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Servicing vs. Appliance sales. My worthless opinions and random rants.

Lorainfurniture

1,468 views

This part is a little bit more "food for thought" than sound advice.    I have been a shop owner for 15 years, and for the first 13ish years the only type of "service calls" I would do is warranty repairs on the units that I sold.  Officially, I can say that I have 15 years experience fixing appliances, but the truth is, I have been serious about service work for about 2 years.  I really put my try-hard pants on about a year ago.   Why am I telling you this?  Its because you need to understand that I have bias towards being a shop owner.  Its essentially all I know.  

At some point I got a little bored playing shop owner and decided to build up the service end of things.  I bought a car magnet, a few pairs of dickies, shubee's. Now Im a professional, right?  

I have a vivid memory of walking in to my first VMW washer and having absolutely no idea what I was looking at.  I told myself never again.  I finally stumbled upon this little gem of a website and finally started learning something.  Now I like to think I am proficient at most appliances, and what very few pose a challenge I can easily work through it with the help of this site, and my ability to somewhat read a wiring diagram.

Pro tip: If you can't read a wiring diagram yet, stop reading this and start learning how to read a wiring diagram.  It really is that important.  Go on, shoo.  

 

So now I find myself a couple of years later moderately busy doing service work.  I do about 6 calls per day, one or two of them are warranty service from my store, 4 are cod.  Out of the 4, maybe one or 2 will be a return trip (have to order parts).  At the end of the day, I usually walk home with 2-3 calls complete, cash in hand.  My average ticket is about $225, with my net profit being around $150 ish.   Somedays I make $1200, other days I make $0.  this is the nature of the business.  So by my very, very rough calculations, I make roughly $1000-2000 per week doing service.  Its a decent living.   If I wasn't burdened with my own "warranty" work from my store, I could do better .  I am also kind of lazy, in some crazy hard-working sort of way.  I take a lot of breaks.  Hunt for Pokemon? 

Today I made 2 trip charges at $60 each.   Yesterday I pulled in $900. 

 

Doing service work is very appealing in the fact that I get to drive a lot ( I drive a Mercedes as a work vehicle), I make CASH, and best of all,  I can essentially run this entire shin dig out of my car, and cell phone.  No rent, employees, advertising.  Truth is, as a one man show, you don't really need anything.  Just a phone number and a good reputation.  Workers comp is optional, you can have some minimal bullshit insurance policy. You can make a really respectable living with essentially no overhead.  No bullshit. No drama.  Other perks include: Days off, go home for lunch, working in nice, air conditioned homes, and more.  

 

Service work drawbacks: You simply can not work an 8 hour day.  Sure, you can do service calls for 8 hours, but what about scheduling? ordering parts? Blogging on Appliantology at 11 o'clock at night?  Appliance repair requires you to be "all in".  you have to keep up with the service bulletins, the ever fucking changing way of how a washer washes clothes.   At the end of the day (week), you worked 40 hours, but in your mind it was more like 70.   In case you were wondering $2000 divided by 70 is $28.50 per hour.   Sure, you just pinched $200 profit off of your last job, but really, how much time did you actually spend on that call?  Initial call, scheduling call, model research, pregame diagnosis, executing the repair, driving to and from the job, follow up call?  Thats a lot of time.  And when you take that time and divide it on your NET profit, its not as lucrative as you would think.  

Number one drawback of being a servicer: You don't work, you don't get paid.  This is a serious problem for me as I really enjoy NOT WORKING.  

 

This is the part where I tell you you should be a shop owner, sell used appliances, make millions, right?  Not exactly.   Owning a small business is fucking hard.  70 hours a week is an easy week.  I wake up in the morning and I'm thinking about my store, and I'm going to sleep thinking about my store.  Dreaming about one's business is somewhat normal as well.   A retail store becomes somewhat of a prison in the sense that someone MUST be there when you are open.  That person for the first many years is likely YOU.  No lunch breaks, no shit breaks (unless you are some record setting speed shitter), you must answer the phone by the third ring.  You must be pleasant, ALL THE TIME.  You must be present ALL. THE. TIME.  Your duties include: Cleaning appliances, fixing, ordering parts, loading delivery truck, calling deliveries and scheduling, taking service calls, scheduling replacements.  Don't for get to pay your sales tax in time, they only send you a reminder AFTER its late, and penalty is assessed.  Pay lights, gas, phone, (don't forget to renew the contract annually) insurance, calculate hours and wages.  Deal with the pleasant customers, deal with the asshole customers.  Deal with the stinky customers, the ANGRY customers.  You essentially have to do it all.  Not essentially, you really have to do it all. Oh, and the delivery guys lost their drill.  Make sure you pick one up on the way home. 

It gets easier.  about 7 years in to it, I got rid of my partner, ( this should be another blog on how BAD it is to have a partner, or at least, the wrong partner) and things started to get easier.  I started making more money.  I found out about this wonderful feature vendors offer called AUTOPAY.  I started making more money.  I embraced Square software, started delegating more work to employees.  I started making more money.  Most of the day to day operations become automatic.  Not like it handles itself, but you do it automatically.  

Today My store made $1400, +$480 on the Ebay store.  yesterday was $580 + $450.  Some days I lose money, other days I'm too busy counting it. 

By year 11 or 12 I finally started to reap the fruits of my labor.  I was making very good money, and not working very hard at all.  It was shortly after that brief stint of boredom that I decided to become a servicer.  

 

I have taken both professions seriously at this point and I have the following observations:  

1. Doing service work will put cash in your pocket next week.   Running a store will put ALOT of money in your pocket in 10 years.  

2. As a servicer, you will work until you die.  I don't see retirement in this field.  How many of you self employed servicers are putting money away in a 401k? Property?  Answer is probably very few.  At the store, your brand starts to build value, inventory, reputation, sales figures. etc.  Ultimately, I don't think even this will be enough, so I bought many rental properties to augment my income, and secure my retirement.  I just don't see how this is possible as a servicer as there simply is not enough money to go around.  

3. In some sort of fucked up way, I find being a shop owner LESS stressful than servicing appliances in home.  I always fear damaging a customers home, or messing up a repair in some sort of dramatic fashion. Or plain old looking like a dumbass.    People are fucked up, and when it comes to money, they'll cut your throat for that dollar.    If I fuck up an appliance in my shop,  its my appliance so who cares.  I paid $40 for it.   

4. Being a servicer allows you a lot of freedoms.  You are not tied down to a single location.  You can go pick up your kids from school in between service calls.  This is not an option as a store owner.  

5. The money:  As a servicer, I just can't see one making more than $120k a year.  Even that I believe is a stretch.  If any one can give me some good hard data on this, I would love to know.   A well run shop can make  double that.  Im talking NET, take home, bottom line cash profit.   

 

Like I said in the beginning, take this in for its entertainment value only.  You do what you think is best for you, or what you prefer doing. After all is said and done,  I like being a shop owner, with servicing in a close second place.   There is no right or wrong answer, you do what feels right to you. 

 

Anything else you want to know? comments? criticism? funny jokes?  Reply! 

 

 

 

 

 

 

 

 

 

 



12 Comments


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Samurai Appliance Repair Man

Posted

Another great post post! Being a long-time servicer, I especially enjoyed your specific musings on this. 

Quote

As a servicer, you will work until you die.  I don't see retirement in this field. 

I don't, either. The plus side to this is that if a servicer stays in reasonably good shape, the nature of the work is such that it's possible to continue doing this work well into the "retirement" years. Compared to other trades such as logger, framing carpenter, or even HVAC- all young men's work due to the physically demanding nature of the work.

Quote

People are fucked up, and when it comes to money, they'll cut your throat for that dollar. 

Double ditto on this! Cheesedicks abound because, for some reason, most people are just freakin' retarded when it comes to paying for repairs, no matter how little you charge. Most of these same people will happily piss money away on useless junk from the Shopping Channel or Amazon that soon ends up collecting dust on a shelf. 

Our biggest competitor as servicers is the replacement cost of the appliance. The most often asked question I get asked is, "How much is a new one?" This question becomes less frequent the further you move up the "food chain" into higher end appliances, where replacement becomes a less obvious option. The servicer's cost of delivering service is the same whether the customer paid $400 or $4,000 for the appliance. Customer's don't seem to get this. "But I only paid $400 for it new!" This is the big reason to focus on high-end work.

 

 

 

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Budget Appliance Repair

Posted

Best blog you have written so far, really puts all into prospective in very clear terms!!!!!

Same applies to Samurai's comments towards this blog!!!!

The owning rental properties is a good thing to supplement and still have somewhat passive income when you do decide to start retiring.  I've always wanted to do this also but working in rentals for property managers and other property owners it scares the shit out of me to even think about it, (the way some tenants treat stuff that isn't theirs!!).

I've got into 1st mortgage lending, less work, but no equity buildup in property. http://www.equitybuildfinance.com/

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Great post. Have to disagree about retirement though.  If you're 55 and never thought about, well, yeah, tough luck I guess, get that SS money.

But if you considered it in your younger years there's no reason why you can't. We use a Simple IRA, a portion of our checks goes in monthly and the business matches it up to 3% of salary.

At my current savings rate I should have about $500k by retirment age, but I increase my contribution every few years and plan on about $1 million by 65.  A financial service manages our IRAs.  Also, in an S corp with a simple ira you can contribute up to about $15k annually.

Also, Scott is right about working through retirement age. By the time I'm at that age you can bet we'll be servicing these things hands free using our minds to control holographic interfaces, so it won't be physically demanding. So there's a bit of extra money there (probably digital globocredits or something by then).

Plus social security. So yeah, I plan on retiring.

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Lorainfurniture

Posted

13 hours ago, LI-NY Tech said:

But if you considered it in your younger years there's no reason why you can't. We use a Simple IRA, a portion of our checks goes in monthly and the business matches it up to 3% of salary.

You are definitely one of the very few that are actually doing this. 

13 hours ago, LI-NY Tech said:

Also, Scott is right about working through retirement age. By the time I'm at that age you can bet we'll be servicing these things hands free using our minds to control holographic interfaces,

The future is already here! How about that LG smart diagnosis? If the future I bet the appliance makes the service request, just show up with the part that the machine orders, and voila!  

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Smashycomman

Posted

Very good post again! All of these have been incredibly informative and entertaining. Keep 'em coming!

I must say, though, that I feel like I'm in a similar boat to you, but I'm in a lesser way. Since you referenced pokemon, I'll say that I feel like a charmander to your charizard. Yep. Here's how:

I work for my parent's retail appliance business, (small, family-run retail business, about 7 employees) and I'm the guy that fixes any used appliances we might sell... (we currently do about 95% new, 5% used)... and I do in-home service.

I've only been training for and doing this for about 3 or 4 years or so, but I'm currently at the place that I may have to plan for the future. My parents aren't going to want to own the store forever, and when they retire, what should I do? I don't know if someone will continue running the store, so I can't only plan on doing what I'm doing..... that might not be an option if there is no store someday.

So my options are to open up a used appliance store... possibly using the same name as the place I work at now if I can.... and just doing that, or doing service on the side, or only doing service.... I don't know what to choose... ( I only know I don't want to sell new. No thank you.)

But I will say that these posts have been helping me decide. It's not like I need to figure it out completely for years, but it's probably good to think about it once in a while now.

I'll probably do a little bit of everything, like you seem to be doing. If those $$ figures are accurate, you're making WAY more money than I'll ever need. But a man's gotta support his family!

 

Thanks for this post. It puts things in better perspective.

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Lorainfurniture

Posted

1 hour ago, Smashycomman said:

Very good post again! All of these have been incredibly informative and entertaining. Keep 'em coming!

I must say, though, that I feel like I'm in a similar boat to you, but I'm in a lesser way. Since you referenced pokemon, I'll say that I feel like a charmander to your charizard. Yep. Here's how:

I work for my parent's retail appliance business, (small, family-run retail business, about 7 employees) and I'm the guy that fixes any used appliances we might sell... (we currently do about 95% new, 5% used)... and I do in-home service.

I've only been training for and doing this for about 3 or 4 years or so, but I'm currently at the place that I may have to plan for the future. My parents aren't going to want to own the store forever, and when they retire, what should I do? I don't know if someone will continue running the store, so I can't only plan on doing what I'm doing..... that might not be an option if there is no store someday.

So my options are to open up a used appliance store... possibly using the same name as the place I work at now if I can.... and just doing that, or doing service on the side, or only doing service.... I don't know what to choose... ( I only know I don't want to sell new. No thank you.)

But I will say that these posts have been helping me decide. It's not like I need to figure it out completely for years, but it's probably good to think about it once in a while now.

I'll probably do a little bit of everything, like you seem to be doing. If those $$ figures are accurate, you're making WAY more money than I'll ever need. But a man's gotta support his family!

 

Thanks for this post. It puts things in better perspective.

My retail location is 7 employees, including myself.  At this point, Im selling about 90% used ( I call it preowned) and about 10% new.  We are actively trying to increase are new sales.  Just curious; why the aversion to new?  Other than the lousy margins, I rather like selling new.  The volume has to be there for it to work.   

Just an idea, why not increase that "reconditioned appliance" section a little bit more?  The purpose of selling preowned is to catch the client with the lower price point.  You have people walking in there every day prepared to spend new money for an appliance, you can really kill it selling "like new" at 50-75% the price.  

 

One thing I will recommend.  I am 34 years old and quite frankly getting burned out.  17 rentals, store with 6 people, 5 service calls a day, and a wife / 2 kids at home is a bit overwhelming.   Sure, I make good money, but my quality of life is not as great as I would like it.   The trap with used appliances is your warranty.  the warranty WILL generate service calls.  Who will do them?  This is where I kind of got stuck, as in I did not know the right answer.   I started doing service calls, but in the process I started neglecting my store.   Right now I'm actively training a replacement servicer, but sadly, I can't send him to all my calls.  

I guess the bottom line is this: Just remember that you can not sustain working 12 hours a day 7 days a week.  Thats not living.  Sure, you have to pay your dues, but working like that for more than 10 years= you are doing something wrong.  

Nobody likes working.  Sure, I love fixing appliances, but Id much rather be on the beach somewhere.  Lets just keep things real.  Find out which profession will earn you the most $$ and run with it.  Be smart and disciplined  with your money early on and you can retire young enough to actually enjoy that V8 Mercedes. 

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5 hours ago, Smashycomman said:

 

So my options are to open up a used appliance store... possibly using the same name as the place I work at now if I can.... and just doing that, or doing service on the side, or only doing service.... I don't know what to choose... ( I only know I don't want to sell new. No thank you.)

But I will say that these posts have been helping me decide. It's not like I need to figure it out completely for years, but it's probably good to think about it once in a while now.

 

if you sell new and then you do charge to deliver and install it and then you charge to take away the old one and then you get used stock that people have paid you for  so dont discount that 

its always worthwhile thinking of the what if or the exit strategy , so when the time comes you are ready to roll 

remember you dont always have to have a retail outlet you can always have storage and CL etc 

 

 

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Smashycomman

Posted

On 8/21/2016 at 8:47 PM, Lorainfurniture said:

My retail location is 7 employees, including myself.  At this point, Im selling about 90% used ( I call it preowned) and about 10% new.  We are actively trying to increase are new sales.  Just curious; why the aversion to new?  Other than the lousy margins, I rather like selling new.  The volume has to be there for it to work.   

Just an idea, why not increase that "reconditioned appliance" section a little bit more?  The purpose of selling preowned is to catch the client with the lower price point.  You have people walking in there every day prepared to spend new money for an appliance, you can really kill it selling "like new" at 50-75% the price.  

 

One thing I will recommend.  I am 34 years old and quite frankly getting burned out.  17 rentals, store with 6 people, 5 service calls a day, and a wife / 2 kids at home is a bit overwhelming.   Sure, I make good money, but my quality of life is not as great as I would like it.   The trap with used appliances is your warranty.  the warranty WILL generate service calls.  Who will do them?  This is where I kind of got stuck, as in I did not know the right answer.   I started doing service calls, but in the process I started neglecting my store.   Right now I'm actively training a replacement servicer, but sadly, I can't send him to all my calls.  

I guess the bottom line is this: Just remember that you can not sustain working 12 hours a day 7 days a week.  Thats not living.  Sure, you have to pay your dues, but working like that for more than 10 years= you are doing something wrong.  

Nobody likes working.  Sure, I love fixing appliances, but Id much rather be on the beach somewhere.  Lets just keep things real.  Find out which profession will earn you the most $$ and run with it.  Be smart and disciplined  with your money early on and you can retire young enough to actually enjoy that V8 Mercedes. 

I guess my aversion to selling new is that I've watched my dad own and run a new appliance retail store pretty much all my life, and he's never really seemed happy. Sure, he's a great dad. No complaints from me growing up... just that now that I'm an adult, I can see how much working there has been very difficult on him. He works 6 days a week, and probably about 10-12 hours a day. It seems like tons of stress and it really doesn't seem worth the effort to me. I mean, I'm very grateful for the life he gave me growing up, and all of the opportunities he's giving me now... I just wish he'd be happier. I wish he'd put more time into doing the things that he'd like to do instead of "work, work, work all the time".

I just don't want to live like that, and I guess that's what you're saying with the whole "quality of life" thing. I want to spend time with my kids and wife, too.

Maybe I'd have the same problem in any business, though, if I let things get out of control. Maybe it's not just the fact that we're selling new. Maybe this whole problem is just the pit than so many guys fall into sometime in life. I just want to TRY to avoid it. 

 

Thank you, again, for your advice. It's really a lot of help.

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santacruzappliance

Posted

I'm getting fairly burned out fast here too.  I work 12 hour days 6 days a week.  I've got one office person and another technician.  I dont even have kids, rental properties or a store.  Thats gnarly Loraine!!! You must sleep good at night.  I'd like to reduce my stress and workload by doing 4 high-medium end appliances per day and no more than an 8 hour work day.  12 hour work days and dealing with regular life just zapps the passion out of me like the evil bird creatures suck the essence from the gelflings in the Dark Crystal.     

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I've taken Saturday and Sunday off from day one I started my business over 26 years ago. Still do to this day.

No money in selling new appliances. Speed Queen is the only (half ass) decent margin out there.

Used appliances... Finance them. You can get much more money for them.

No money selling electronics.

Furniture and Mattresses is where the margin is.

A little independent mom and pop such as myself has got to belong to a buying group.

Gotta have good credit and banks finance dollars are tight these days.

Can I get honest here. The economy sucks bad. Service will always be good. Used appliances you can pick up everywhere you look. Under peoples carports and such. Happy to let you haul um off or take 10, 20 dollars for it. Fix them with good used parts when you can and finance them. What you would get for an example 125 dollar washer you can get 249 plus interest. 50 dollar down payment and in most cases you got your money back up front. Not risking much at all.

Retirement? Best be thinking survival at this point and time in history, be happy for the know how to make a living. You can always trade a service call for a chicken if things get worse.

I'm hoping Trump gets into office myself. If Hillary gets in there prepare for even more difficult times ahead. 

Very difficult to get ahead in this starving economy. Much less retire.

Quick

 

 

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Your posts really have me looking at my numbers and I see I can improve so I appreciate the food for thought. A lot of times I miss out on the business owner and focus on the technician part of the job. This is bringing the business owner part into it pretty strong. 

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Another very good post. Thanks for taking the time to share your insights. I'm currently in the 3rd month of year 3 of my used appliance sales operation, and it's been a whirlwind. I never would have imagined the doors it would have opened for me and I'm excited about streamlining things going forward to maximize our potential.

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