranty for those machines is with you. Granted, you'd have the warranty with the vendor (Scan, in this case) that you bought the parts from, but if someone returns a machine to you they're going to want the faulty parts replaced there and then, not within the period that it might take for you to test, deduce the faulty part, return it to Scan, have them test it and possibly have to send to the manufacturer for a second opinion and then eventually send the replacement, you to fit it and test then return to the customer. Nobody in their right mind will settle for that, so you'd need to keep a stock of spare parts to cover this.

You're not the first to think about this, and I'm sure you won't be the last but for your own sake I'd strongly recommend you reconsider.

[alex.morris09]

1st of all whats a Gigabyte GTX 285x2 (i take you mean 2 x gtx 285)

2nd of all selling full high end systems on ebay or anywhere else is going to be difficult, people spending that sort of money want parts they chose, not something someone else chose for them, thats one reason why companies sell systems cheaper than buying in parts.

3rd its worth going down to some of these computer shops and seeing if you can get a trade account
(can be fairly easy even if your peeps have a non related business), you'll get maybe 5% - 10% discount

4th 14 day warranty is not going to cut it, if someone is going to spend over £1500 on a new system they would want at least 1 year warranty (which you should be able to pass on as you will still have the warranty on the parts)

5th you mentioned dell, now and again they have top spec i7 systems for approx £600-£800 with a nice 20-22" screen, even adding a top end graphics card or 2 will save the customer a good £500+ over your spec

6th how have you calculated the paypal / ebay fees?

i think £1800 of funds incurs £61.40 of paypal fees


not sure about the ebay fees

7th if someone wants to spend a big wad on a pc I don't think they would want to restrict to the pc parts your offering, e.g. they might not like the case, prefer a different psu or graphics card, or might want vista 64

8th unless things have changed at scan, I wouldn't hold hopes on receiving everything within a week, there can be delays in receiving parts which will annoy your customers

9th about pnp, make sure that you take some insurance but then again insuring to £1500 can cost a lot

10th sending pre built systems can be a problem, a simple sata cable might just pop out in transit and the other end probably wont be too happy with you asking them to open up, also ive had a system sent to me with the cpu heatsink still in place, but during transit it dislodged and destroyed the whole system in the process

11... well im going now but im sure others can fill me in

I agree with virtually all of your points, and mainly the one on the warrenty, I forgot about the parts warrenty, but would that mean I cannot buy OEM CPU's, and I would have to buy the normal ones, they dont costs that much more I suppose. The 14 days was return for refund. And yes I could provide a year parts warranty.

Also yes, your right about the charges, and PayPal charge you £61.40, but ebay charge you £12.67 on the first £599, and then 1% on the remaining balance bringing it up to £85.87. But i didnt know about that calculator, looks very useful

As you said about Dell, I tried to replicate the option, and the closest I can get is an XPS for £1549 with a single GTX 285, and 4GB DDR2 Ram and a Q94000 CPU, No moniter.. But this does include a mouse + keyboard with 1 year in home repairs

About SCAN, I have made sure all the parts I have chosen are in stock, and would be delivered on the day I choose, If this changed I would notify the buyer, of a delay, or change the part for an equivilent or better, I am sure they would be happy with that?.. I would ask them first though.

I will probably provide an option for the customer to change any component they want, and I will provide them with a quote on this

And yes sorry thanks for pointing out about the GPU, it is vista x64 as-well, I need to change that

Thanks for your help

Alex

[alex.morris09]

You want my advice? Forget about it. The big box shifters have the market sewn up, and you can't compete with their economy of scale. Let's say for instance over a year you manage to sell 30 PCs - as the retailer (effectively) the warranty for those machines is with you. Granted, you'd have the warranty with the vendor (Scan, in this case) that you bought the parts from, but if someone returns a machine to you they're going to want the faulty parts replaced there and then, not within the period that it might take for you to test, deduce the faulty part, return it to Scan, have them test it and possibly have to send to the manufacturer for a second opinion and then eventually send the replacement, you to fit it and test then return to the customer. Nobody in their right mind will settle for that, so you'd need to keep a stock of spare parts to cover this.

You're not the first to think about this, and I'm sure you won't be the last but for your own sake I'd strongly recommend you reconsider.

Its a big commitment I understand and at the moment its only and Idea

If I sold 30 PC's I would have £3000 in the bank providing I don't spend much of it, which I am not planning on doing, and I would be able to order the part, and put it in within about 2-3 days. Then send the old part off and wait for the replacement, and use that in one of the PC's I sell afterwards.

Also I am not hoping to sell that many, 30 would be more than enough. I am in it for the money granted. But I enjoy building computers too, I would be happy to do this with no profit what so ever. But then I wouldn't be able to keep spare parts. But a 13% markup is virtually nothing.

Anyway thanks for the advise

Alex

[PeterStoba]

I have tried this, and it doesn't work. Nobody in their right mind will buy that computer for £1850 anyway, never mind on ebay.The hassle you will have won't make it worth while.

my advice is quit whilst your ahead before you loose a serious amount of money

[alex.morris09]

I have tried this, and it doesn't work. Nobody in their right mind will buy that computer for £1850 anyway, never mind on ebay.The hassle you will have won't make it worth while.

my advice is quit whilst your ahead before you loose a serious amount of money

Where did you go wrong??

What happened?

[Pingu2003]

here are some examples of dells "deals" that were available recently

Base Intel® Core i7 Processor 920 (2.66GHz, 8MB cache, 4.8GT/sec)
Microsoft Operating System Genuine Windows Vista® Home Premium SP1 64Bit - English
Memory 3072MB (3x1024) 1067MHz DDR3 Tri Channel
Keyboard Dell Multimedia USB Keyboard Black - UK
Monitor 23in S2309W WIDESCREEN UK Black (1920 x 1080)
Video Card 256MB ATI® Radeon HD 3650 graphics card
Hard Drive 500GB Serial ATA (7200RPM) Hard Drive
Floppy Drives and Additional Storage Devices 19-in-1 Media Card Reader
Mouse Dell Laser Mouse USB (6 buttons scroll) Black
Optical Devices 16X DVD+/- RW Optical Drive (DVD & CD read and write)
Sound Cards Integrated HDA 7.1 Dolby Digital Audio
Enhanced Service Packs 2Yr XPS Premium Warranty Support - Priority Call In and Onsite Support

for £664 delivered

PROCESSOR Intel® Core i7 Processor 920 (2.66GHz, 8MB cache, 4.8GT/sec) edit
OPERATING SYSTEM Genuine Windows Vista® Home Premium SP1 64Bit - English edit
HARDWARE SUPPORT 1Yr XPS Premium Warranty Support - Priority Call In and Onsite Support edit
MICROSOFT APPLICATION SOFTWARE Microsoft® Works 9 - English edit
MONITOR Display Not Included edit
MEMORY 4096MB (4x1024) 1067MHz DDR3 Tri Channel edit
HARD DRIVE 750GB Serial ATA (7200RPM) Hard Drive edit
GRAPHICS CARD 512MB ATI® Radeon® 4850 Graphics card edit
OPTICAL DRIVE 16X DVD+/- RW Optical Drive (DVD & CD read and write) edit
KEYBOARD Dell Multimedia USB Keyboard Black - UK edit
MOUSE Dell Laser Mouse USB (6 buttons scroll) Black edit
Accessories
SOUND SOFTWARE Integrated HDA 7.1 Dolby Digital Audio edit
SPEAKERS No Speakers (Speakers are required to hear audio from your system) edit
FLOPPY/MEDIA DRIVES 19-in-1 Media Card Reader edit
Services & Software
ACCIDENTAL DAMAGE SUPPORT No Accidental Damage Support edit
PROTECT YOUR NEW PC No Security/Anti-Virus Protection - English edit
Also included with your system
Shipping Documents English Documentation with UK/IRL Power Cord
Gedis Bundle Reference D01SX04
Order Information XPS Desktop 430 Order - UK
Standard Warranty 1Yr XPS Premium Warranty Support - Priority Call In and Onsite Support
Dell System Media Kit Resource DVD - (Diagnostics & Drivers)

£620 delivered

obviously not the same spec but at those prices whos going to spend £1800 on yours over these?

if i had a choice....

[alex.morris09]

here are some examples of dells "deals" that were available recently



for £664 delivered




£620 delivered

obviously not the same spec but at those prices whos going to spend £1800 on yours over these?

if i had a choice....

Very good point.

After you add the £450 or so it would bring it up too just over £1000 though

Where did you find these deals?

Thanks
Alex

[TAKTAK]

Where did you go wrong??

What happened?

He didn't go wrong, that's the problem...

It is impossible to start up a decent company that makes money selling prebuilds in the current market, especially as SCAN are starting to offer insurance on building your own... Plus the fact that the prebuild marked has started to falter, and custom builds are gaining pace...

There is noway you can compete with all/any of the heavy hitters or any of the mini leagues, Vadim went down (yes they did do VERY bespoke systems), Beast struggled, Apex went down () and a hell of a load more, and they had been going for years (most of them ) and had money in the bank...

Every single little problem no matter how minor will come back to you, even if it is installing a program, all of your time will be taken up solving niggles, and you won't have time to build more, then you will stop and still have people hassling you...

My advise, is don't even start, it is a road destined for failure, especially at this current moment in time, there are no end of people that try, and so far, i haven't seen one of them succeed, even though some have want very good attempts...

Seriously, for your own sake, don't do it...

[PeterStoba]

Right, first of all, you're aiming too high, look on ebay, how many computers do you see on there in your price range? Not many. Now look how many computers there are for around £400-£600. Harder competition at the top, for the same price they can get more from somebody else, as they are a proper business using ebay to sell computers with business accounts so they pay less fees. They will choose the other company over a man on ebay with a much lower feedback score.

You also have to take into account, if you do list an item for £1800, the fees are still there if you don't sell it, meaning you could just keep relisting it, not selling, and still paying.

I didn't really "go wrong", I done everything right. I set up a website, had a large and customisable product range, with low prices and profits to draw customers in. I had adverts in 3 different computer magazines, totalling around £550. I had alot of enquires from people, but you can't match the prices for the larger companies such as dell, and even the likes of wired2fire and pc specialist. I beat the latter on price, but they offered longer warranties, better customer support and they could get the system to you quicker, as they have parts in stock, and a much bigger workforce.

I know this varies slightly from an ebay website, but I still had fees to encounter, and still had to pay VAT. I have also tried ebay, the prices that other people offer are much better that what you can, as they are VAT registered. It's really not worth the time, just save your money.

[manwithnoname]

Another don't bother. Think about if a transaction goes wrong, can you afford the £1600 in kit sitting around until the the next buyer turns up? I don't use ebay but I'm lead to believe that honest people and dishonest people use the service, can you afford to 'lose' a system to fraud? Check UPS will insure the system how soon will you get your money back if they lose it.

I buy bits of PC's and fit them myself because I enjoy messing around with them (well everything but windows). If I didn't like messing about I could save myself money by get a Dell or another system.

[alex.morris09]

Intel® Core™ i7 Processor 920 (2.66GHz, 8MB cache, 4.8GT/sec)
Genuine Windows Vista® Home Premium SP1 64Bit - English
1Yr Premium Warranty Support
Microsoft® Works 9 - English
Display Not Included
6144MB (6x1024) 1067MHz DDR3 Tri Channel
1TB Serial ATA (7200RPM) Hard Drive
512MB ATI® Radeon® 4850 Graphics card
16X DVD+/- RW Optical Drive (DVD & CD read and write)
Dell Multimedia USB Keyboard Black - UK
Dell Laser Mouse USB (6 buttons scroll) Black
1 Year Base Warrenty

That comes to £913, and the GPU included that costs around £110inc VAT, so If I add the £500 to that It bring the price to £1413, and it is a rather mediocre case compared to the one I am offering, and If you add around £100 to that, it gets it up to about £1500.

Okay, I cannot compete with unless I got a trade account, and got discount on my parts, and I found a way of receiving money without hefty charges from PayPal + eBay.

Dell are a big business, and it would be hard to compete with and I might be better of starting with systems around the £700 - £800 price range, to get me started.

[PeterStoba]

Something else I missed, manwithnoname reminded me. Ebay users aren't all honest, whats to say you ship the system to them and they say it doesn't work, and manage to get a refund? What happens if it is broken in transit, takes a long time to get the money back from a claim, if the claim is accepted, and even then, shipping fees for a £1800 items will be atleast £100 if you want it insured (DHL anyway..)

Okay, I cannot compete with unless I got a trade account, and got discount on my parts, and I found a way of receiving money without hefty charges from PayPal + eBay.

Dell are a big business, and it would be hard to compete with and I might be better of starting with systems around the £700 - £800 price range, to get me started.

A business account on ebay would help, but it's still got a monthly cost, payable if you sell nothing. A way of receiving money through ebay without using paypal, not going to happen, it's against the T&C, and people will be reluctant to bank transfer £1800 with no protection.

A trade account with an e-tailer will only give you a 1-2% discount from experience, you need to apply for one, which is difficult getting accepted, they want a regular supply of parts.

£700-£800 is still too high for what you're aiming for, you will struggle.

[Pingu2003]

Very good point.

After you add the £450 or so it would bring it up too just over £100 though Where do I find these deals?

Thanks
Alex

what does that mean??? lol

[alex.morris09]

what does that mean??? lol

Sorry, I dont even know myself, I have changed it now.
Alex