Crestron System Markups and Programming Fees

[Target]

I'm interested in this on a purely intellectual level. Not looking to create any sort of flamming of Crestron or other non DIY products. I'm actually trying to do some market research on the HA industry. That said, I have a couple of questions.

1. Does anyone know what the markup on Crestron products is from wholesale to installation?

2. If a Crestron system for a larger installation (or medium for that matter includes $25,000 in equipment, what will the programming fees run?

3. How does the breakdown between programming fess and equipment work for some of the other products?

Thanks a ton to anyone that can help!

Target

 

[electron]

I know we have people here who know this stuff, but I am not sure if they are allowed to discuss this.

 

[IVB]

I know a guy who knows a guy who's brother has a buddy in this business.

He tells me that companies typically look at annualized *gross* margins of 32% max, with net margins being far less.

That doesn't count the time invested in the long sales cycles required for these gigs, and the ratio of wins to losses.

For those of you in any form of business, I hope you're as horrified as I am. Talk about busting your butt way too much for way too little money. I'm fairly certain the woman that cleans my house has a higher effective hourly rate than a professional CI.

 

[Target]

That's kind of what I figured. Its a tough model to live on. I'm really not looking for anyone to break any rules. At this point I'd be pretty happy if somone could just clue me in on the breakdown between programming/labor and hardware for a standard bill.

Target

I know a guy who knows a guy who's brother has a buddy in this business.

He tells me that companies typically look at annualized *gross* margins of 32% max, with net margins being far less.

That doesn't count the time invested in the long sales cycles required for these gigs, and the ratio of wins to losses.

For those of you in any form of business, I hope you're as horrified as I am. Talk about busting your butt way too much for way too little money. I'm fairly certain the woman that cleans my house has a higher effective hourly rate than a professional CI.

 

[IVB]

Well that's the thing; a regular bill will be misleading because of all the other crap. You may think there's a 45% markup, until you realize the things that aren't allocated to any given client but rather across clients. For example, template construction - it might cost $X to uplevel your templates, but you may not force one client to pay since another client also wants it.

There's also varying accounting techniques. Some folks may opt to charge MSRP for the hardware, and a lower rate for labor. Others may opt for hardware minus 20%, but charge a lot for programming. Some programming may be subcontracted out, so you'd need to add in a 15% markup to protect margins, but charge less for hardware to keep the total cost reasonable.

Hence, the percentage of a given bill for hardware versus programming is going to be all over the map. I'd just stick with a "@ end of year, the net margin is 10% or less, gross is 32%". Anything else will be apples and running. (worse than apples & oranges, those are both fruits. Comparing bills at the detailed level is like comparing a noun with a verb - doesn't make sense to do)

 

[opie]

I am in the business and don't do the high end so I can't speak specifically to Crestron or AMX but I have to say IVB makes excellent points (as usual). Every company does things a little differently and the business is rapidly changing. Hardware margins used to be a lot better but the internet has done a lot to change this. Crestron is obviously a different animal and pricing is generally not as easy to come by but you can still find info on it if you look hard enough.

Some companies are trying to move to more of a service model for the profit since the hardware profit is diminishing. Others have excellent sales skills and are still able to get full price for labor and equipment. Having said that, there are a lot of business/management education resources available to the Custom Integrator and they generally will advocate a pretty standard labor to product mix; whether most businesses follow this or not I don't know.

If this is for a legitimate research project, I would contact some large Crestron dealers. They may be willing to give some of this information off the record and not on a public forum.

Good Luck.

 

[CollinR]

1 touchscreen doesn't need much programming.


($25k doesn't go very far! lol )

 

[Ranger Digital]

Some have tried to model their labor/material after satellite installation companies. Example, call a local Directv company and they tell you a flat rate of $89 a drop.

I guess I could make it that simple, but I personally dont think its fair. At $89 a drop, if i run 5 coax to every TV (RGB, L & R audio) and there are 8 TV's, that $445 x 8 = $3,560. Wouldnt that be nice but it rips off the customer! EVERY job gets its own customized quote. Tedious and pain the butt. Someday I may figure out a fair and VERY easy way to estimate based on a PER DROP formula, but have not found one thats fair. Others may have.

IVB is right. Its difficult to tell a customer "I will charge you X% above cost." It would never be understood since the customer has no idea exactly what it takes to put together a complicated system, what hours you already put into it BEFORE you pull the first wire, nor the time it takes to learn, train and grow the education necessary to be successful.

It doesnt answer your question directly but should shed light on the some inabilities to even answer it correctly. Every quote is different. I even factor in "compatibility" figures ie, how easy is the customer, location, access, do I want this job, is this person "fun" to work with, is this REALY going to be worth the hassle in the long run. ABSOLUTELY have turned down business SOLELY because I thought someone would be a pain in the bootay or I just didnt like them at all. Lifes to short to mess with people that can bring you down. Hope to never be desperate enough to have to (for money only) deal with situations I put myself into that I had to complete choice to NOT put my into. Make sense?

 

[Target]

Thanks a ton for the responses. This is definitely a legitimate research project. I'm taking an MBA class and trying to learn a bit about the industry through that lens. I have contacted one very large Crestron dealer ans will be sitting with him in a couple weeks, but I thought I'd try to probe here a bit.

I'd welcome any more discussion, and I'll try to remember to post back here after I talk with the dealer.

Thanks again,

Target

Some have tried to model their labor/material after satellite installation companies. Example, call a local Directv company and they tell you a flat rate of $89 a drop.

I guess I could make it that simple, but I personally dont think its fair. At $89 a drop, if i run 5 coax to every TV (RGB, L & R audio) and there are 8 TV's, that $445 x 8 = $3,560. Wouldnt that be nice but it rips off the customer! EVERY job gets its own customized quote. Tedious and pain the butt. Someday I may figure out a fair and VERY easy way to estimate based on a PER DROP formula, but have not found one thats fair. Others may have.

IVB is right. Its difficult to tell a customer "I will charge you X% above cost." It would never be understood since the customer has no idea exactly what it takes to put together a complicated system, what hours you already put into it BEFORE you pull the first wire, nor the time it takes to learn, train and grow the education necessary to be successful.

It doesnt answer your question directly but should shed light on the some inabilities to even answer it correctly. Every quote is different. I even factor in "compatibility" figures ie, how easy is the customer, location, access, do I want this job, is this person "fun" to work with, is this REALY going to be worth the hassle in the long run. ABSOLUTELY have turned down business SOLELY because I thought someone would be a pain in the bootay or I just didnt like them at all. Lifes to short to mess with people that can bring you down. Hope to never be desperate enough to have to (for money only) deal with situations I put myself into that I had to complete choice to NOT put my into. Make sense?

 

[AnthonyZ]

I know a guy who knows a guy who's brother has a buddy in this business.

He tells me that companies typically look at annualized *gross* margins of 32% max, with net margins being far less.

That doesn't count the time invested in the long sales cycles required for these gigs, and the ratio of wins to losses.

For those of you in any form of business, I hope you're as horrified as I am. Talk about busting your butt way too much for way too little money. I'm fairly certain the woman that cleans my house has a higher effective hourly rate than a professional CI.

Very, very close to what my model has been for some time. Gross margin on residential work is in the 30-35% range while commercial is typically at 35%. Net is considerably less and yet I still have to listen to people who earn more money than God bitch about my prices. Much like my man Ranger said, I tell 'em to pound sand (although I usually state something that starts with "Go..." followed by the F word and finishing with "...yourself").