How do you guys charge?

gf5300

Active Member
Maybe somebody here can steer me in the right path.
I am seriously considering starting an HA business. Due to the lack of knowledge (really, more like zero) where I live, I went ahead and educated myself and automated my new construction house mostly with HAI products. I have almost completed the project with almost all the subsystems normally associated with HA. I have had several friends and neighboors asking me to do the same with their homes for a fee. I do consider myself quite capable of doing it again. I will also be attending HAI factory training shortly to pursue a dealer certification.
I am a professional pilot and do have a lot of free time to work on the business part time. My intention is to advertise and to showcase my own home by appointment to prospective clients.
Due to the lack of competition in my neck of the woods and the enjoyment I get from this field, I believe this enterprise is worth giving it a try.
With that said, how does an HA integrator charge for services? Does he make money stricktly on selling the hardware or does he also charge for planning, programming and installation? How about call backs such as reprogramming or adding extra features?
Any help would be appreciated.
 
I think you're in a great part of the state to start your HA business. Also make sure you hit the area between Port Aransas and Rockport. There is a lot of business just north of you without many installers at all. I've met with builders in Port A and they don't have a clue or even know where to find people to do that type of work. With the rapid rising in home prices down there and the amount of new building, it's a great market.

As far as charging your customers, yes, you should make money on the hardware but what your customers are really paying you for is your knowledge and ability to integrate the systems to meet their needs. The really good installers will listen to the customers needs and wants and be able to translate that into the technology required. Keep in mind, most customers don't really know what equipment they want, the usually just have a vision of what they would like to be able to do. You can also help them with this vision.
 
As usual, Martin gives great advice and will be a great resource in your new venture.

I was in your shoes about 3 years ago. The main difference being that I jumped in with both feet when I was displaced from DEN (where I live) to PHL. I decided not to commute and turned in my wings. Similarly, my only HA experience was with my own home so I had a lot of learning to do.

One of the first lessons I learned was that there is a difference between a professional product and a DIY product and you don't want to put the latter in a client's home. Both may do the job but one requires a lot more tinkering to get it working and keep it working; call backs absolutely kill profit.

Don't use your clients as Guinea Pigs. Live with a product before putting it in a client's home unless it's one of your "friends" and they understand the deal and like to tinker.

Don't believe the cut sheets. Many manufacturers drastically overstate what their product will do.

Don't give your time away. You can not count on hardware sales to drive your business. If you give away your time a client will not see the value of your service and will take advantage of you. Things will take you a lot longer than you think in the beginning so you will end up undercharging on your first few jobs but that's part of the learning process.

Don't give your clients a shopping list. Early on I would spend hours on a bid only to have the client "shop" me on the internet. We sell systems/solutions and not boxes. I now charge for large detailed bids and credit it to the system if we go forward. Those who complain were not likely my type of client anyway. Just a personal thing but I have "Clients", Walmart has "Customers".

To my surprise, the most difficult aspect of starting my own HA business was not the technical side it was the business side. Spend the time required to have your ducks in a row from the start, it will make life so much easier down the road. I found an excellent business coach who is specific to our industry and I highly recommend him. Go to : Fast Forward Business Coaching for more info.

As AnthonyZ said in this thread:

AnthonyZ said:
Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. You are going to be payed to be an expert so be one.

Actually, all of Anthony's advice in that thread is good.

As a pilot, you have a lot in your favor. You are well versed in how to follow standards, have a good technological background and can read boring nebulous documents. ;)

Good luck and feel free to PM me with questions.

One other thing; consider how you will handle service calls while you are on trips. A client will not want to wait 3 days for you to return from your trip.
 
Thanks for all the info guys.
I love this site. Always very helpful.
Opie, good to see a fellow aviator in the forum.
I am planning on staying with an all HAI solution with a few components from other manufactures to fill some of the gaps. It has worked good for me in my own house, I feel comfortable with their products and I think they have the best all around package and integration out there for the money. They are putting out some nice new stuff this year including better touchscreens although it thats not to say that I rule out using other touchscreen interface software and hardware.
Going back to fees.
Opie, besides providing the hardware, how are you charging for the HA solution?
Charging for a bid makes a lot of sense to me. I agree that if somebody has a problem you probably don't want that person as a client.
I guess I am trying to figure out how an integrator sets fees for his expertise. Is it by the square feet of the house, the number of individual components to be installed or a flat fee?
I really need help with this. I have my first project coming up shortly and I honestly don't know what to charge these people.
There is absolutely nobody down here in Corpus Christi (KCRP for you Opie) that does this kind of work so I have nothing to compare with.
Thanks.
 
It sounds like you're in a good location, but it also sounds like you might be jumping in without getting all your ducks in a row on the business side.

You should really make sure that you have all the proper licensing, insurance, etc. that's required for this type of work. Not sure what the requirements are in TX, but in California you need the minimum of a low-voltage state contractors license (C-7). If you do any lighting (high voltage) or security/alarm work, additional licenses are required for each of these as well. Along with the state licensing are certain amounts of liability insurance and performance bonding that you're required to maintain.

At a bare minimum to get started you should look at obtaining a local business license as well as your state resellers permit. Having these will allow you to establish accounts with distributors and purchase equipment at dealer pricing without paying sales tax since it's for resale. Our friends at Automated Outlet would be a great place to establish an account with and I expect a call to them might also put you in touch with someone that might have a better understanding of the state and local requirements in Texas?

Properly estimating the cost associated with jobs is something that is gained with experience. When I first started out I tended to underestimate projects (especially time) and did a number of jobs that just barely broke even. Now after 3 years, I can do a walk through with a builder or home owner, take some quick notes and throw out some ball park figures on the spot. If I take the next step to do a proposal for them I find that I'm usually very close.

Most of the jobs I do are based on proposals where I provide a fixed price for the system. These proposals may be broken down into categories like lighting, intercom, whole-house audio, living room entertainment system, etc. but not detailed down to the line item. Often for retrofit work I'll provide and "estimate" but bill for actual time and materials. My labor rates in Santa Barbara, CA are $95hr for the home technology work and $125hr for IT consulting. This is in an area of >$1M fixer upper homes and a place where gardeners & dog walkers charge $40hr so appropriate rates may be different wher you are? The guys at AO might be able to give you some insight as to the going rates in TX???

Cheers,
Paul
 
Having done bids and installations in a previous job, let me tell you that no matter what you tell the client you're doing, they will claim you said something else.

Make sure you put EVERYTHING down in writing and make sure you specify the level of programming to be done with HA / security stuff. (once you bid a few jobs you'll develop standard boiler plate for most of the infrastructure). Get a copy of the house plans and indicate where everything goes like keypads, speakers, jack outlets. Then develop the costs assuming your time as project manager as well.

Typically I would charge for the bid if I didn't think the client was serious or didn't seem like they would follow through with me.

Make sure you have a change order process and make sure the client knows he's going to be charged for change orders.

That being said, I typically did about 80% of my work as time and materials with set rates for each type of job being performed. With software programming costing much more than pulling wires. To me this was the best of both worlds, I got paid for all my time and effort and the customer gets exactly what he wants based on his budget. And if unforseen events occur, you don't get stuck eating the costs.
 
Lots of great advice in this thread. I send D14 info on what I know about licensing in Texas.

As far as rates charged, in Texas I've seen everything from $65 to $150 per hour. Most of them are in the middle of that. In my opinion, if they are charging $65/hr, either they are very new, very inexperienced, or just leaving money on the table. In the Dallas area, rates have climbed over the last couple of years. $75 was common a couple of years ago but most charge around $95 or so. Most installers in the area are very busy at those rates.

I think it is a good idea to bundle the prices as someone suggested. That way piece parts don't get shopped or analyzed.
 
Thanks for all the info guys.
I love this site. Always very helpful.
Opie, good to see a fellow aviator in the forum.
I am planning on staying with an all HAI solution with a few components from other manufactures to fill some of the gaps. It has worked good for me in my own house, I feel comfortable with their products and I think they have the best all around package and integration out there for the money. They are putting out some nice new stuff this year including better touchscreens although it thats not to say that I rule out using other touchscreen interface software and hardware.
Going back to fees.
Opie, besides providing the hardware, how are you charging for the HA solution?
Charging for a bid makes a lot of sense to me. I agree that if somebody has a problem you probably don't want that person as a client.
I guess I am trying to figure out how an integrator sets fees for his expertise. Is it by the square feet of the house, the number of individual components to be installed or a flat fee?
I really need help with this. I have my first project coming up shortly and I honestly don't know what to charge these people.
There is absolutely nobody down here in Corpus Christi (KCRP for you Opie) that does this kind of work so I have nothing to compare with.
Thanks.


I started to type a long reply but quickly realized there was just too much information to convey in a forum. The bottom line is you are just going to have to estimate the best you can. Buy extra wire and plan extra time, I can almost guarantee it will take way longer than you think it will. Keep good track of what you use and how long each run takes. Every house is different and some will take longer but the more you do the closer you will be able to estimate. Think of it like flight planning. At first, you had to calculate the time to climb, time between each way point and so on. Now you can take a quick look at the weather and estimate within a few minutes without even breaking out your E-6B.

If you want to discuss over the phone I would be happy to. I am not the best of writers and have a hard time making my point in writing.

You can reach me through my web site at Focus Home Systems.

Another AnthonyZ quote from when I met him at EHX a few years back:

"You are going to make mistakes, just don't make them all on the same job."
 
I would like to thank everybody for being so helpful.
Martin, thanks for all the good info.
Opie, yes I will give you a call soon. The flight planning analogy was great!!
 
I cut and paste this from a similar thread that's working on a year old now...

I've been at it for about eight years, starting with basic cabling, light AV then two channel audio, distributed audio and home theater. You know how it is. One thing leads to another and I've been a hard charging HA guy for about four years now. First things, first. Get training(armed with the knowledge that you are being pitched). Then buy and install gear for you own home. DO NOT EXPERIMENT ON YOUR CLIENTS! Learn it, love it, live with it. Get very comfortable with the rig. Pay very close attention to the market. What's happening? What's coming? Go to trade shows. They're a great tax break/vacation with the added bonus of a little learning and a lot of networking. Knowing people (including your competition) is a very good thing. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. Learn. You are going to be payed to be an expert so be one. Pay your taxes (on time). Hire carefully. Add to and upgrade your own rig. Keep learning. Watch your numbers/books. Sell relationally. Sell youyr expertise. Sell. Sell. Sell. Sell. Sell. Sell. Build a brand and a reputation. Ask for referrals. Ask for upgrades. Practice impeccable intregrity. Go meet some more people. Understand that when working with a female client she will feel far more comfortable if you find a way to "mention" your wife or girlfriend. It let's her know you're safe. (I usually find one item in the home that I know my wife would like. Then I compliment the Mrs. while telling her that my wife loves that sort of knick knack or what have you. You can feel the internal sigh of relief. She's instantly more comfortable and I then let her play with color swatches of acoustic panels, wall plates, etc.). Read and read some more. Participate (rather than lurk) in various forums. Humbly request help when you need it. Make good friends with other trades. Go to some more training. Learn how to accept rejection. Learn how to say no or decline to work with squirrelly clients. Give manufacturers honest feedback, the good and the bad.

Lastly and most importantly, remember how much fun this stuff is. I have days that drive me into the ground. I suffer from outbursts of irrational anger and frustration. Then I contemplate just how blessed I am to be payed to practice my hobby, my passion, and I thank the Lord. I then fire up my theater rig and bask in the glow with a $hit eating grin...Have a blast!
 
For those guys who have started a HA Biz in the last few years, How is it going. Has this down turn effected you much? Is it still a profitable field? The reason I ask is I have been pondering fallowing suit and trying it as a part time side gig. I have had a few people interesting in it when they see my setup and I figure I could then justify it to the wife about why I spend so much time doing this stuff. :)

Any input would be appreciated
 
phenix, I would suggest that now is a bad time to consider jumping in and especially as a part time gig. Business is slow on the residential side (at least it is for me) and commercial is not where you want to cut your teeth. There is a significant correction happening across the country right now that is, thankfully, weeding out the weak sauce. Trunkslammers, rookies and the gutless are dropping like flies. Hell, even big firms are shutting their doors (look at Baumeister in Chicago). If you don't have a pipeline, you're probably screwed and as a rookie, you don't have much of a pipeline. Also, as a part timer, you're gonna have a hell of a time convincing new prospects that you're a safe bet. If you ignore me and go for it, I wish you luck. You'll need it.
 
For those guys who have started a HA Biz in the last few years, How is it going. ...
Any input would be appreciated

I started my own company a couple years ago and it ended up not being my cup of tea. I loved installing my own HA setup and had a blast installing other people HA setups also. I just was not comfortable leaving my current full time job to become my own boss and because I could not leave my job I had a hard time offering support to my customers after the installation.

The guys have given you excellent advice in this thread and I hope other in your position also get something out of it.

As for me I have chosen to back off the actual installations and become a part time consultant instead. I have actually made more money as a consultant than I did doing the couple installations I did. The main reason I did not make as much money doing installations is because I underestimated the amount of time it takes to support an existing customer.

The guys are 100% correct about DIY products not being equal to Pro products and I learned this the hard way when I installed 60+ Z-Wave light switches in a 3500 sqft home. I ended up having to return to the home about 10 times at about 5 hours each time to replace devices as they quickly started to fail. Two days after the initial install I was back replacing devices with week transmitters. Then I was back a week later trying to debug controller issues.

If you are serious about doing this than you need to invest some time and money and do your research. My business plan was to focus on retrofit jobs. I would not recommend you go this route. Instead you are better off focusing on new installations and once you get a solid business going then you can add retrofit into your plan. Practice on yourself, family members, friends, and close neighbors first. One of the other things that killed me was that I was in the wrong location and my clients were contacting me from 1.5 hours away. Spending 3 hours on the road for a job is no fun.
 
Hey thanks Guys

AnthonyZ- Thanks for the reply. Thats kinda what I figured. As with most biz these days it is tough times everywhere. I appreciated the honest advise. I live in a good part of the country for this type of work and I usually have about half the month off at a time but I don't want to jump into a dry market. Good luck to you and your biz.

Squintz- Thanks to you as well. Could you explain the consulting route a little more? Sounds interesting.
 
Consulting can really be anything you want it to be. You are essentially selling your knowledge to a customer. My consulting started off as me writing articles for Z-Wave World and after making a bunch of contacts through the gig I started getting e-mails from customers wanting to know more about Home Automation. I typically respond to these e-mails with enough information so that the customer understands that there is not any one correct way to Automate their home. I try to explain a little about a few of the technologies available and then I offer my consulting support should they need it. This conversation usually weeds out who is intending to do it themselves and who is planing to hire a professional. I do offer my services to DIYers but have yet to have any request my services. Typically my customers are general contractors who are renovating homes or building new ones. Keep in mind that this is a side job for me so I don't actively promote my services. Work usually finds me through word of mouth.

In one case my Dad was building a home in Ottawa, Canada (I live in Maryland) and he was getting help for a GC. I was helping my father and the GC was visiting and overheard us talking. He requested my services and he is actually the one who offered to pay me for my time. I spent most of my time on the phone with him trying to understand what he wanted to offer his customers. I put together a list of systems that he could offer and where to get educated about those systems. I was paid for my time and ended up blowing it on my own hobbies like I usually do with my extra money.

In another case I had a research company call me and paid me a couple hundred dollars for a phone interview. This company found me through Z-Wave world.

Currently I am in contact with yet another company who wants me to be an editor for their magazine. We are working out the details.

I must admit that I am not getting rich from this "consulting" work but I am much more happy doing it because when the job is finished I never have to worry about fixing anything. If I were to consult for an electrician or another GC it is ultimately up to them to make sure everything works in the end.
 
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