Just remember that its not 'if' the builder will screw you, its 'when'. Its the nature of their business. They arent building houses for fun, its for money and lots of it. Usually a fixed percentage from what I have been told. Somewhere in the neighborhood of 15% - 20%. If you give this prewire away, will the builder pass on the savings to the customer? Do you have any way of enforcing that if he agrees to it? Will you warranty your work? If the sheetrockers shoot a screw through a wire, will you have to eat the cost of replacementof the wire? Or, if the homeowner decided to hook up his exisitng gear to your wiring and there was a short that damaged his gear, will you have to warranty that?
Just a few questions that came to mind when reading this thread. Good luck at making it work. Let us know if you decide to do this and how it works out for you.

A loss leader is something sold at cost, maybe a little below cost to entice someone to shop. A loss leader would be us selling plasmas at cost to get the job. NOT giving away!

Look out..........sarcasm ahead.............

Jason, hey I don't know what all these guys are talking about. It's a great idea! And just to prove it to you I'm gonna let you pre-wire my house personally. It could be worth a LOT of future income. Of course I would definitely maybe call you back to buy equipment from you. Thanks!

As the general consensus says here... NO!

Builders are in the business of building and selling houses. Some build one or two a year... some build one every 5 years... others roll out thousands of new homes per year. Regardless of their model, they are in the business to sell a house. They want to spend as little as possible and make as much as possible. You giving away a prewire will set an expectation that will now be passed on to every other bidder on a particular floorplan by that particular builder.

Here in Washington the electrical companies have pretty much taken over the production home business. Since they make money on the electrical portion, they GIVE AWAY the low voltage part. This guarantees that they own the whole wiring job and they have first contact to sell AVAD products to their customers. Its gone to this... it ain't gonna change and I've wasted too much time bitching about it... now I wait for sparky to get in over his head and sell our superior retrofitting skills along with actual system design skills that the customer has obviously not been exposed to yet.

Actually some of these companies bought low voltage divisions (companies like mine) and now are very competent competition. The landscape is full of people all looking for the same piece of pie and as other threads here indicate... you better change your business model to accomodate this or die. Competing with a large electrical firm that gives away what you do just so you can get to talk to one of every five home buyers (my experience is along these lines... perhaps others are different), while there is the guarantee that since they did the electrical they will also try to sell gear to the client... is bound to fail. Also remember that a customer moving in usually has some reason to call the electrician before they have a need for you.

We have hooked up with a good bunch of the custom builders... guys who are used to working with a lot of subs and like working with us. Guys who at least sit us down with every client they build a home for. We also have our own group of electricians we like to work with... guys we try to help sell lighting and generators for and most importantly... leave what we do to us. Find a few of these and get them bought in on the job with you.

Whatever you decide to do... abandon this plan. Good luck to you!

Instead of free, how about working out a plan to kick a little money to the builders for sending you leads (assuming that they pan out).

My experience is that most builders will do everything in their power to get the house built and closed as quickly as possible and with the least amount of disruption to their daily lives. Most adopt new technologies only when they're forced to. There are of course exceptions to the rule.

I have a few builder customers that are very progressive about trying new things. These people think with the customer first, and not just of themselves, but the majority of builders in the area are not always receptive to new new things.

A few will actually try to talk their clients out of putting in high end audio and automation system.

It didn't take me long to figure out why some of them do that. I've concluded two points:

#1 They've had bad experiences in the past working with guys who botched up the job.

#2 They were unneccesarily burdened with having to deal with issues revolving around low votage stuff.

Both of those points lead back to the premise that they've worked with incompetent installers who didn't do their job right.

There's nothing that a contractor hates worse then having an irate customer calling them to complain about one of their subs.

Therefore, my advice is to align yourself with a handful of contractors that you can work well with. Once you have a good base, make it worth their while to send you customers. Remember that for every additional sub that's on a project, the contractors life gets that much more complicated.

Do your best to uncomplicate it. First and foremost, do a good job at whatever you do. Secondly, don't involve the builder for unncessary things. These are busy guys who typically don't like to be called 400 times a day with questions. Thirdly, make it worth their while. Forthly, treat them as business partners. If they have a problem with their own personal system, go out of your way to help them. If you leave a good impression in that regard they'll be more apt to recommend you to their customers.

Lastly, make it worth their while to partner with you.

This can come in various forms. Some guys give the builder money for referalls, other guys give them credit towards merchandise, others will trade them labor.

In any regard, the old addage that "nothing is free" should apply here too. To me, doing a free prewire with the hopes that they'll buy equipment is dangerously similar to giving a free vacation with the hopes that they'll buy a time share.

I'd like to thing that most people in this business are above that.

Illegal, for the most part (at least here).



I'll agree with most of what you're saying, but your worth to the builder needs to be in the form of getting the job done for the homeowner in a manner that makes the builder look good for having brought you on board. And that's it. There are laws regarding "referral" fees (more commonly called kickbacks) and the like. There's a need to tread very lightly on this ground.

I too have a few select builders that I've worked with for several years. First and foremost, they know that I'll drop everything to get to their jobs, and satisfy their clients. I get loyalty, they get quality and service.

Yo Trunk slammer - you have hit the nail on the head. My builders push me because: A) I get done when I am supposed to be done B) Get the job done how the customer wanted it done C) Leave the job as clean as when I showed up. D) Provide excellent service after the initial install. E) Rarely, if ever, have to cut drywall because of a screwup in the prewire. This reduces his effort to run the job because I ACT PROFESSIONAL! Most of my builders don't put any markup on my bill to ensure I get the job if price becomes an issue. A courteousy I greatly appreciate. In return I go out of my way to take care of his customers, even the ones from 10 years ago that I didn't do the initial install. Its a WIN/WIN/WIN for all involved.

I'm curious about that statement. Is there a state or municiple law against paying commisions for non-employee compensation in that regard? (assuming that you're filing a proper 1099 of course)

Actually it's federal and state laws that are involved.

You can call it a "commission for non-employee" if you want, but that doesn't alter what it is.

But, besides the legal issues, you create another dilemma.

If you increase your prices so as to allow for a "commission" to the builder, then your pricing is out of line with the market (you're higher).

In this case, if the homeowner gets another bid on his/her own and discovers that you're 10%, 15% or 20% higher than others for the same products, the homeowner perceives this (rightly so) as you trying to overcharge for the product. Ergo, YOUR reputation is damaged.

Then, additionally, the homeowner takes the builder to task for referring them to a company that overcharges. Ergo, the builder's reputation is also damaged.

You not only lose that particular job, you very possibly end up losing that builder. It's a NO WIN situation.

How to address this?

The proper way to have the builder compensated, is to have the builder specify to the homeowner that your products/services come under the builders "cost plus" addendum to the building contract. The builder marks up your products/services as the contract allows, and the homeowner is aware of these charges.

In this case you don't seem to be out of line price wise, the builder is doing business "as usual", and the homeowner will accept this as a normal business practice (which it is).

See the difference?

One method is under the table, and illegal. The other is normal business, and quite legal.

I appreciate the many responses.
Let me mention that I have been in business for 5 years and the business is doing very well. I have just about all of the high end custom builders on my side. I recently got a project from the last custom builder who builds 1mill + sized projects.
My employees are highly skilled and paid well.

I also got involved in a large condo project. We are upfitting the model in return for being offered as an option. The model is not completed and the units are being presold. We have contracts with almost half of the presold units. Thats what gave me the idea for CHEAP, not free prewiring. There are several other attached projects as well as $250K and up homes which the builders won't offer our products.
Those are what I want to get into. When I mentioned free I was thinking of some way to offer the free wiring, if we do the trim out, great, if the homeowners want to go elsewhere then they have to buy the drawings with measurements from us.
I realize that doesn't sound tempting to the builders because now they really can't advertise that they prewire, since they owners have to buy the measurements.

But that's what I'm looking for, a way to get into those projects. I feel that these people, $250K and up would come to us for the trimout. Our demographic in this town are retirees building their last home. I think they appreciate service and would be willing to pay for it. I'm staying away from the first time home buyers, as they would most likely go to best or circuit.

Does that change any thoughts?
Thanks again,
Jason

I stand by my original post. Do not give away your work.

It sounds like you have built a solid start to your company, but it would appear that you are not where you want to be. Take a good look at your business model to make sure you are putting your time and effort into the avenues that will take you where you want to be. If you wish to be in those $250k houses, quit playing with builders that do condos. Find the right market and do your work with quality and professionalism and you will not have to worry about anyone even asking for free work.

rhm9 said ;

"now I wait for sparky to get in over his head and sell our superior retrofitting skills along with actual system design skills that the customer has obviously not been exposed to yet."

I'v encountered that more than once. But as a twist, sometimes it makes a lot of sense to have sparky do the prewire ( he charges the builder and makes some profit). You become the consultant with the design and a future stake in that plan. What is the risk? a few hours of your time ( you use that opportunity to make an impression as to the more sophisticated services you can provide) Sparky purchases the wire ( to your specification) , and now your costs are about zilch. Not to mention, sparky likes you becuase you just increased his income, and in many cases, deep down, he is relieved not to have to delve into waters he's really not completely comfortable swimming in, and in many cases, doesn't really have the time for. Of course there will be times when this will backfire and an ambitious electircal contractor looking to diversify into AV will use it as an opportunity to do just that. But hey, nothing in life is a guarantee