Did a big Elan system for a client who owns a high-end car dealership.

If one of his techs screws up, or runs way over on repairing or troubleshooting a car --- it comes out of the technician's pocket.

I've lost $$$ over the years dealing with equipment that was bad out of the box. Impossible for these guys to cut us any slack... Is it fair? NOPE. Some of this was really expensive high-end gear too!

The other option often overlooked is to charge for burn in on the bigger jobs.

"We'll open the unit, set it up, run it in for 7 days.....at $x per piece".
I don't want to pay for that....
"Well then if there's a doa style failure your newly installed system could be down while we wait for replacements....."
Don't you stock replacements
"Nope, not enough margin anymore for that..."

I eat labor and processing on DOA or nearly immediate failures on gear that I sell and install.

In normal cases, after 90 days I charge for labor and shipping to process warranty repairs/swaps, though I charge minimally.

In cases where a piece of equipment fails multiple times [as has happened with the 4X10 series of Denon AVR's], I may opt to eat some of the time required to deal with a recurring issue.

Clearly not our fault that it failed... Not our responsibility!



Except... It was us that recommended, spec'd, touted the product as superior, installed it...



Thus the problem.

For those here who don't know me, I'm not a CI, I'm a DIYer when it comes to home theater, audio, and automation. I'm a EE, so this all fits in well with my skills, knowledge and interests.

What I find interesting is that I see threads here where a CI will start a bitch session because they got internet price shopped on something, and this got the customer thinking about the total price they're really paying. This inevitably brings up comments that CI's charge full list price, as you provide service like removal of equipment that failed under warranty. (Seems reasonable, as the consensus seems to be the customer doesn't choose the equipment, and doesn't even necessarily know what they're getting.)

Then I see a thread like this, where CI's seem ready to provide service, except when it comes time to provide that service.

Seems like there of plenty of individuals here ready to stand on whichever side of the fence suits them at that moment. As a consumer if I had a discussion with a CI, and they say we service in warranty equipment at no charge, and later you wanted to charge me because... "We just can't continue to service this at no cost.", I'd be quite unhappy. I think the take away is that unless you have the entire policy including exclusions written up and signed by the customer, get ready for an unhappy customer.

Well stated bcf1963.

What the issue is there are more failures and less margin. So it's time for a change. Maybe cost plus is an answer. Raise labor, reduce equip margin. Is the end cost all that different in reality, probably not.

This is what I'm thinking. bcf, you are absolutely correct, changing the rules after the game has begun is not an option. And truthfully, I am rarely price shopped online these days, or if I am what I'm selling is price protected enough that there is no issue.

I'm thinking a combination of what has been said here is where I am trying to go. Keep the one year installation warranty, provide service of failed equipment under that warranty for the first 90 days, rack test all equipment before it goes out the door to give it a burn in period. And offer a service contract to last past that 90 days.

The other way to go is offer all electronics at 25% off msrp, speakers at full price, and every minute that is involved in the project is billable while my rate goes up 15%. In this scenario, the warranty only covers installation, connectors stay connected, tvs stay on the wall, cameras stay pointed in the right direction.

So, how much do you charge for a service contract?

I agree.....bcf has a valid point, and I agree. I also eat the costs. If I totaled up the amount of money I paid for shipping, repair, loaner equipment, technician wages, travel, on warrantied equipment I'd probably put a pistol in my mouth.The problem is that the manufacturers are making absolute junk these days, but they're able to skirt the responsibility at the expense of my bottom line. I remember a time when I might have a manufacturer warranty service call once or twice a year. If I get 1 or 2 a month now I'm thanking my lucky stars. For small businesses, it's a tough row to hoe between keeping the customer happy and keeping the doors open for something that isn't your fault. But Hey!!, HDMI 2.0 will be released at the end of the month....I'm sure that'll be the cure for everything. (That's sarcasm).

Also someone stated use better products... I had issues with all manufactures. I want to know which ones don't have issues?

Better is rapidly starting to equal "sucks less/the least".

High end is not immune either.
Panja (ack)
Run of AMX NI series processors that were bad
Crestron MTX-3
Crestron TPMC-10
Runco (pretty much all pre Planar). I used to refer to them as "The Ferrari of display products. Beautiful, exclusive, expensive and temperamental".
RTI T2Cs with bad/failing displays (had 4 in one house die in less then a year)
Integra HDMI boards

The list goes on and on.

I do like the idea of an "equipment burn in charge".

Until about 6 years ago, we gave the client 5 years warranty on all equipment and labor. This included a loaner for TVs and receivers, unless it was something unusual. We built in a little more margin to cover the cost, and it wasn't unusual to go the entire five years without a single issue. When we had a warranty service call, it was an opportunity to add a TV in another room, talk about adding a set of speakers to the patio, or update a piece of equipment. Sometimes the client would mention a friend who was about to build a house or office, and actually make the contact for us. The service call could be expensive for us, but more often than not, we'd come out ahead for the opportunity to sell something else or get a lead for another client.

Then came the Chinese junk. Other manufacturers stated lowering prices to compete with the junk. At around the same time, the internet became the reference for what things should cost. Margins tumbled, and manufacturing quality went to crap. The most important issue to the client became price. Unfortunately, everyone expected the quality to stay the same, or get even better. Furthermore, as the price went down, clients expected the cost of installation to be commensurate with the price of the equipment. More and more trunk-slammers started offering cheap installs with prices that are impossible to match for a firm that is legitimately licensed and insured. So, you made less margin on the equipment, you made less on the install, and the equipment became much less reliable. Manufacturers tightened up their policies also. If I was shipped a Samsung TV and it was bad right out of the box, I had to take it in for repair rather than get a free replacement. I had to buy a new one for the client, who wasn't about to accept a TV that didn't work from the onset. I had to buy another one, and eventually sell the repaired one to someone at a discount. With TV margins at 5 to 10%, that's pretty hard to do. Some of the TVs we sold broke down 3 or 4 times during five years (usually power supplies). Clients starting accusing us of selling lemons or junk, even though we were the ones flipping the bill, not only for repair, but for the cost of dealing with it. Sometimes they would get angry when we couldn't give them a new one, that "wasn't a lemon".

Of course, we had to reduce our warranty. Now it's a year. We still cover everything except fire, flood, earthquake, physical damage, etc. But clients are rarely satisfied when their TV breaks down six months, a year, or even two years past their one-year warranty. It's no longer an opportunity to sell them something else or to be introduced to a friend. Warranty issues nowadays are rarely a positive experience. They are nothing but red ink for us and a disappointment for the client.

At this point, we are going to have to reduce our warranty to be even less inclusive. The clients who have been buying from us for twenty or thirty years will not be happy with our new policies. The only way we can do it is to charge substantially more for an all-inclusive 5 year warranty or "service plan". Client's don't like paying more for the warranty, but for those who expect premium service, that's the only way we can offer it. The industry is getting ugly and it's harder and harder to offer exceptional service for a competitive price.

The answer, I think, is to focus on premium clients. Although they are the minority, they will pay for good service and better quality equipment. The bargain hunters can waste someone else's time. I might not have the client base I had a few years ago, but maybe I won't have to work as hard servicing less clients. As long as I can squeak out a living with the smaller client base, that's the important thing.

Until about 6 years ago, we gave the client 5 years warranty on all equipment and labor. This included a loaner for TVs and receivers, unless it was something unusual. We built in a little more margin to cover the cost, and it wasn't unusual to go the entire five years without a single issue. When we had a warranty service call, it was an opportunity to add a TV in another room, talk about adding a set of speakers to the patio, or update a piece of equipment. Sometimes the client would mention a friend who was about to build a house or office, and actually make the contact for us. The service call could be expensive for us, but more often than not, we'd come out ahead for the opportunity to sell something else or get a lead for another client.

Then came the Chinese junk. Other manufacturers stated lowering prices to compete with the junk. At around the same time, the internet became the reference for what things should cost. Margins tumbled, and manufacturing quality went to crap. The most important issue to the client became price. Unfortunately, everyone expected the quality to stay the same, or get even better. Furthermore, as the price went down, clients expected the cost of installation to be commensurate with the price of the equipment. More and more trunk-slammers started offering cheap installs with prices that are impossible to match for a firm that is legitimately licensed and insured. So, you made less margin on the equipment, you made less on the install, and the equipment became much less reliable. Manufacturers tightened up their policies also. If I was shipped a Samsung TV and it was bad right out of the box, I had to take it in for repair rather than get a free replacement. I had to buy a new one for the client, who wasn't about to accept a TV that didn't work from the onset. I had to buy another one, and eventually sell the repaired one to someone at a discount. With TV margins at 5 to 10%, that's pretty hard to do. Some of the TVs we sold broke down 3 or 4 times during five years (usually power supplies). Clients starting accusing us of selling lemons or junk, even though we were the ones flipping the bill, not only for repair, but for the cost of dealing with it. Sometimes they would get angry when we couldn't give them a new one, that "wasn't a lemon".

Of course, we had to reduce our warranty. Now it's a year. We still cover everything except fire, flood, earthquake, physical damage, etc. But clients are rarely satisfied when their TV breaks down six months, a year, or even two years past their one-year warranty. It's no longer an opportunity to sell them something else or to be introduced to a friend. Warranty issues nowadays are rarely a positive experience. They are nothing but red ink for us and a disappointment for the client.

At this point, we are going to have to reduce our warranty to be even less inclusive. The clients who have been buying from us for twenty or thirty years will not be happy with our new policies. The only way we can do it is to charge substantially more for an all-inclusive 5 year warranty or "service plan". Client's don't like paying more for the warranty, but for those who expect premium service, that's the only way we can offer it. The industry is getting ugly and it's harder and harder to offer exceptional service for a competitive price.

The answer, I think, is to focus on premium clients. Although they are the minority, they will pay for good service and better quality equipment. The bargain hunters can waste someone else's time. I might not have the client base I had a few years ago, but maybe I won't have to work as hard servicing less clients. As long as I can squeak out a living with the smaller client base, that's the important thing.

Well said; very well said.
I could see printing most of this and including this in a proposal to set proper expectations.

I was just copy and pasting it and then saw your reply

We give our clients "bumper to bumper" 3 years from completion of install.

We do not discount......if you want ANY kind of discount on anything, it goes to one year.

If you want to supply even one TV, it goes to one year.

If you want your brother-in-law to watch, participate, or help....30 days or until the check clears...........8>)

All that said, when something fails, we fixed it, no questions asked, unless in the case of abuse or lightning.

Yes, we have been burned a few times (Marantz DVD Players and 5000 series receivers), but the overall look to the client is that he will be taken care of.

We consider it a cost of doing business, we do not advertise, so when a client feels taken care of, they will refer you. That is my advertising budget...........

To be honest, we sell stuff that does not break.......on occasion it breaks, we fix it.

My nickel,

RR