I would love it if the business worked the way you described. The problem is clients want to have their cake and eat it too. They want low prices on gear and then they want the same labor rate as if they are purchasing the gear from us. I don’t care if I make money on equipment sales or labor; I look at the overall profitability on a job. If there is no profit on equipment then the labor rate will need to go up, way up. If we are getting paid the same and the internet seller is also making money, guess what, the system costs more.
Look at the IT business where they are a labor only model they charge 1.5 to 2 times what we charge. They also bill for every minute. Our clients want a fixed price for the installation, I get more pushback on the T&M part of a job then I do on the equipment price. I think it is psychological that people can’t deal with uncertainty; they want someone else to take all the risk.
Another problem with having clients source their own gear is that actually makes the job harder and burns more time. Every time there is a problem with shipping, DOA, or the client tries to save money by getting a different model then what we specify it adds to the cost. There is also the additional cost of us having to test the equipment that the client provides. When we provide the equipment we know that is new from the factory. We don’t know where the clients internet seller is getting their gear, is it refurbished, B-stock, missing parts, etc. It all needs to be tested. If anything is wrong and another item needs to be ordered that can stop the whole project. Having clients supply the display can work if they order the correct display and have it working when we get there. Having to go thru that process with hundreds of parts would be a nightmare.
Most businesses that care about quality operate this way. If I need my car fixed I can get parts 20-40% cheaper on the internet for the same part with warranty then I can from the local dealer or independent. Sure I may be able to find so shade tree mechanic to install parts but a dealer or any decent independent charges for both parts & labor. Same goes for restaurants, plumbers, general contractors and numerous other businesses. At the end of the day clients want a quality system installed and limited problems. Having them source their own gear means more work and headaches for them, questionable quality, and paying more for the same system.

 If it was such a good business model we'd be doing it that way. 

Clients have no idea of how the project process and business work. They don't need to either. If they want to understand if they're getting a fair price then they create a project specification and have other installation firms present proposals.

Not check the prices of specific parts on the internet. 

If we are going to go the way of IT, give up margins and only bill for labor, then my labor prices will close to double and we'll have to work on retainer. Every communication will be billed. 

So if we succumb to client's wishes and give up on labor they'll end up paying the same amount  and have a new focus of their frustration: how much we charge in labor. 

Not to sound antagonistic, but if a client thinks we should adopt the no margin IT model and just bill for labor... then they can create an AV installation company and be wildly successful. Have at it. 

+1

Sonos probably gives discounts to Microsoft employees because that makes many little bits of the entire company have a positive attitude about Sonos, which generalizes to a good attitude from the company itself. Since Sonos uses software and connects to computers, that's a good thing. For them. And they don't care about anyone else.


You're a sleaze dealer if you do this. If they're well-to-do jerks, then things will end up costing more because they're jerks, so just let it be at that!


Installation alone is not enough to stay in business. If you pay me even the slight profit that's in Sonos when I sell it, the special service you get next year is ME because I'll know you understand what I must do, and because I'm still in business, or because I'm not magically busy every time you call, doing, or heck, even planning, work for someone who will allow me to make the money needed to stay in business.


Because once you touch it, it's yours. And it doesn't matter how much you tell them you're not liable, every issue is a battle. That itself lowers profit == lowering ability to stay in business == getting me on the phone in a year.


An Ernie Adage: Every time someone says "just" or "only," they are about to omit seventeen facts crucial to the situation. In this case you omit the visible offense taken by clients who are presented with such an agreement.

As has been said many times, my real product is a system.


Well, this metaphor falls apart as soon as youi combine "montly" and "CI." How do we do that? What monthly is the parallel here?


And all our clients believe everything they read on the internet?


I put them in what position? On the internet? I know that's not what you mean, but hey, how did I put them in any position?


Installs have rates, hourly. What are these rates (x PER y) for equipment that you bring up here?


Why? They can see it for less on the internet. I see nothing you've said to support your conclusion.


We are in the business of selling completed things, not skeletons, guts and labor. You'd have us convince someone they want a dog by listing the bones, the innards, and the cost -- I mean price* --of getting God to say "Live."


I don't see why. You have some pretty well-thought-through opinions, but I think you don't understand our positions or how things must work so we can keep on being there.


*Cost is what I buy it for. Price is what I sell it for. The difference is gross profit, which pays for whatever is not covered by the labor charges.




See?


yuk yuk


Here I agree with bcf: educate the customer. "Gee, isn't it cool that the price of TVs has come down so much since they make them by the millions, even though the time needed to mount a TV in your location has hardly varied? At least there's an ongoing change in something, that brings lower price to part of the purchase!"


Exactly.


I suppose you should now explain to the customer how good you are: how much it would have cost them if they had bought from the other company. There was a bad sub -- extra labor for you. You would have had to ship it -- extra labor for you. You would have had to reinstall it -- extra labor for you. You should point out that if they had bought it from you at your price, to begin with, you would have solved all the problems without him knowing about it.


Oh, yeah: Here's your labor rate if I supply it, and here's your rate if I don't. What customer is not going to hate that?

Msft employees also get discounts at Great Wolf Lodge, Coho Cafe and Tully's Coffee. I guess those companies are screwing other Indian casinos, Red Robin and Starbucks.


Luckily, there are other customers out there who don't work for Microsoft.

I wont comment on this stuff because i don't agree with the sentiment "because they have more they should pay more". Total nonsense. Every guy on this forum googles for the best price on everything they buy from tooth paste to luxury sedans. I guess i did comment on it but what i meant was that its not relevant to the rest of the post imo.


Sonos is really a poor example because its one of the only truly plug and play products on the market. We don't service their target clients so i can't comment on margin. Yes "pros" can make it "better" by hard wiring and using better network gear/settings...by using multi-zone amps and good speakers etc but at the end of the day anyone can go to best buy and get a cart full of gear and have it working themselves. This is why i say its a poor example. Its meant for end users not installers. Installers just happen to jump on board because the technology is good and better than most of what was out there when they showed up and even now.

So sonos is like paint. Yeah you can paint your own house but no you are not a painter. You can get the job done but you can't faux the light cans into the wood ceiling or match the texture on the wall when you patch a hole from a door knob. Real painters can...just like real AV installers know to use good networking equipment and the fact that for less money you get a better amp (compared to sonos amps).

Next question is...do you even want to be a painter? Most people dont. Thats why there are so many painting companies.


Retail will never fail completely imo. I remember when mail order was going to destroy all the high end 2 channel shops. Video/automation is what ended up killing the $300k out the door speaker+amp sales every weekend. People with $300k and an itch to buy toys could now do more stuff with it.

Having said that...i agree with you. Many of us have already abandoned the "make a sale and work for free" model. Not only do we let the clients buy their own TVs...we charge them to put together a list of which TVs to buy. All those free hours of measuring and verifying commands and inputs are billed for now. We usually end up sourcing them for the client using their credit card while charging a handling fee.

When the complainers finally start billing for all of their time they wont care where the TVs come from because you lose money every time you sell one. Anyone who says different isn't counting wasted hours when one shows up cracked or fails right away. And you don't look like a crook when you try and charge MSRP for something thats $300 less at Best But and everywhere else.

Same with Sonos...let them save 20% on the Sonos gear. Charge them to spec the gear. Sell them good network gear. Charge to configure the network. Sell amps and great speakers so their Sonos system sounds better than anyone elses they know. If it fails its not your headache. I


Monthly payments and expertise are two different things so i dont get the comparison. As far as internet shopping goes i think we can all agree/admit that we shop online for 2 reasons. #1 convenience and #2 to save money. Some people may use the internet to see what typical pricing is but once they do they immediately fall into the save money crowd. IMO its very rare for someone to go online and see that they can save $50 on a $100 item and choose to go pay $100. The only way it will happen is if the B&M or CI really sold them on service and expertise.

Anyone who finds an internet price and truly wonders why our prices are "so high" needs a lesson in how retail/the economy/money etc works. I say truly because most KNOW why but they play dumb and use it as a haggle tactic.

Install rates are what they are. $5 an hour or $500 an hour. Some people are worth more...some just charge more. The customer can decide who to hire and who not to hire. I just wish some of them would ask more important questions than "whats it cost"...like "can i see some examples of your work?".

Qualcomm employees get a steeper discount on Apple products then we do as a reseller.
Things like displays, I have given up fighting clients on. Tell them "that's fine, order it from discountflatpanels.com, costco or wherever. We are T&M to unbox, test and install it.
If it is DOA, have fun boxing it back up, getting a return set up, and getting a replacement. Or we can charge you for our time to do it.
In a few days/weeks/months when your repaired or replaced display shows up, you can pay us again to reinstall.
We don't even offer to haul the empty tv boxes off unless they want to pay us for it.

Buy it from us at our price and we deal with all this. Blunt? Yes, but it makes sense to quite a few of our customers.

I'm not going to respond to everyone's comments about my posting individually, It would just take too much time to play the point / counterpoint game.

I see many of you have learned that to make cusotmers happy, you need to address their fears. Allowing them to buy items, and charging them a fair price for your services, is the way to go. This allows them to make good decisions, and get their overall system installed for the lowest amount.

Many of you say you don't get the car analogy. I'm sure you don't want to. You don't want to understand how mixing prices for install and the goods, is like mixing prices for financing and a car. The truth is that both practices make it difficult for the consumer to figure out how much they are paying for each item, and therefore makes it diffficult for them to get a fair deal. When customers see these pricing inconsistencies, it causes them to doubt you, and the pricing for your services. This can only end badly.

I love the responses about not selling goods that customers can source on the internet. I'm sure many here try to run their businesses this way. The issue is that doing this you are not actively trying to get the best sound/video for a customers dollar, you are choosing suppliers based on the best margin / sales practices. This doesn't translate into a good deal for your customer in all instances, and therefore, can put you into a poor position to compete. Even if you do this in a majority of areas, you will be hard pressed to compete with pricing on flat panel displays. There is no margin here, and if your pricing looks high on these items, customers will suspect your pricing on other items is simalarly high. Isn't it just better to price your services at what they should be, and let the customers decide if the pricing on the other items is better through you or elsewhere?

I'm sure those of you who have issues with transparent pricing will go on about your business in the same way you have in the past. It is your option how you wish to do business, just don't be surprised if your customers see how you are doing business, and decide they don't want to purchase that way. Just because someone would choose to get the best price they can, does not make them cheap, it just makes them intelligent. I doubt any of the CI's here pay more in their personal lives for items, unless they feel they are getting extra services or convenience for the expenditure. Why do you think your clients would be different? Do you really think that customers that make more are somehow less intelligent?

The reason the car analogy isn't understood is because it's a bad analogy, not because we merely don't like it.

Buying a car and financing it is a horrible analogy for our business model.

A better analogy would be to request for a design and type of car then having it custom built, with the respective service and warranty included.

If prospective client wants to understand the costs of materials it's not a complete conversation unless we include all the costs of doing business. That's a much deeper conversation that most clients won't understand.

The trust goes both ways here, after all these transactions are supposed to mutually benefit both parties. I'm in this business to try and deliver my interpretation of the best value to the client, not their interpretation of it, acknowledging that they are not the professional in this business with the years of experience and knowhow.

This is exactly why you design a specification or scope of work then submit to contractors to compete. I don't understand how an 'open' business model with no margins will improve things for anybody, the client or the contractor. It merely reduces $ in one column and adds it to another.

This whole conversation is predicated upon the assumption that professionals are not to be trusted and trust has to be earned, no doubt sharing the costs of equipment and having to 'prove' those costs are justified. That is advantageous to a prospective client wanting to negotiate price upon their perception of values on cost. As I said before, if we talk about costs, we have to talk about all costs. With somebody who doesn't do this for a living.

And that is why this conversation never gets any further than this point.

I spell out exactly what each component costs, and how much it costs to have installed / integrated - I don't combine the two. This way there is total transparency.




I disagree. Many of the higher performance products are not available online... i.e. Berkeley Audio, Mark Levinson, Sim2, Epson Professional not to mention many of the better speaker systems.
I explain that the customer is free to buy the flat panels themselves, although we will not warranty them.




No not that. It's just that a lot of them don't have the time to line-item price shop, and most of them are business owners and understand that they are not dealing with a non-profit organization. A lot has to do with how you conduct yourself with the client. If you project yourself and your services in a less than a professional manner, that might throw up a red flag - inspiring the client to double check pricing and your reputation. Otherwise the majority of our customers understand that we have to make a FAIR profit in order to stay in business, so that in 5 years when they need service or upgrades or good advice, they know we will still be around.
I'm smart enough to figure out that in a proposal, some of the things that they may "shop" namely TV's - I price at or slightly below the other guys, because if they see I'm higher there on a high profile easy to shop item- than the rest of my stuff might be higher too, so I price TV's accordingly.

Will I match internet pricing? Usually no. It's on a case by case deal. I won't warrant owner supplied items, and may charge an additional labor amount, especially if it something I'm not familiar with and have to figure out how it works and how to integrate it.

BTW intelligence, or should I say common sense has little to do with a client's income level. I've run into some very ignorant, unreasonable wealthy clients, and some salt - of - the - earth blue collar clients who were brilliant.

Me, I'm cheap. Yes I will shop around especially if I'm low on funds for certain items... I'll even check my "Gas Buddy" app to see has the cheapest gasoline in my area - but when I built my last house, I was mentally prepared to pay a fair amount, and get good people involved, knowing I wasn't hiring the cheapest guys. In the end the job was done well and I didn't have to call guys back to re-do things.

If I need dental work or a good doctor, I'm not going to jump on the phone and price shop. I do, however check Yelp (and I take a lot of the reviews with a grain of salt, but it helps give me an idea how a business is run).