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post #1 of 160 Old 04-18-2007, 02:36 PM - Thread Starter
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I am looking into getting a crestron system to automate lighting/shades/distributed audio/etc and I'm wondering where people go to get the best prices on the hardware. I could buy it from a system integrator company but I suspect they will take my first two children. I'm wondering if it is cheaper to get it from someone else and hire an experienced programmer (which seem to be around) to put it all together.

Do discount dealers exist? Typically, how much does pricing vary?
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post #2 of 160 Old 04-18-2007, 03:10 PM - Thread Starter
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I'm happy to let someone make a profit on me. However, I also believe in a reasonable profit and I'm not convinced that the typical system integrators do that. Typically, reasonable competition in a market will let people make profits but not outrageous ones.

I suspect I can find a designer who will take a project at a fixed fee or hourly rate. That still allows them a reasonable profit.

I can afford it the system. I simply resent feeling exploited. If I'm paying folks hourly fees to install things, hourly fees to program things, and hourly fees to design the system, I really don't feel I owe them huge margins on the hardware.

A modest one yes but the evidence I've seen suggests most integrators have very high margins on crestron hardware. Many of the people who deal in these items are also dealers of AV equipment. I had one quote for a $10K projector which has a street price of $5.7K.

Thats not a reasonable profit. That is an outrageous margin and I believe somewhat a representative of how these people operate.

Just like you try and get the good prices on a car or home rennovations. I try and get good prices on my electronics. In all cases, you also pay attention to support, reliability, quality, etc. But starting with the assumption that the system integrator somehow deserve the MSRP is a bit absurd to me.
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post #3 of 160 Old 04-18-2007, 04:22 PM
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Quote:
Originally Posted by Awake View Post

I had one quote for a $10K projector which has a street price of $5.7K.

Thats not a reasonable profit. That is an outrageous margin and I believe somewhat a representative of how these people operate.

But starting with the assumption that the system integrator somehow deserve the MSRP is a bit absurd to me.

Most good custom installers will start to with MSRP or close. You are not only paying for the product when you buy an item, you are paying them for their knowledge in selecting the right product for your needs.

Is it the CI's fault some dealer puts their stuff online and sells it for cost plus 5% if that. I can't even afford to come to your house and look at the application on those margins.

QQQ is right, this approach with Crestron will almost certainly end in a big mess and probably cost more in the long run. Crestron customers don't price shop, at least not most of them. They look for the CI they like the most and go with them. They don't have time to research, design, and implement a system.

You will most likely have lots of trouble finding all the pieces you need to complete the system for a discount seller.

Check out CQC.
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post #4 of 160 Old 04-18-2007, 04:25 PM
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This debate has been had on these forums many times and I know better than to jump in but . . .

Don't confuse street price with a fair price. Each individual business has the right and responsibility to determine what type of margins they must maintain in order to maintain and hopefully grow their business. Internet vendors can operate at much lower margins due to their extremely low overhead. A local dealer can't count the margin they make on hardware as "profit." They have other things to pay for with that money like the shop where you have an opportunity to demo the products that you're interested in, insurance, employee salaries, demo inventory and on and on.

What you're suggesting (buy my stuff at "street" and have the installer just put it in for you) is the equivalent of going to Sam's Club to buy ingedients for dinner and expecting the local four star restaurant to cook it up for you. They would laugh you out of the restaurant and go ahead and seat the next guest that isn't carrying in their own groceries.

This post is NOT meant to be a slam. I just think that sometimes people have an unrealistic idea of what type of margins should be considered "fair". If you want to talk about high margins, ask the local Pizza Hut manager what their food cost is on that pizza you ordered!

I've had this same type of discussion with hourly employees. "We charge $85 an hour for labor but you pay me $20. You're making $65 an hour profit on me!!! I want a raise!" When we opened the books and showed them the operating expenses involved with running a responsive and stable custom installation business, they changed their tune.

Crestron (as well as most other automation products) is highly dealer dependent. The dealer makes an enormous commitment in time and money to become proficient in designing and implementing these systems. Creston is a very powerful system, but the key to it's successful implementation is the dealer.

Everyone wants to save money, but don't be penny wise and pound foolish. I have worked with many clients over the years that tried to do things as inexpensively as possible and ended up spending twice as much as if they had just hired an expert in the first place.
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post #5 of 160 Old 04-18-2007, 04:29 PM
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With all due respect to OP, overhead and labor cost and ongoing service are what drive up costs. When we do a job at cost plus, we then need to charge for actual labor hours. You are much better off getting a bid price all inclusive.

As far as "outrageous markups" it is always cheaper to buy a filet from the supermarket that going to Morton's or Ruths Chris, but no one seems to complain that they are selling 15 Dollar steaks for 50 Dollars. The "street price" is what someone who has no great people to install or calibrate is charging you for moving a box. Integrators do so much more, hence they cost so much more. You will find the good ones are in it for the love of technology not cash. Typically they "take home" 5-7 percent of what you spend not exactly gouging.

If you get cost plus expect 25% plus actual labor hours with no cap.

Just my .02

I know it sounds great and looks great.....but can we communicate with it? If not it is useless:)
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post #6 of 160 Old 04-18-2007, 05:19 PM
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hehe......this will be an interesting thread.

When I got the quote for my home last year. What blew me away was hardware costs like 5-8K touchscreens. Not everything was extreme but it seems some items were grossly over priced.

I still dont know why good Home Automation doesnt cost under $20,000 considering all equipment I needed was I think under $15K but I have been told on here by the CIs that it just is that way

I ended up building my own system. Its not for everyone, it has to be a hobby because it does consume time. Its been awesome learning everything.

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post #7 of 160 Old 04-18-2007, 05:27 PM
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btw, CQC does have CIs so you dont need to do it yourself.

You can then source all components (You will know the true costs) and let someone else make them all work together and give you an interface.

Costs for this I have to believe is substantially less then a Crestron solution.

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post #8 of 160 Old 04-18-2007, 07:31 PM - Thread Starter
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This forum seems to be populated by people who make there money doing this stuff so I guess I see why you don't like my views. This is interesting

Quote:
Originally Posted by SAAudio View Post

Most good custom installers will start to with MSRP or close. You are not only paying for the product when you buy an item, you are paying them for their knowledge in selecting the right product for your needs.

QQQ is right, this approach with Crestron will almost certainly end in a big mess and probably cost more in the long run. Crestron customers don't price shop, at least not most of them. They look for the CI they like the most and go with them. They don't have time to research, design, and implement a system.

Somehow, the fact that I buy a $20k projector rather than a $10k projector entitles the SI to earn twice as much? It doesn't take twice as much work. I guess I'm not a typical Crestron customer. I'm quite analytic and believe in getting value for my money and doing a lot of research.

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Originally Posted by Mattman View Post

What you're suggesting (buy my stuff at "street" and have the installer just put it in for you) is the equivalent of going to Sam's Club to buy ingedients for dinner and expecting the local four star restaurant to cook it up for you. They would laugh you out of the restaurant and go ahead and seat the next guest that isn't carrying in their own groceries.

Everyone wants to save money, but don't be penny wise and pound foolish. I have worked with many clients over the years that tried to do things as inexpensively as possible and ended up spending twice as much as if they had just hired an expert in the first place.

A good and reasonable reply. I'm not sure I agree with the analogy although I will tell you that there are parts of the world where that is essentially the model you follow. Go buy your fish and bring it to the chef down the street to cook so it isn't as outrageous as you think. In your analogy, I can go buy the ingriendents and find a less skilled chef. However, that seems hard with Crestron. The ingridients cost me the same regardless of the chef.

I'm actually not excited about any kind of DIY setup or finding another mechanism but I'm building a fairly large setup (fully wiring a 4BR apt with lots of windows) that the savings is potentially substantial. If it is large enough, it justifies more risk and a bit more headache on my part.

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Originally Posted by penngray View Post

When I got the quote for my home last year. What blew me away was hardware costs like 5-8K touchscreens. Not everything was extreme but it seems some items were grossly over priced.

It is expensive and Crestron puts a lot of money into development efforts. What bothers me is if I buy a touchscreen that costs $8k rathern the $4k, the SI gets twice as much profit although the work is largely the same (and the difference is covered by hourly wage).

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Originally Posted by Mr. Integration View Post

With all due respect to OP, overhead and labor cost and ongoing service are what drive up costs. When we do a job at cost plus, we then need to charge for actual labor hours. You are much better off getting a bid price all inclusive.

So normally you do not charge for hours? The proposal I have right now is MSRP + hours. To my mind, it makes sense to charge one way and not the other.


Just like any skilled professional gets compensated for their time. I like to think of SI's as skilled professionals and they should be compensated for their time. The fact that they also try and behave like car salesman and get more money because you want a fancier product makes me uncomfortable and seems a bit deceptive. I would much prefer someone charge me cost and I pay a decent hourly wage. I don't expect speakers or a projector or an extra two rooms of audio is going to take them twice as much effort so I don't see why I should double the amount of money I give them.

But I think we are going in circles...
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post #9 of 160 Old 04-18-2007, 07:44 PM
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Quote:
Originally Posted by Awake View Post

I'm happy to let someone make a profit on me. However, I also believe in a reasonable profit and I'm not convinced that the typical system integrators do that. Typically, reasonable competition in a market will let people make profits but not outrageous ones.

This has been covered quite a bit. The issues are many and are not only based upon hardware costs. Integration is a funny business. You have a lot of responsibility and yet almost no control. " My Crestron system is broken.." may begin the complaint but the cause may be low cable TV signal that causes the cable box to pixelate. It may be a defective piece of equipment. Perhaps your hard drive failed and when you press the button it no longer plays music. Or the program could be corrupted. Or you may have found a bug in my code that no one else ever has. Or you may have found a way to use the system for which I failed to code.

I am in the process of coding 4 large jobs. I am working 15-18 hours a day. I have to draw screens, code the GUI, figure out serial protocols, address devices, I need to figure out why code that worked stopped working. How much am I entitled to make according to your sense that my profit ( and my net profit last year was 9% on a gross profit of 35% ). You have no clue what it takes to make one of these systems work. You see some of the prices quoted and you think, my Lord, these guys are ripping me off. When you discover how much time and knowledge many of us put in you might discover that it is lawyers, wall street investors and born again ministers who are the shysters, not we lowly integrators.



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A modest one yes but the evidence I've seen suggests most integrators have very high margins on crestron hardware. Many of the people who deal in these items are also dealers of AV equipment. I had one quote for a $10K projector which has a street price of $5.7K.

I have no clue what this means. I trust it means that the MSRP is 10K but you can find it on the Internet for 5.7k. My initial response might be some 4 letter expletives. Many items I sell can be had on the Internet for less than my cost. How so? People go out of business and their inventory is purchased and resold, is one method. The point, however, is you don't understand and haven't a clue. We sell systems not boxes and you are still looking at everything as if it's a product. When you go into Wolfgang Puck's restaurant you are going to spend more than you might were you to go into McDonald's. The difference is not just the food itself. It is the service, the decor, and the capabilities of the chief. You are not just getting a 10K projector. You are getting a high quality distributed audio video system and I charge MSRP for the products and a service fee to install and program. If you don't like it follow Pengray and do it yourself.

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Originally Posted by Awake View Post

Thats not a reasonable profit. That is an outrageous margin and I believe somewhat a representative of how these people operate.

You have no idea what is reasonable. You only have a belief system that says that if I can find product A cheaper then the other guy ought to sell me that product for that price. You don't for a moment consider that a. I might actually know what I am doing. b. I might tweak that product and make it sing ( calibration) c) I might have to have spent time to figure out how to write a driver for it d. I am responsible for more than just that product. If your mill work installer puts a nail or screw into the wire and something fails to work can I still get paid? If there is a problem with RF interference will you still pay me? How about the thief--you don't know who I'm referring but others do--who hired me to install a basic system, had his Nigerian enabler change the specification, agreed to more fees and after he received a working system failed to pay. You sound just like him. He also found a way to pay less while getting a working system that took 7 days to wire, 2 weeks to trim out and 2 weeks to program.

Quote:
Originally Posted by Awake View Post

Just like you try and get the good prices on a car or home rennovations. I try and get good prices on my electronics. In all cases, you also pay attention to support, reliability, quality, etc. But starting with the assumption that the system integrator somehow deserve the MSRP is a bit absurd to me.

I hear that Control4 is the cat's meow and boy are the prices of the equipment lower than what that Crestron thief tried to pawn off on me. You may wish to look into it. Then there is also Lifeware. I'm told they are in Best Buy. Doesn't Best Buy have "The Geek Squad." They must also be able to do custom integration well too. There is also a fellow who participates here who speaks very highly of MainLobby. I'm told it can do everything Crestron can do and at a fraction of the price.

Some people are candidates for custom integration and others really need to look at Walmart for their solution. It is a personality quirk. You just have no idea how time consuming it can be nor the fact that it is impossible to know how long it will take to finish your job in terms of labor. Ultimately, what matters is my net profit which as you can see above is probably a lot lower than yours especially when you factor in time. I spend a lot of time, even if you discount for inefficient work habits and inventory control and order management, making systems work. The only way you'd have any idea is when I was in your home for 7 straight 17 hour days that did not include the years of driver and GUI creation. Shades don't work and I get the call, not the shade contractor. Lights don't work and I get the call and I have to change the light bulb. Security system does not work and it's my fault that their horrid protocol craps out and spits out garbage that locks up my com port. Since you have no idea about my business model or costs and care only about paying as little as possible not in getting a system that works I don't any of these words will in any way be illuminating.

Alan
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post #10 of 160 Old 04-18-2007, 08:02 PM - Thread Starter
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Some people are so defensive. You guys seem to attack me because I question your margins/business model and want to get a decent bang for my buck.

So lets try a very simple question:

Why do you charge large markup and hour fees? If it takes you 15-20 hours of work to do a task, I pay more hours. Fine by me. If it takes 40, I pay for forty. You do more work, I pay more money. Seems simple and rationale.

So why the markup? Charge higher rates rather than hide it in the markups. Your rate includes salaries, overhead, profit, amortized education costs, etc. More complicated tasks take more time and entail more risk but you bill for more hours.

This is how I interact with lawyers, accountants, and many other professionals. They do what I tell them as long as I pay their rates. My accountant doesn't care who they need to work with to get the job done (Morgan Stanely or stupid idiot bank) -- if it is harder for them, they work longer and charge me more.
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post #11 of 160 Old 04-18-2007, 08:55 PM
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I know I shouldn't but I can't help myself ....

When was the last time you went into a Ferrari or Rolls dealer and negotiated a discount? Would you complain about the $300+ oil change and take it to Walmart the next time?

When comparing Crestron to cars and their salesmen, you need to think Rolls, Ferrari, etc. I don't ever remember seeing a Rolls or Ferrari in the 10 minute oil change place or on Walmart's grease rack.

"I'm a fanatic without a cause and I believe in it!" - B. D. G.
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post #12 of 160 Old 04-18-2007, 09:19 PM - Thread Starter
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Repeating over and over again that "We are great we deserve a premium" isn't going to make it true or not true. It just sounds a bit self aggrandizing.

If you like the car dealer analogy, I can buy my car at one place because they offer me the best price (and yes, people do price shop for premium vehicles -- not everyone, some people don't care about money until it gets another zero or two) and get it serviced by another (good reputation for service department, near work/home). Might be a premium auto dealer, might be the neighborhood mechanic you have been using for years.

You ignored my question. The only real reason I can see for high markup and hourly rates (rather than simply clear and higher hourly rates) is to obfuscate the issue.
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post #13 of 160 Old 04-18-2007, 09:20 PM
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Quote:
Originally Posted by Awake View Post

Some people are so defensive. You guys seem to attack me because I question your margins/business model and want to get a decent bang for my buck.

So lets try a very simple question:

Why do you charge large markup and hour fees? If it takes you 15-20 hours of work to do a task, I pay more hours. Fine by me. If it takes 40, I pay for forty. You do more work, I pay more money. Seems simple and rationale.

So why the markup? Charge higher rates rather than hide it in the markups. Your rate includes salaries, overhead, profit, amortized education costs, etc. More complicated tasks take more time and entail more risk but you bill for more hours.

This is how I interact with lawyers, accountants, and many other professionals. They do what I tell them as long as I pay their rates. My accountant doesn't care who they need to work with to get the job done (Morgan Stanely or stupid idiot bank) -- if it is harder for them, they work longer and charge me more.


I agree this is how most professionals work except they charge 300 an hour if they are really good. Try putting that on an invoice, besides hourly charges are a bad idea. If I am really good at my job, I generate less revenue, if I am learning or just not too efficient it costs the client more money. It is a lose lose, but if you know how much it be before you start you can decide if it has value. I typically tell my clients get your own"fill in the blank" we will connect to it and call whomever you got it from if it breaks. I could care less if we sell any products. We get paid for design, install and programming. Products typically are a loser if you provide service.

I know it sounds great and looks great.....but can we communicate with it? If not it is useless:)
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post #14 of 160 Old 04-18-2007, 09:22 PM
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Quote:
Originally Posted by Awake View Post

Some people are so defensive. You guys seem to attack me because I question your margins.


So lets try a very simple question:

Why you you charge large markup and hour fees? If it takes you 15-20 hours of work to do a task, I pay more hours. Fine by me. If it takes 40, I pay for forty. You do more work, I pay more money. Seems simple and rationale. So why the markup? Charge higher rates rather than hide it in the markups. Your rate includes salaries, overhead, profit, etc. More complicated tasks take more time and entail more risk but you bill for more hours.

This is how I interact with lawyers, accountants, and many other professionals. They do what I tell them as long as I pay their rates. My accountant doesn't care who they need to work with to get the job done (Morgan Stanely or stupid idiot bank) -- if it is harder for them, they work longer and charge me more.

Because I have no control or little control over the products I must integrate. If you'd like to pay time and materials I'd sell you gear at a discount. But Would you really like me to only work when I'm on your job site? Might you see some benefit from my working on your program when I'm off site? What if installation took 2 men 7 8 hour days to install your system? That is 16 man hours @ 95/man/hour or 10640.00 What if in addition to that installation fee it took me 21 days to design the GUI, program the equipment and code that system. Let's say I only worked 8 hour days but the reality is I work longer. At 150/hour that's 25,200. What if you had any issues? Cable box does not work, some RF interference, interface into other trades, shades lose their limit switches, you want to change the lighting scenes, turn on volume, or lord knows what. That is 1.5 hours travel time at my hourly rate x the time I need to be on site, with a minimum of 4 hours.

What would stop me from doing what the lawyers do? Namely running up the hours by working slowly, charging for every telephone call we have or I have with trades? There is a reason why even amicable divorces cost a fortune. Believe it or not I either discount labor or equipment. I need a bottom line number and you can pay me for my time or pay for the job. Even data entry takes time. The more time, no matter how trivial or simple the data entry, the more you will have to pay.
Moreover, I have far less control of my enviorment then do your legal eagles. They have the law and precident. I have constantly changing equipment, protocols that are after thoughts, heat issues no one wishes to deal with when the price of real estate approaches 800/sq ft. Put in the tiny touch panel but make it so I can control my whole house, including pool, jaccuzzi, CCTV, security, lighting, HVAC and shade subsystems. If any of those do not work you make it so they can. If I do not like the way the networks transmit programming on HD channels then ought not I have to fix it? What if you Toshiba TV will not tune in QUM digital signals? What if it has not discrete IR or serial jack? What if it just behaves funky? What if it has a secret handshake to enter service mode? What if it will not be addressed and put on the system? Who pays for the time to trouble shoot it? If you'd like to absorb that risk then let's sign the contract now.


Did you know that a security door contact costs .50 and sells for $8.00 That is much more profit than I make on a plasma and while your projector may seem as if I'm off to the bank I caution you to take account of what happens if it craps out? Who pays for shipping? Who pays for time trouble shooting, removing the unit and then reinstalling it? HDMI will not work? Fix it. I don't like the way aspect ratios display on the TV you sold me--yes that 10k projector. I don't like pixelization from the cable TV box on the 10K projector you sold me. That 10K projector used to work but now it does not turn on?

Do I get to act like a plumber? Do I get to charge for every man hour I am in your home? Let's go. I'm your man. It will be the first time my net profit exceeds 12% in years. We will move to a labor only model in the near future and you will pay more for my services not less. And I will have less responsibility not more. If it doesn't work I'll come back time and again and fix it and you'll pay for every trip.

Keep in mind also that I travel to 5 states, and even when I'm local I have to fight different traffic patterns every day. Unlike your lawyer, I don't drive to the same office every day. I have to fight architects and decorators and sometimes clients to get the proper engineering specifications built into their gorgeous mill work. I took a call yesterday from an architect upset because his gorgeous cabinets are not deep enough to accommodate a HD cable box. His solution? Go to a SD box. Can I get away with that were you to hire me?

The point is that since you don't know my costs how can you know if my charges are outrageous? If you'd like to pay for everything, as happens with lawyers--phone calls, faxes, copies, then go to it. My favorite is the client in the above example--who has yet to hire me-- who has called me 6 times and spoken with me on my cell for at least 3 hours-- and has solicited my advice on product selection but followed your preferred purchasing method of buying on line. If I go out of business is that in your interests were I to have coded your system? The bottom line is what's important not the price per line item. If you paid 40K more in labor than my quote but the bottom line is the same as when I sold the system with equipment at MSRP and labor discounted or if I discounted the equipment and charged more for labor.

Alan
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post #15 of 160 Old 04-18-2007, 09:44 PM - Thread Starter
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Two parts:

1) So, your costs vary and are unpredictable. This is true in lots of industries. So, you increase your hourly rate to compensate. You adjust them if you need to travel out of state (some system integrators do this anyways).

Why is burying the cost in a markup a reasonable solution?

For some reason, you seem to think hiding it in a markup is a better solution than fixing your rates. To me, it gives me a feeling that things are being hidden and not entirely upfront.


2) The reason I feel the rates are unreasonable is that I can say with a high degree of confidence that you are likely to make significantly more money because I decided to buy a nicer component that was 5X the cost of the cheaper version but I liked better.
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post #16 of 160 Old 04-18-2007, 10:12 PM
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Awake,

I hope that you did not misinterpret my response as an attack. It was not meant that way.

If those of us that are in the business seem a little defensive, it's because our right to make a decent profit is often attacked by folks who have presented their case much less reasonably than you have here. How you and I define what a fair margin is will be completely different because I am entering the transaction with a different perspective than you are.

If the products and services that I offer come at a price that you are unwilling to pay then it is your right to walk away. I am not trying to con you by charging more for product than I buy it for. We're all well aware of our client's ability to use the internet to determine what our cost for goods is. Even if we wanted to hide these facts, we can't.

By the same token, if you are unwilling to pay what I feel is a fair price for what I offer then I can also choose to decline the opportunity of working with you. I have the right and responsibility to conduct my business in a financially prudent manner that assures that I, and all the people that work with me, will continue putting food on our tables. This isn't your concern but it has to be mine.

That's the way of the world. I'm sure if people had easy access to the pricing of other product categories (pharmaceuticals come to mind) then they would be much more offended by those than they are about electronics.

When I enter into a project, I have two goals - make a profit and get referrals from my client. I will not get referrals if i do not do everything in my power to make sure that my client is thrilled with the end result. I will not be around to take advantage of the referrals if I have not been diligent about running a profitable business. If I can't accomplish these two goals then it is irresponsible of me to involve myself in the project.

Most of the a/v companies that have tried to follow the financial model that you suggest have not stayed in business very long. Yes, the people that bought from them got some fabulous deals but now if there's a problem or a desired upgrade then those clients have to look elsewhere. They're probably just fine with that because price was always their main objective.

I don't have a problem with your desire to save money. That's just smart. I do the same thing in many aspects of my own life. But there are many areas in my life where I value the expertise and the long term relationship and I am willing to pay a premium for it.

The cabinetmaker that built my bar and entertainment center easily costs twice as much as some reasonably talented trim carpenters that could have built a decent version of what I wanted. My cabinetmaker and these trim carpenters would have been using similiar materials to accomplish their tasks. I paid more for materials and labor because I wanted something special that was tailored to exactly what I wanted. For me it was worth every penny.

This may just be one of these cases where we have to agree to disagree. Crestron dealers are like fine cabinetmakers. They have spent years perfecting their craft and there will be a premium to work with them. But if you want the ultimate in automation and something truly special then you'll pay a premium.

If that premium is unreasonable to you then it is your right to move on. Hire the a/v version of a trim carpenter. The result will be okay but nothing spectacular. And that may be just fine for what you're wanting.

Good luck with your project.
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post #17 of 160 Old 04-18-2007, 10:27 PM
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2) The reason I feel the rates are unreasonable is that I can say with a high degree of confidence that you are likely to make significantly more money because I decided to buy a nicer component that was 5X the cost of the cheaper version but I liked better.

This is true of everything else you're buying - cars, furniture, clothing, food, tools, appliances, etc., etc.
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post #18 of 160 Old 04-18-2007, 10:40 PM
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Why is burying the cost in a markup a reasonable solution?

For some reason, you seem to think hiding it in a markup is a better solution than fixing your rates. To me, it gives me a feeling that things are being hidden and not entirely upfront.

Because different industries use different pricing models, largely driven by the free market. Cell phone companies "give away" phones and make it up in the contract. How about $50 "activation" fees, that one always makes me smile. Activation takes 5 minutes (if that) of someone typing on a keyboard. Those naught cell phone companies. And what about those naughty banks, double dipping with their ATM access fees.

Of course doctors and dentists are the worst offender. How dare the dentists make any markup on that new crown he's charging me $1500 for? I'm sure that offends the heck out of some people, I just smile and say more power to him (if someone is poor that's another issue and another discussion with regard to medical issues). Of course it does not take a genius to realize it costs a fortune to pay for all the medical equipment and all the other huge expenses associated with running a medical establishment and the costs are divided out between hourly rates and "products".

If you want to buy equipment at a discount then follow that path. That's how it works in the commercial world.

1. Hire a consultant to design a system for you.

2. Then provide the spec to contractors to bid on. Most who do that type of work won't want to deal with a residence but I'm sure if you look hard enough you'll find one.

3. Then hire a top notch programmer such as MDCI at $250 an hour.

In the end you'll have likely paid more, have finger pointing as to who is responsible for what, and so on, but you'll have that warm fuzzy feeling inside that no one made any naughty "dishonest" markups on you.
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post #19 of 160 Old 04-18-2007, 10:53 PM
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p.p.s. I have decided to stop using Google. I STRONGLY object to their dishonest pricing model. It may appear to be free but I have concluded that in fact because they make so much money from advertisements that they are in fact ending up with a much larger percentage of my income (via my purchase of products from companies that advertise on Google) than I deem appropriate. This is outrageous!

Lest my post be thought tongue in cheek, only a little, for it truly reflects how idiotic these discussions are at their root.
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post #20 of 160 Old 04-18-2007, 11:43 PM
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One last thought. Please note that no where did I say that it is unreasonable for a person to shop for and/or want a good price when conducting a transaction. That is NOT remotely what this discussion is about.

If I shop for a very high-end luxury watch it seems it would be natural to consider price as one of the primary factors in the purchase. And if I find that I can buy it from vendor A versus vendor B for $17,000 versus $19,000 I have every right to buy it from vendor B. I have every right to decide that the extra $2000 that vendor A wants is "outrageous", though I might be a wiser person if I understood that's an entirely subjective determination.

Now if $17,000 is what the market will bear, it really makes NO difference whether that watch costs the watch dealer $100 or $16,990. REALLY.

Now it's not unfathomable to think that if the market demanded it, it might work much differently. Watches my get sold at 10% over cost and I might have to pay a $500 consultation fee to look at high-end watches. Is one more "honest" than the other? Of course not. Another way to look at it is that if all the dealers who charge the "outrageous" markups on the projectors that the poster mentioned end up going out of business because they can't compete with Internet sellers with low overhead and no showrooms, we might just end up in a situation where seeing a projector will cost a fee. Again, the market at work.

What we have in this case is a poster who has arbitrarily decided that integrators don't deserve their "outrageous" markups.

One more last last thought. The funniest thing of all here is that as has been pointed a person who purchase a Crestron system is buying much more of a solution than a product. So it'd probably be of supreme importance to know the type of work the integrator you are hiring does, because you are purchasing that far more than a "Crestron system". But if you don't think an integrator has a right to make more money if you buy a more expensive product (which pretty much flies in the face of how the world works with almost ALL products) and that they only have a right to charge an hourly fee, that will never happen.
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post #21 of 160 Old 04-19-2007, 04:21 AM
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Originally Posted by Awake View Post

Two parts:

1) So, your costs vary and are unpredictable. This is true in lots of industries. So, you increase your hourly rate to compensate. You adjust them if you need to travel out of state (some system integrators do this anyways).

Why is burying the cost in a markup a reasonable solution?

For some reason, you seem to think hiding it in a markup is a better solution than fixing your rates. To me, it gives me a feeling that things are being hidden and not entirely upfront.


2) The reason I feel the rates are unreasonable is that I can say with a high degree of confidence that you are likely to make significantly more money because I decided to buy a nicer component that was 5X the cost of the cheaper version but I liked better.


Awake,

I agree with you in theory that a 50K projector is more profitable than a 30K projector. If your integrator is pushing higher priced products to drive his raw dollar cost up, than you need a different integrator. Your original thought of cost plus and labor is reasonable and frankly we have taken very large jobs this way. It ends up being more profitable because one cannot accurately predict the number of hours needed to complete a 40K sq ft home. In a smaller project I would tell you cost plus 30 plus actual labor hours is very reasonable.

I see your point about people driving the product up and unfortunately I have seen it first hand, our industry has become somewhat tainted, but the is not the "norm" most are very good and honest.

I know it sounds great and looks great.....but can we communicate with it? If not it is useless:)
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Awake,

Have you tried getting quotes from different integrators and then, god forbid, negotiating? If someone says, "Hey bud, this is my bottom line price," then fine. Go to someone else whose bid is more in line with your expectations.

What you ABSOLUTELY DO NOT WANT TO DO is get someone down to the wire just to see how far they will go and then try to bounce that off of a competitor. You will not get any bids that way, or if you do, there is a much stronger chance that you will find someone who does half-assed or inexperienced work. If you make an offer and an integrator accepts, you are honor bound to go through with your part of it. I ended up buying a car that I didn't actually need because I low-balled a sales rep and he accepted the offer. I caught much heat from the SO but she understood why I had to buy it.
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post #23 of 160 Old 04-19-2007, 08:23 AM
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When was the last time you went into a Ferrari or Rolls dealer and negotiated a discount? Would you complain about the $300+ oil change and take it to Walmart the next time?

I have seen a ferrari made, I have seen touch screens made. You dont come close to what is in the manufacture process.

Orange and apples PERIOD.

Crestron equipment is not a ferrari guys, this analogy is used over and over to try and convince people it should be valued as such.

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post #24 of 160 Old 04-19-2007, 08:36 AM
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Some people are so defensive. You guys seem to attack me because I question your margins/business model and want to get a decent bang for my buck.

hehe, You should read my threads on this here

For some reason everytime guys like you and me say HA shouldnt be expensive they get all defensive in thinking we are saying they dont need to make money. There are two ways to make money in this, Huge margins, small number of installs per year or Low margins, large number of installs.


Honestly, Crestron isnt for guys that get into the details and like to know the value of each item. Crestron is for people that just want to buy something they know will work without question, it has that going for it.

btw, for all those who think people dont negotiate $100,000+ cars, I would have to say you dont know many who can afford that stuff then. The ones I golf with will negotiate that and anything. They didnt become millionaires but just spending money on whatever and never negotiating. From a $2 bet on the course to $1 million land deals. These guys work all the numbers.

Im not saying all of them are like this, I have a good friend in Vegas that owns that Ferrari you talk about (and a Porsche), he has too much money to care any more. Heck he brings 15 of us out there and spends $10K for dinner in the foundation room at the Mandalay Bay. Now thats money without care. Surprisingly he doesnt have a crestron system in his house ( I was bugging him about that).

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post #25 of 160 Old 04-19-2007, 02:42 PM
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I sell Crestron so i am biased to Crestron. But anyone who has taken the time to read my posts would discover 2 constants. The equipment does not matter, espeically among these two offerings. But the integrator certainly does matter. You purchase the integrator and his skill sets and you install the equipment he recomends. I cannot know the ins and outs of every sub-system on the market and ultimately what you want is a feature set not an equipment list.

The price of Cerstron gear goes beyond the components themselves. you pay for the fact that there is a delaer base, manufacturer training, 24 hour tech support and a pre-engineered solution. None the less, it's expensive boat anchors if it is not installed and programmed correctly. And do not be misled by the dollar amont. I program for firms that have huge reputations and their work can be and often is very shoddy. I've seen all sorts of horror stories and yet, becuase I'm programming that system all goes well. But I work the hours required to get the job done not just 7-3pm. You purchase my skill set, my workahoalik trait and my ability to make these systems work, somehow, though it sometimes takes more than a day or 20 to get it all togehter. Thus you are puchasing my bottom line not Crestron's, not JVC's, not Sim2 or Pioneer's. I do not move boxes. I have no economy of scale. I provide small, ,custom solutions that work, all of the time. Does equipment fail? Damned right. But other than that the system works. It costs money and becuase it's a luxury, you are not ill and you are not in jail and you are not trying to protect assits from the spouse you're divorcing, I have no barrel on which to bend you over.

Those of you who have done it yourself know how much time it takes. And because I require reliablility I require a pre-engineered solution. I want the manufacturer to stand behind me. I don't want to risk that the system may not work every time or there will be a changed firmware and the 600 dollar touch panel will not work. I don't have that time or the inclination to absorb that risk. You want to DIY the soluton go to it and it's only your money you are risking. I'm risking my livlihood and possibly more should an individual as wealthy as this poster choose to sue me becuase the DIY solution I sold him failed to work.

Alan
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post #26 of 160 Old 04-19-2007, 03:12 PM
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For some reason everytime guys like you and me say HA shouldnt be expensive they get all defensive in thinking we are saying they dont need to make money. There are two ways to make money in this, Huge margins, small number of installs per year or Low margins, large number of installs.

Honestly, Crestron isnt for guys that get into the details and like to know the value of each item. Crestron is for people that just want to buy something they know will work without question, it has that going for it.

It's always fascinating to me how someone with no experience in a field, and very little knowledges of it, can be so sure of their "expertise", and make sweeping and ridiculous statements that are not remotely accurate.

And for what it's worth, though you endlessly parrot the line over and over again that the evil forces that be want HA to be "expensive", the reality is that many here on both sides have pointed out again and again that if a person wants to engineer their own system HA can indeed be accomplished for a lower price. That's why in my very first post which I later deleted I suggested that thread starter look at CQC, not necessarily because of money savings, but because it may be more conducive to what he's looking for.

And while you'll continue to rant about Crestron's "overpriced" solutions, others will understand that Crestron and CQC are two very different but very viable options, and that it's absurd to compare Ebayed touchscreens to Crestrons. Of course you'll also continue to ignore again and again that ANY tablet PC or UMPC can be used in a Crestron system as a full touchscreen if you don't want to use a Crestron touchscreen. The fact that in spite of that people choose to use Crestron touchscreens might give you a clue that they have some advantages, but that would mean you'd have to see the things in terms other than "ripoff" and "cheap". BTW, did you know that you can also use an ELO or 3M or Wacom touchscreen with a Crestron system?

BTW, I do have one question. What touchscreen would you recommend if I'd like to be able to input balanced audio and composite and HD video, microphone, intsant on with no boot up time and no crashes. I'd like to be able to go to the touchscreen and page or intercom any room. View my security cameras. View a video window with picture and picture. View the security camera in picture in picture as I'm watching a movie in my theater. To name a few features. What "non-overpriced" touchscreen would you do that with?
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I have seen a ferrari made, I have seen touch screens made. You dont come close to what is in the manufacture process.

Orange and apples PERIOD.

Crestron equipment is not a ferrari guys, this analogy is used over and over to try and convince people it should be valued as such.

Penngray,

I wasn't making a statement about the actual cost/quality of the items. I was speaking to the concept of pricing and negotiations at the top end of any given market. There are reasons for anything getting to the top of a particular market.

If what Crestron does where so easy, there would be any number of companies making comparable products much cheaper. Individual hardware components that can do most of what Crestron products do can be found relatively easily. Insuring that the complete system will work is an entirely different proposition. The value is in the combination of system integrator and reliable hardware.

FWIW, I am not and have never been a Crestron dealer or employee but I have been deeply involved with system integration work on a $1B+ project and can appreciate what Crestron does.

"I'm a fanatic without a cause and I believe in it!" - B. D. G.
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post #28 of 160 Old 04-19-2007, 04:23 PM
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............................

Of course doctors and dentists are the worst offender. How dare the dentists make any markup on that new crown he's charging me $1500 for? I'm sure that offends the heck out of some people, I just smile and say more power to him (if someone is poor that's another issue and another discussion with regard to medical issues). Of course it does not take a genius to realize it costs a fortune to pay for all the medical equipment and all the other huge expenses associated with running a medical establishment and the costs are divided out between hourly rates and "products"

...................
.

I am amazed that most installers take it as a matter of course to mark up their product by 100% or more. And that is apart from 'labor' costs. The home automation dealers also have the temerity to state that they are not licensed electricians and you need them as well.

On the other hand, the medical business has become quite regulated for physicians. Medicare requires that you accept their payment schedule. Insurances follow suit. You cannot bill the patient for anything more. Dispensing most drugs in physician's offices is illegal. Those few medicines that require parenteral administration (injection) have reimburesement rates tied to the wholesale price, and if you dont purchase in volume, you get a 'mark down', not a mark up.

Interestingly, hospitals can charge an order of magnitude more for the same medicines ($10 aspirin) and their procurement methods are similar to the defense industry-the government just writes a check based on their 'cost'.

Individual physicians have been devalued over the past two decades. Reimbursement rates that are LESS in nominal dollars than they were 20 years ago. Add inflation into the mix and you realize that 20 years ago, physicians were being paid more than most executives, but not today. Insurance companies do not have to negotiate with physicians.

Most people would not even think of paying a physician real money for their health care. They argue about their $25 copay, but they sure want that wide screen TV.

Oh, and btw, costs to physicians have continued to rise because the free market (where physicians have to procure their goods and ancillary services) is not regulated. You better enjoy that 1080p projector now because your cataract repair will be hard to come by (unless you let a robot do it. Heh, that gives new meaning to 'the blue screen of death').

I cannot speak for dentists but I think they are also in a bind. Oral surgeons and podiatrists on the other hand, are doing WELL. Lawyers of course are unregulated and doing exceptionally well.

I still marvel at our society where we devalue real things (manufacturing, craftsmanship) and overvalue the ephemeral (home automation, video content, audio content, licensing agreements, legal argument).
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post #29 of 160 Old 04-19-2007, 04:43 PM
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karos,

You make Excellent points and I actually had a fascinating conversation about this issue with one of my (doctor) Clients just a few weeks ago. I don't want to go off topic, plus the area is anything but my area of expertise, but just want to mention that my only point was that in many professions, even the most respected ones, there is markup on both services and goods.
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post #30 of 160 Old 04-19-2007, 04:58 PM
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If there is something that I want I shop and compare.
If the price is too high I don't buy, if it is inline with my desire (re: within mean of market value)I buy.
If it is too high does that make all resellers crooks or me a cheap bastard (BTW I am a cheap bastard).
If Crestron prices (or anything) were out of sync with market value the company would fail, since they prosper I have to believe that they are in sync (overall).
The "CI" business is not like plumbling or electrical services, while individual jobs may or may not be harder for the "CI" overall he must have a greater understanding of a greater varity of products and services.
Much of this is learned outside of billing hours (or through mistakes that the "CI" generally pays for).
Very few working "CI's" are making a lot of money (or even a medium amout), the ones that do are very good business men first and "CI's" second (which is a good lesson for the rest of us).
Now whining that something that you want is too expensive because you wont (or can't) pay it comes off like a child throwing a tamtrum.
If you think that it can be done as well cheaper put your money into it like Dean has (the man can annoy me but I do respect him) and lets see how you do.
I wanted the new Panasonic 1080P, round up with the Mits 1000 (see my above statement about my spending habits). However that does not mean that Panasonic (or its dealers) are crooks.
OTOH; I have been doing this for almost thirty years and I paid full pop to have an alarm installed (my desire to not get into the corners of my attic was greater than my need to save money).
It is all about value to you and no one else..


BTW; Awake, what do you do for a paycheck?

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