In reading through many of the post's in this forum I've become curious about the financing aspect of the home theater/automation business and wonder if some of you might educate me a little.

Specifically, I'm curious about common practices of financing, and ultimately billing, for home theater/automation installations. It seems that there are, in very general terms, two types of installation clients (I'm limiting this to private clients, not business'). One being the client with an existing home that they would like to have HT/Automation retrofitted into, the second being a client building a new home and wanting to incorporate HT/Automation into it during construction.

In the case of the first client, do most HT/Automation companys provide customer financing for the job? How does this work if the job entails multiple phases (ie...cabling/infrastructure installation, equipment purchase/installation and final integration/programming)? Are these phases financed internally then re-fi'd through some external lender that the customer ultimately sends the payments to?

In the case of the second client (new home being built....) many of the post's I've read stress the need to deal directly with the client. I can see the obvious benefit of this but I wonder how you deal directly with the client and, in the end, wrap the cost of the installation into the first mortgage the client takes out on the property? Is this not even done? It seem's to me that if I were the client, it might be more sensible to incorporate the cost of the HT/Automation into the mortgage itself. Having dealt with contractors in the past, it sure would seem that they would be looking for a way to get a slice out of that pie! How do you bypass the contractor but have the fee included into the mortgage?

In both cases, how does the HT/Automation company protect it's interests (ie...work already done, equipment already purchased/installed etc..)?

I'm in a completely unrelated business but have installed my own HT/home network/Automation in my home (learned an enormous amount from reading post's in this and other forums...my thanks to all of you!). I've really enjoyed reading the post's in this forum but the more I've read, and thought about your business, the more curious I've become about this question.

Thanks in advance!

Karl

Nope. In fact, 98% of my customers aren't even interested in using a credit card to pay for their purchases.


You're opening up a whole can of worms there.


More sensible? Plugging in the numbers of financing a $10,000 purchase into a 30 year mortage fixed at 6% reveals that after 30 years, the total of payments on that 10,000 audio system comes out to be $21,583.82!

How do you bypass the contractor but have

The client can give the cost estimate to the builder prior to finallizing the loan, and the contractor can work with the loan officer to try to get it included into the mortgage. A word of warning though, at this point the contractor is paying you, and aside from them being notorioius slow payers, they may also demand that you carry additional insurance, licensing, bonds, etc. Check y our state's requirements regarding filing property liens and if possible, do so until payment is received.

Builders suck to deal with. They want the best, but the cheapest. There is a company in town here, that sells a volume control, in-wall speakers, the wire and installation for $150 per room. How can you make money doing that? Plus it is crappy equipment. Look more to remodelers and interior decorators.

We offer no financing. All of our clients pay by check or card. The people that usually cannot afford the system ask us about financing.

Mike

On retros, we ask for at least a 50% deposit. The balance is due the day the installation is completed. On new construction, we do 25% deposit, 40% 2 weeks before Speaker and Keypad installation, 25% 2 weeks before final installation, and balance due on installation of rest of equipment.

I only had one client in my 10 years in business ask if I accepted credit cards. I simply said "Yes, I don't return them, though". That client, by the way, shops at Costco.

I'm fortunate enough to have clients that can afford to buy some 3rd world countries.

I'd never consider financing an electronics system for the 'AHEM, prior post's' explanation.

In the event a client cannot afford a system without financing, I recommend either downgrading or lesser equipment.

There are people who offer third party financing, I would refer your customers to them. Also, if you're working with a builder on a new build they can roll your install into the mortgage.

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Good point! I hadn't done the numbers actually...I guess I had a vague thought of....a client, new build, looking to install a 25K plus system....would they want to shell out that kind of money out of pocket??? It sounds like, for most of your clients, this would present no problem.

Interesting info here! I get the impression that,for the most part, the client is generally billed on completion (with some cases of partial payment upon completion of installation phases).

How do you guy's deal with clients who never seem to finalize system requierments...ie....what the system should ultimately do is a constantly moving target? I have to believe this happens frequently. Do most firms do some sort of written statement that lays out, in fairly specific terms, what the final system will be?

Thanks again for everyones input!

Karl

People who can't make up there minds get put on time and materials. That is if you don't just leave them right away. Without a clear plan of where you are going you are going to do a lot of things not once or twice but 7 or 8 times. Failure to plan is plannning to fail?

Or... the 7 Ps
Prior Planning Prevents Piss Poor Preformance Poverty and LOSS OF INTEGRITY!
(Mr. Liming; Teacher)

Beautifully put!