Subscriber Discussion

Should I Sell Camera Systems To The Residential Market?

UI
Undisclosed Integrator #1
Dec 07, 2017

Wondering if anyone on here focuses on Residential Business. We have always stuck to commercial but we are contemplating offering residential Camera systems. If you do or have done residential systems in the past please let me know how your experience has been.

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John Bazyk
Dec 07, 2017
Command Corporation • IPVMU Certified

5 years ago 90% of our revenue came from national accounts and larger commercial projects. Now that’s down to about 60%. There’s a lot of money to be made in the residential space right now you just have to do it right. You can’t go cheap cheap and you can’t expect to put a high end server in a home. Lots of good opportunity to think outside the box to get good cameras and a good VMS into homes at a profitable yet affordable price point. 

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JH
John Honovich
Dec 07, 2017
IPVM

#1, good question. 

One element I would consider first is how inexpensively / reliably can you get residential customers? Certainly, they are going to average less revenue per sale than commercial systems so you will need a low-cost process to get such customers. Do you feel comfortable about that?

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UI
Undisclosed Integrator #1
Dec 07, 2017

That was something I was concerned about but after talking it over with some key people in the company and our marketing agency it seems like the residential market is slightly easier to market online and should not cost as much per lead as commercial.....

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Luis Carmona
Dec 07, 2017
Geutebruck USA • IPVMU Certified

Best thing to do is probably sell a small amount, maybe 2 to 4, residential customers as a pilot program and for at least 6 months and see what the results are.

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JH
John Honovich
Dec 07, 2017
IPVM

seems like the residential market is slightly easier to market online and should not cost as much per lead as commercial....

That's good to hear. Try it out. 

Btw, even if residential leads do not cost as much as commercial leads, the residential leads will need to cost significantly less to offset the lower revenue potential.

One other thing I am curious about - what is the close rate on residential leads vs commercial ones? Is one materially much higher than the other?

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Darrel Cross
Dec 07, 2017

We thought about it, but they always come back with "But I can get one from Sam's Club or the internet for $300.00" and the fact that your phone will never stop ringing at all hours of the day and night when they can't remember how to do anything. So......

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UI
Undisclosed Integrator #1
Dec 07, 2017

The hours were also a concern for us but based on our research in the area it looks like most of the companies doing it are closed on the weekends. I'm sure there are still calls after hours but that is already the case with commercial at times.

UM
Undisclosed Manufacturer #2
Dec 07, 2017

One caution...residential customers usually expect remote access to their system, which gets you involved in hosting services, plus the customer's routers, etc.  

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Paul Grefenstette
Dec 07, 2017

No. ;)

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Juan Moratto
Dec 07, 2017
Vigilancia Online-Argentina

We have started selling camera systems to residential market but we abandoned the project. We have a lot of problems: the residential owners feel that their homes are "castles" and they are the "kings" so they want to decide every aspect of an installation, camera type, and mounting details as "experts". To show a residential owner a project the same as to a company is a very expensive task that the owner don´t have the intention to pay and rarely couldn´t understand at all.

About the calls out of hours, it´s routine. And about the prices: eBay and a lot of dealers, including Amazon or the shop in the same block sells chinese cameras earning practically nothing, specially if they need to pay the rent.

About the installation, the information systems guy is always grateful to install residential cameras using the more cheap materials/connectors/cabling systems. You are the expert but the boy accepts what the owner (not an specialist) suggests and, very important, is very, very cheap.

Companies search "security" but residential owners search "price+security+guarantee at any hours+instruction at a baby level", no magic formula exists to sell camera systems at bargain prices!

Never again we will install in residential markets, never. Regards.

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U
Undisclosed #6
Dec 11, 2017
IPVMU Certified

Searching google for “price+security+guarantee at any hours+instruction at a baby level” yielded this 1080p wireless PT for under $75.

Thx :)

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U
Undisclosed #3
Dec 07, 2017

Bishop Bullwinkle channels 75% of commercial security integrators in response to the OP:

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UM
Undisclosed Manufacturer #7
Dec 12, 2017

I laughed so hard beer shot out my nose!

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UM
Undisclosed Manufacturer #4
Dec 07, 2017

To me, the question should be:  

How to Should I Sell Camera Systems To The Residential Market?

 

Dealers edge is on professional install. So try to avoid those projects that could be done by DIY.  Focus on rich areas with decent houses. Position cameras system as either primary defense (NVR+ more cameras) or supplemental in addition to alarm system (weak video is the most common thing among alarm systems).  

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UI
Undisclosed Integrator #5
Dec 07, 2017

Residential is a lot more price sensitive. Unless you have video with low upfront with RMR I wouldn't step into it in the year 2017 unless you are already playing in resi-alarms and this is just an addon service. As others have noted you will be price shopped out of the gate versus online products and the local wal-mart deal. You will also deal with a lot of collection headaches. There is certainly money to be made, but it's not as cut and dry of a business relationship as commercial systems are where customers expect to pay for a service ticket and understand the difference between price and cost of a system.

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LJ
Lee Jones
Dec 11, 2017
Support Services Group

Resi customers must be made aware of the difference between “deterrent” systems and “defensive” systems. Defensive systems have capability of remote witness (generally via video), whereas deterrent systems do not have remote witness, just motion sensors. In recent years, most police departments have lowered the response priority (often to no response) for “deterrent” systems, while increasing the response priority for “defensive” systems. Not wise to lead customers into false security thinking cops will come fast to all monitored alarms.

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

If you want to move into this space you need to realize something. To use a car analogy, not everyone wants to buy a Cadillac. The problem with most of the comments I see above is that many of the integrators want to sell the Cadillac of surveillance systems to homeowners even when they don't want it or can afford it. This doesn't mean you have to install crappy equipment, just have to find a way to reduce costs and make an option that's more affordable.

Here's what we do. We almost exclusively install Spectrum no matter if it's a business with 100 cameras or a home with 2, most of the time they're getting Spectrum. So how do we make Spectrum affordable? If we were to go to ADI and buy a BJ-Cube-LX with a 2TB HDD, 8 DW cameras, POE Switch, Licenses, Cable, Connectors, Conduit, then pay for the labor to install everything, sales commissions and make enough money to justify support our COGS is going to be higher than what the residential customer wants to pay. 

Rather than doing that, I've found a way to get Spectrum into peoples homes keeping our cost of hardware and software below the price of a BJ-Cube-LX. It took me over a year to figure out a good reliable solution but it works. End of the day, with everything our cost for hardware/software is not much higher than the DIY kits we see in the big box stores. 

At that point, all we have to do is sell them on the professional installation. Frankly, this isn't that hard. Because we're for the most part standardized on Spectrum our technical support staff can help anyone easily. We load TeamViewer on all of these small servers we build so we can fix most issues that arise remotely in just a minute or two. With the new cloud connection in Spectrum, we're not screwing around with routers either and our customers almost never loose connection to their cameras.  

IMO residential is a great supplement for large commercial projects. I'll take 10 residential customers over one commercial account of equal installation value any day. For me it's all about RMR, RMR keeps us going when times are tuff. 

How do you get RMR out of customers? You just need to explain to them what makes your technical support staff different from Costco's. At Costco, they'll take anything back. While that's great and all it doesn't solve the problem they're having with their system. RMR is what fuels your technical support team and is what fuels you to develop better products for the customer. Combing a video surveillance system with a professionally monitored security system makes this sale easy. Police are slowly not responding to alarm calls, however, if central station verifies an active break-in when the intrusion alarm goes off the police will respond much faster.  

Just my opinion. I've had great success in both commercial and residential. Residential takes real creativity, it's been a fun challenge for me to get a real VMS into homes. Now that's we've done it. Our customers love it.

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U
Undisclosed #3
Dec 11, 2017

Informative.

John,

How do your back-end support costs differ between commercial and residential customers?

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

This is a hard question to answer as we primarily focus on commercial customers. Off-hand, I would have to say that I personally hear from my commercial customers more than my residential customers. When we were selling Hikvision, Bosch and Honeywell DVR's we got a lot more calls and those systems were much harder to support as we had to roll a truck on every call. 

Since we can teamviewer into all of the resi spectrum servers we can resolve most problems now including any random router issues we might see. For example, if Comcast changes out to a new router and their DNS is 75.75.75.75 a lot of cloud services don't work until we change to another DNS. This is our biggest call, again it get's resolved in just a few minutes as we know exactly what the problem is almost everytime. 

U
Undisclosed #3
Dec 11, 2017

The reason I asked is this comment you made in your original post:

"I'll take 10 residential customers over one commercial account of equal installation value any day."

If installations and equipment are of equal quality, then I would expect that the support costs for 10 customers would be dramatically higher than those for 1 customer - unless that 1 customer is just a beast. 

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

Maybe this will help you understand my comment. 

Let's say a commercial client pays $10,000 for an installation and is paying me $60/month in RMR services.

Each residential customer paid $1,000 for the installation and is paying $60/month in RMR services.

Out of the gate one commercial client is worth more. However, after a year the commercial client and residential client are worth pretty much the same because they're getting the same RMR services. Now, this isn't always the case but for this example, we'll say they are.  

A year from now 10 residential customers are paying me a total of $600/month @ $60/month/each where that 1 commercial customer is still only paying me $60/month. In the long run, more diverse RMR is better for our business. It's what keeps our tech support team paid for and allows us to provide even better support for all of our clients.

I believe in needing both, we have national accounts and lots of SMBs that are great customers. Having these commercial accounts is what allows us to have more buying power to make the equipment we use in resi accounts more affordable. But it's the RMR from resi accounts that in the end helps us to provide better support for commercial accounts. 

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JH
John Honovich
Dec 11, 2017
IPVM

Let's say a commercial client pays $10,000 for an installation and is paying me $60/month in RMR services.

Each residential customer paid $1,000 for the installation and is paying $60/month in RMR services.

John, is that a typical/representative pattern for your clients? I am curious because I would have thought the average commercial client would pay more in RMR than residential. Am I off? 

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MM
Michael Miller
Dec 11, 2017

I agree.  For commercial projects when you add service/maintenance plus video/alarm monitoring there is a lot more money per customer then residential customers. 

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

This example only includes standard services. If a commercial customer has managed access, access control reporting to the cloud, fire alarm monitoring with tests and inspections or a maintenance agreement then that RMR number is higher. But overall the average commercial customer is about the same as the average residential customer. 

On the other hand, if you add in home automation, video verification, maintenance, inspections upgrade programs, to residential accounts that number goes up too.

The $60 figure was intended to be an average number for the average account with standard services. 

U
Undisclosed #3
Dec 11, 2017

I was referring to the difference between your own costs to support each type of customer, not your customers costs.

If you are charging the same RMR to each type of customer, then you are indicating that each type costs you the same to support?

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

If considering the average commercial and average residential customer who's only receiving central station monitoring and remote access to video and 24/7 tech support the costs are about the same. In some ways commercial is a little higher (cellular rates/central station fees) but in some cases residential is higher (slightly more phone calls/emails). On average they come out to be about the same. Again for the average system. 

UM
Undisclosed Manufacturer #4
Dec 11, 2017

"Each residential customer paid $1,000 for the installation and is paying $60/month in RMR services."     

Assume it takes a year in avg for a account to break even on hardware cost ($720), your business model requires decent amount of capital to scale.  Just curious if you are partnering with any sort of capital groups in order to get this going? 

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

The $1,000 number is just an example to make it easy to compare. Not what our typical residential customer actually pays for installation. We don't give away free systems. 

UI
Undisclosed Integrator #1
Dec 11, 2017

Thank you for your input here. We also use spectrum on about 90% of our commercial installs and I like how you are doing that for residential. The challenge is building a server that is good and still low price. 

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John Bazyk
Dec 11, 2017
Command Corporation • IPVMU Certified

Email me if you want. John@commandco.com I worked hard to figure this out and don't want to really share publically. But I will share with another Spectrum integrator. 

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Sergey Bystrov
Dec 12, 2017
NetworkOptix

John,

Do you mind sharing some Spectrum experience?
Can you send me a private message? 

UI
Undisclosed Integrator #8
Dec 12, 2017

Just curious John. Do you have better luck outright selling the equipment to the customer, or do you prefer to lease the equipment to create a form of RMR?

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John Bazyk
Dec 12, 2017
Command Corporation • IPVMU Certified

Historically we do more outright purchases. However the more we grow in this space we're finding more people are interested in leasing. Especially small businesses and larger homes. We've been around for 30 years and have hundreds of customers with outdated systems. Trying to get them to spend the money to upgrade is tuff. Asking them for just a few more dollars a month isn't that hard. Leasing is good for us (less old equipment in the field to provide support for) and good for them (they don't have to spend a ton of money every few years for an upgrade). Why do you think Verizon moved to all leasing options? We have video systems that are 20 years old, fire alarms that are 30+ and intrusion systems that are 30+. At this point it's almost a liability for us to have that old of equipment in the field. 

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JH
Jay Hobdy
Dec 13, 2017
IPVMU Certified

Who is funding the lease? Are you financing in house or using a finance company?

 

I am surprised residential clients want to pay monthly.

 

CH
Corbin Hambrick
Dec 13, 2017

It sounds like John finances a small amount for some customers but I certainly don't want to speak for him.

For us, we sell the equipment outright so there's no financing needed.

One model you could use though is to have the customer pay your COST as a downpayment and then work the profit into your monthly.  That way you're not funding anything.

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John Bazyk
Dec 13, 2017
Command Corporation • IPVMU Certified

We deal with a few different leasing companies as well as do it in-house, when we do it in-house it's not actually leasing, we're just taking the hit on the equipment and collecting the RMR for the services. When it's done in-house equipment and install costs are typically very low and we're taking money up front to at least cover the equipment. Like most integrators, we don't have the capital to hold that kind of paper for a lot of deals and frankly holding the paper even if you do have that kind of money is not smart IMO. Even companies like Vivint have moved away from holding the paper themselves...and for good reason. 

I was surprised as well. Personally, I don't finance or lease much of anything unless there's no cash discount or they'll give me "0%" for 12 months. If I have the cash I will buy what I need to buy. If I don't, I don't buy it (other than my house). Consumers and small businesses are different. There are tax advantages to leasing equipment as a business and not having to pay thousands of dollars up front for a home video surveillance system is appealing to a lot of homeowners. You may be surprised how many businesses you are already doing business with that use leasing companies to make equipment purchases. 

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John Bazyk
Dec 12, 2017
Command Corporation • IPVMU Certified

We recently finished a small install for a business. He was paying $80/month for a cloud service with 6 cameras. We installed Spectrum and 8 cameras for about $95/month with a small downpayment. He's much happier now for not much more money per month.

MM
Michael Miller
Dec 12, 2017

How much is the small down payment?

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John Bazyk
Dec 12, 2017
Command Corporation • IPVMU Certified

Happy Birthday!

Depends on the customer, what their personal credit score is or how long they've been in business. Assuming established business, good credit score and a building no larger than 4,000 square feet with drop ceiling we're looking for about $100/camera. Some people don't want to put anything down so their monthly rate will go up. Most want to put something down. More risk on the install or the client the higher the downpayment will be. 

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U
Undisclosed #3
Dec 13, 2017

John,

Thanks for your feedback so far - I think you do a service to others by showing them what has worked for you...

But please allow me to ask further questions so I can better understand exactly what you are doing.  thanks.

"He was paying $80/month for a cloud service with 6 cameras."

So this customer - at least at one time - bought into the 'hosted' solution's value proposition.

What was it that your customer didn't like once he/she tried it out that gave you the 'foot in the door' to take over the customer?

Further, if you are using a local Spectrum server (that you can manage remotely) - rather than a cloud-hosted solution - what does the customer pay $15 more a month ($95 vs $80) to you for?

Since hosting and maintaining access to data is a clear cost to the provider in a hosted solution, how do you justify even more spend per month than the hosted solution the customer was already using - when you have no costs incurred for hosting the customers data?

 

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John Bazyk
Dec 13, 2017
Command Corporation • IPVMU Certified

We had his intrusion system prior to taking over the video. The client is leasing equipment from us that's why he's paying more per month. We're also monitoring the alarm system, monitoring the server health and providing managed video services for him. 

The client is leasing equipment from us that's why he's paying more per month, at the end of his equipment lease his monthly rate will drop to just the managed services he's purchasing from us unless he upgrades all of his equipment. We're also monitoring the alarm system, monitoring the server health and providing managed video services for him. 

This is the way to do it IMO. All of these hosted providers talk about total cost of ownership but they're missing the mark by miles and costing clients a lot more money in the long run without getting much in return.

End of the day, most people don't trust the internet to deliver their video surveillance to the cloud for storage. We monitoring hundreds of accounts over the internet and see how often internet goes down.

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IQ
Ino Quandus
Dec 13, 2017
IPVMU Certified

John you are helping a lot of us with your comments and experience in this area, thanks for that.

1 question: in this case with 8 cameras and the use of spectrum, what cameras do you like to use for small businesses and (high) residential homes?

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John Bazyk
Dec 13, 2017
Command Corporation • IPVMU Certified

Depends on what they're willing to pay. Where cost is really an issue we use TVI cameras with Spectrum. I built my own server/encoder to keep costs down. To be clear, TVI is not my first choice. However, I have learned that not everyone wants to buy a Lambo. I was showing one of my friends two different systems the other day. She and her husband told me they would rather have something that worked and was affordable than something that was expensive or didn't work and cheap. This along with feedback from dozens of customers is what set me on this journey to figure this out. 

CH
Corbin Hambrick
Dec 13, 2017

I'll chime in to offer what I can.  We are 98% residential and only 2% commercial.

We are not a camera company though so that might skew some data here.  We are an integration company...I think our industry has settled on the the term "Technologist".

Cameras are only a very small part of what we do.

We don't deal with the uber rich...our happy place is professionals that have busy lives and some money to spend on cool technology.  Most of our customers live in homes with values between $500k and $2m (in Texas mind you)..that translates to something like 2700 square feet to 10,000 square feet.

Likewise we almost never sell only a camera system.

Before the race to the bottom we sold Axis cameras.  Do to their price we only sold a few systems a year.  After the Chinese killed prices we HAD to find a second solution for budget reasons.  We settled on Uniview.  (I'm at a point now to look elsewhere.  I've always considered the Spectrum and Speco's of the world to be cheapo products but may have to revisit Spectrum based on comments here.)

We got lots of customers asking if we'd install a Costco/retail system that they bought and I would refuse and explain that they would be wasting their money on the professional installation of a crummy product that will not yield the results they are expecting.  I think we've lost only 2 customers because of that.  The rest relented and went with a much more expensive "budget" system we specified (i.e. $1000 instead of $300).

I started toying with Milestone's Essential+ free VMS with a couple of customers and have been happy so far.  Other then that we're using the NVR from Uniview.

I also must add that any customers we take on, we require them to use our recommended router and network setup--including a purchased modem rather then Comcast provided modem--because we want to control our own destiny.  That of course would be different in many of your worlds based on the posts I've read here.

We've been in business for 16 years and I'm slow to change.  ...buuuutttt, 2018 will be the year we begin RMR.  Many of our customers were not interested in a monthly bill (and we're talking well-to-do people), but some expressed their understanding of the value.  So we'll push that hard in 2018 once we get our ducks in a row.

I don't get too many support calls for cameras, as a matter of fact I can't think of any other then when someone has an incident and wants the video and forgets how to do it.

If I can answer any specific questions to help out, I'll certainly try.

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Brian Rhodes
Dec 13, 2017
IPVMU Certified

Thanks for the interesting comment.

Likewise we almost never sell only a camera system.

What other products/services do you sell these customers?

CH
Corbin Hambrick
Dec 13, 2017

As "Technologists" (a term I've not gotten used to using), our primary solution is home automation.  In particular we are Control4 dealers.  So 95%+ of our jobs are home automation jobs.  ...but home automation basically covers "anything electronic"...or more specifically it's about creating an interface for people to interact with all the electronics in their home.

Many years ago we got licensed for security since that's a system we can/do tie into. With that, we began doing cameras as one more thing we can offer.

We've had a few leads come to us with a need for camera installation (as opposed to coming to us looking for home automation).  Historically these customers we're close enough to DIY with their budget that I take a few minutes to educate them and then if they don't bite on a rough qualifying number I throw at that them (I'll say something like "You'd be looking at something like $1500 to $2500 for a 4-camera system with recorder depending on the variables.") I wish them well.  If they are interested then we set up a discovery appointment for me to meet with them.

 

 

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UM
Undisclosed Manufacturer #4
Dec 13, 2017

Thanks for sharing.  You mentioned "Integration for busy professional on cool technology", can I assume that's mostly home automation including video/audio?      I recall a Alarm.com's survey on most connected homes in US. There are quite few Texas cities are among the top 10 on that list.

CH
Corbin Hambrick
Dec 13, 2017

You assume correct.  audio/video/lighting/electronics control/thermostats/sprinkler control/door locks/etc.

For us the camera system we chose needed to work with our integration product...which in the past was slim pickins'.  That's why we went with Axis in the beginning.  ...for example we used to need a camera that had a URL with an mjpeg feed and had a URL for a jpeg snapshot image of the camera.

Now with improvments in the automation systems camera proxy and more ubiquity of H.264 feeds most cameras work.

 

CH
Corbin Hambrick
Dec 13, 2017

I think I fit I'm this funny space.

I'm not a camera/security company.  I'm not a Technologist that knows very little about cameras/security.

I joined IPVM to become more informed on the surveillance market/industry because I want to KNOW what I'm selling.  I'm definitely not there but I see most of my compadre's picking up the cheapest cameras the distributor is selling that day and selling them.

Alarm.com became a huge solution for guys like that.  I liken it to a gateway drug.  It's an easy starting point for cheap home automation and has some cheap camera integration to boot.

JL
Joe LoRe
Dec 13, 2017

Only you know your business and whether or not it would be worth the time and effort for what you're going to make generally not going to be able to get the same labor rate. You do run into a lot of homeowners and small business owners that will show you camera prices online. Just takes a little bit of educating the customer as far as the equipment needed usually to run wires and terminate them as well as the fact that many camera manufacturers will not honor warranty if purchased through certain online vendors

UI
Undisclosed Integrator #9
Dec 13, 2017

Thanks for all the posts. Your experiences offer a lot of food for thought. 

In the UK we are mostly commercial but see a gap for residential that includes :

- Alarms

- CCTV 

- Nest thermostats

- Ring door bell

- AV

Challenge is that there is no trade pricing model for Nest/Ring products. Need to also find out more about a monthly RMR model. 

Another challenge is cabling. It can be a pain and the biggest unknown in many properties here due to their age - but also believe in a good finish.

Also there are an increasing number of renters vs owners, so i need to do more research on whether this is viable. 

 Would be great to figure out a way to sell fixed price packages using a network of "uber-esque" style  contractors on a fixed price with centralised commissioning/set up. Also not needing to do a survey would also save overhead. 

Am I right in thinking that this model is about volume? 

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Sean Nelson
Dec 13, 2017
Nelly's Security

It depends I think. If you an alarm dealer i think you would starve if you abandonded it totally. If your a telecom's provider that does structured cabling and all that, resi doesnt make alot of sense at all.

If you are pondering it, you should definetely study it. There is totally money to be made in the resi market. We have clients that all they do are high end residential installs. Granted, they do alot of A/V stuff on top of video surveillance, but maybe those are the things should consider doing as well if you plan on getting into resi, think outside the box. How can you add value? 

Main thing is you have to be willing to just pass up those types of people who say "i can get this at sam's or amazon for...." you can throw a few rebuttals but dont waste alot of time on guys like that, but dont get discouraged the first time you hear that because you will hear it. Not all resi's customers are like that though!

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CH
Corbin Hambrick
Dec 13, 2017

A good entry point for someone wanting to get into that business model would be Alarm.com as mentioned.

They have a complete ecosystem of products (including some off-the-shelf stuff).  It's easy to get started and you don't have to go crazy doing off-the-wall stuff.

As for cabling, everything is being made with WiFi so just make sure the WiFi is rock solid.  We rarely do a job these days where we can't put in our recommended commercial grade network and WiFi.

As for rent v own.  That may be more of an issue:  1.  Renters can take the product with them and sell to that.  2.  Get to the owner of the home, via renter or whatever and sell them on the value-add of some of the stuff that can help them rent out the property (aka commercial WiFi comes with the house, etc.), and with their ability to manage their property (aka if THEY own the alarm system then THEY can control it and be notified of the alarm, or the energy used, etc.).  ...probably walking some fine line with the second one but I digress.

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