Product Markups Debated / ACTi E73

You left out one CON:

The large number of potential customers who don't like paying 200% mark-ups... :)

Ted, where would you like the IRs to be? Their placement seems to be 'standard' for integrated dome cameras.

Does the edge storage work with Milestone or other VMSes?

That pricing is fairly incredible for 5MP.

Marty, I don't understand you point about the mark-ups?

Marty, I agree, all I'm saying is the quality of the camera at that cost allows the opportunity with some customers. The display in my opinion rivals that of an Axis camera with a wholesale tag of $800!!! 60% of my customers do not reference the Internet for pricing. It is a case of me figuring out which ones are likely to do the research. The conversation alone gives me a good idea about that. Enjoy the weekend!

I was referencing the point that whether something is a PRO vs a CON is perspective-driven...

While all the others listed can be said to be PROs and CON's from both perspecitves (integrator and customer), I'm pretty sure no customer sees paying a 200% markup as a PRO. :)

Higher markup for customers who are less educated about the product they are considering for purchase?

I'm not so sure that is a PRO. Agree with Marty here.

So it's now wrong to take advantage of customers? Seriously, what kind of world is this becoming? ;)

In any event, I think we can agree $350 online cost is an attractive price for a 5MP integrated IR camera, regardless of what one ultimately does with that low price.

I think everyone would agree that nobody is in the security business to break even..... mark-ups are simply how businesses run. I get that.

Everyone is free to run their own business as they see fit... but, to me, charging mark-ups in the range of 200% when a simple google search of the model number shows this, seems like a big risk to the integrators reputation.

John, you're absolutely right with the 'standard' for IR placement on integrated dome cameras. I shouldn't have singled out ACTI when discussing the IR placement as a con on the E73. (Apologies to ACTI).

In my opinion the placement of IR's under any dome of a camera regardless of brand is just not right for numerous reasons. Firstly, from my experience it is nearly impossible to eliminate 100% of IR reflection from the dome back into the camera lens regardless of how tight to the dome you are able to get the rubber grommet shield around the lens to protect it. Secondly, dust particles are the next culprit that generate IR reflection, mist, rain etc,etc and then someone cleans the dome using the wrong material.

This design flaw frankly renders the camera near useless at night after a few months in the field.

In fairness to Axis, their T90c illuminator adaptable with the P33 camera line, is a worthy solution and shows that the R&D team at least thought about it enough not to have a single camera with IR's under the dome.

That said, I do not understand why the IR's cannot be located in the dome housing. ....simple solution.....may be I'm missing something??

Regarding markups.....I believe in customer satisfaction no matter what it cost them. I have many happy customers whom I have deployed the same material. I have made $10k off some of them and $3K off others. If I could make $100k, I would. If I go and buy myself a toy for $X and I'm delighted with said toy, I feel I got a deal, etc............Then my friend a week later buys the same toy but it cost only $X/4. I might be a little miffed but I'm still real happy with my toy because it works like I was told it would.

Further, I know I'm paying at least 100% to 150% mark-up on what my supplier paid the manufacturer. Does that bother anyone?? It's nickels and dimes at the end of the day. Doing a good job is what matters. I would rather be known as expensive but good any day over the opposite.

Lastly, I have no experience with ACTI Edge storage...period. I was merely pointing out its availability on the E73.

One last point......My Network Engineers actually like the E73 and you know how those guys are when you feed them a new item...lol.!!!

"I know I'm paying at least 100% to 150% mark-up on what my supplier paid the manufacturer. "

That's almost certainly not the case, unless you are getting gouged by your supplier. The ADIs, Northern Videos, Anixter's, etc. are lucky to get 10 point markup on products (maybe 20 or 30% for people who are buying in super low volume). None of them are getting anywhere close to 100%.

Secondly, the T90c is pretty cool, though that add on is basically as expensive as the whole Acti D73 camera including IR. A 5MP Axis dome with a T90c is likely better than a D73 but that's going to run you ~300% more.

Ted, there is a difference between a distributor marking up a product 90% and distributors in general marking up products 90%.

You should run the other way if you find a distributor marking up any product 90%. It's highly irregular, and you are essentially being gouged. This is, by far, the exception, rather than the rule. Those resellers selling ACTI E73s at $350 are most assuredly not marking up those cameras anywhere near 90%. Indeed, it is much closer to 9% than 90.

I completely agree Richard's comments about the IR inside the dome on exterior cameras being a design flaw, but would like to add on more thing. The red light from the IR attracts bugs at night which then attracts spiders. The spiders work all night building highly reflective webs in front of the camera activating continuous motion recording. Knock the webs down and they are back the next day. A good exterior design would have the IR illuminator off to the side of the camera.

Charging customers extremely high margins is a short sighted practice. If they find out- and they will, as soon as they discover Google, or have a conversation with a colleague with a similiar setup - they'll never trust you again.

No one begrudges a certain amount of markup, and obviously it's harder to comarison shop labor than equipment, but people usually only let themselves be taken advantage of once.

The days of 200% margins will soon be over, and will never come back.

Well if you sell Pelco they protect the channel very well and $200% markups are common.

Don't forget that the cutomer is paying for for onsite warranty and tech support - so the markup is not for nothing.

ACTi is an iT brand - so there is no money to be made for integrators.

Hello, Bohan.

I'm sure you can buy Pelco from ADI, and anyone with a credit card and a pulse can buy from ADI. Maybe in the past Pelco protected the channel, but now it's fairly wide open.

Okay but at least you cannot get them from any odd IT store and search for the price of every model on staticice.com

The average consumer does not know ADI exists right? And if an end-user calls up Pelco I am sure they will have the respect to not tell said end-user to rock up to ADI.

The reality is if the customer cannot access the price of each component - that customer is more likely to assess the merits of the whole solution against their budget - as opposed to counting the beans with a calculator and Google.

A user with even modest Google skills can and often does search for distributors, which will eventually lead them to ADI. Or Anixter. Or me. Or even Amazon.

Here's numerous results for Pelco Sarix for online stores on Google Products and 139 results for Pelco Sarix on B&H Photo.

This is not an issue specific to Pelco. Similar online availability for Panasonic, Sony, Bosch, etc. is commonplace.

I find this thread extremely interesting in direct relation to other recent discussions.

Integrators clearly do not prefer projects where they are placed in a competitive bid / RFP scenario, yet here is a specific example of why end users feel the need to follow a competitive bid process.

Markup is expected, no doubt, but to take a gamble that a customer is "less educated" and mark up that customer could potentially lead to more (sometimes poorly written) RFPs. Does anyone else see the cycle?

Yes you can find Pelco but only at near MSRP - so in effect an integrator can quote these prices and get good markup.

with ACTi, Axis, Vivotek what you see online is often just 8% above integrator trade pricing.

See - Axis has a following based on their unique SoCs and SDKs, as well as well thoughout installation design on high end models.

Even Vivotek has some semi-unique stuff - like 60FPS 1080p cameras, and panaormic/PTZ pairing. So these two companies can get away with screwing the integrators on margins to an extent via product desirability and superiority.

However, companies like ACTi are so me too - what they make others like Hikvision, Dahua, Hunt, SMax, Sunell etc... also have - in addition to this they still want to take all the profits for themselves with IT style channel structures - thats when integrators get annoyed and go else where. This is why ACTi is not getting anywhere quickly.

The most dangerous thing about buying from a company thats not going anywhere quickly is that they don't have the money to spend on R&D to improve their product design - which is very bad news for integrators and end-users in the medium to long term.

Melissa, it's a great point and highlights one of the core tensions in the market today - integrators are getting squeezed by greater product availability, end users are getting tired of overpaying for products now more widely available.

Bohan, I think you are just wrong on this one :) at least for US prices / availability.

For instance, take the Pelco IL10 series. The MSRP is in the low $400s (depending whether it's a minidome, box, etc.). You can buy them online in the mid $200s, which is quite close to what most dealers pay

Hi Melissa - are you an end user?

As a vendor/distributor we find that there are 3 main types of integrators:

1. The type thats just there to make a dough - they act like employees/cablers and make us design everything - these do seek high margins and are not the most caring of the customer - however they stay in the industry becasue we as the distributor make sure things go smoothly and they make good money without doing too much)

2. The passionate about surveillance type that learns everything we feed them, does more of their own learning, teach us a few things once in a while and are very "honest" to the client when it comes to passing on pricing and discounts - however they don't quite make enough and tend to move on to other more profitable roles like consulting.

3. The passionate type that also has an eye for making a good dough --> this is the type that stays for the long haul and benefits the customers the most via experience and competence.

So you see - integrators that gouge are usually not bad as long as they are either passionate or the distributor is. But at the end of the day type 3 is the best type of integrator - the one that has the most experience and the passion, kept in the role by high profits.

End users never value labour to its full deserved amount - because they do not factor in the true cost of providing onsite warranty (unpaid time and lost sales) and also the real value of experience. The easiest way to fill this gap is high margins on products - because that way the end user has a perception that they are spending a higher proportion on products which they physically keep and hence feel better emotionally.

Firstly, Bohan I agree with your '1,2,3' analogy.

Secondly, I have had success in achieving good markups on low costing hardware by basing my proposal on the total job cost without the bid being broken down. I will base sales tax on approx 70% of the total which is my first check and then my final check is solely for labor whether it covers it or not. Basically across the board I believe the customer likes to see the majority of his financial investment to be spent on technology and not labor. Obviously this is not the case at the lower end, but this proposal format works for me. Higher end I will breakdown most of the time.

At the end of the day every job costs you X and must sell it for Y. Whatever way you decide to base your numbers to achieve Y is entirely up to you. If you don't get Y, you're not doing the job!

It's hard to get big mark-ups with well branded products like Axis, 30% and I'm happy. You can buy 1080p cameras from China with USD100 and sell it USD300 easily. Lower starting price makes it possible. Is it reasonable, that's the other story.

Pekka, that's a good point about buying overseas non branded products. Of course, now you take on increased support cost, risk of higher failure rates, etc. Certainly some companies do this successfully, but it comes with more challenges/risks.

This discussion is why we use CPDs for everything we buy from Pelco. we just make up invisible clients with lots of $ of equipment and we buy the equipemt over a course of 12 months. For Axis, I try to project price 2-3 jobs at the same time while it seems like there is just one. When i quote ACTI, im usually dealing with a client tight on money anyway so to me that is the point of ACTI, its cheap with smaller markups. I don't mind getting big markups for a difficult install or a end-user that is difficult to deal with.

We even get priced shopped by our biggest client once in a while (300 cameras, 700 readers and growing ) but we still do 99.99 percent of their security work.

CPD = Competitive Price Discount. Is this Pelco's term for project registration?

Yes, got to love those "blanket CPDs"

Well, as an end user I probably do not quite understand the true cost/value of labor but have a pretty good general idea as would most but not all end users. Most business owners or managers of any industry have a good concept of labor costs but perhaps not the exact details of man hour for system design and install of camera systems so some fudge factor between vendors might be missed or within reason. What I will not tolerate is crazy mark up on equipment.

Sure, I know that some brands are discounted quite a bit over MSRP and others will be only available at the listed price and that a vendor will be purchasing at a lower price for a number of valid reasons. Most end users have no issue for what the discount might be but if I find a piece of equipment priced out over MSRP or an average Internet price I am highly suspect of the bid and individual/business and don't even bother with further follow up before its round filed.

I think it would be foolish to think that no one would bother to spend a half hour or so to verify some price points and you would be surprised what you can find on wholesale prices as for every manufacture product there is a distributor somewhere who does not user/vendor protect their price sheet.

"If I find a piece of equipment priced out over MSRP or an average Internet price I am highly suspect of the bid and individual/business and don't even bother with further follow up before its round filed. "

I excerpted this quote on twitter and here's feedback from an Avigilon dealer: "that quote has always been our biggest deterrent to selling Axis or Arecont. Online pricing nearly the same as distribution cost." That's a fairly common sentiment among dealers.

We actually did a survey on this point: Integrator Importance on Restricting Resales.

The Restricted Resales article was very informative and well balanced to the need of any business to make a profit. Every industry and individual should be able to use what ever approach works for their situation/market. There should not be much of an issue with equipment mark up within reason but when an end user comes across a 200-300% price disparity its hard not to be suspicious of the entire deal. I would rather see reasonable mark up/ profit on equipment along with fair cost for labor, system set up and what ever else a billing line is called for the hard work that it takes to successfully put together a good system.

What I don't like to see is a line item listing "IP camera, x4, $4,000". Makes me think you would also like to sell me a car as "gas engine, 4 wheels, 2 doors, $4,000".

Interesting responses. We used to get these type of comments when I worked for Cisco (switches and routers). I can assure everyone one here that business people "follow the money". If people make excessive profits everyone will jump in to our market. This will eventually make the installation of the product become a commodity. Again ask Dell and HP what they sell computer for today vs 5 years ago. I was certifited CCNA and MCSE. Used to command big bucks but now they are graduating high school kids with CCNA's. And Junior Collage with A+ and MCSE certs. If it happens, and it will, the IT department eventually will rise up and impact a much bigger influence in the security space, then "by by excesses". Supply and Demand rules eventually.

Here's what I would like to know? How do you include in the price of the equipment and labor for the project the cost of:

• marketing and advertising so you get the lead in the first place
• time for the site visit and sales call
• time for the proposal preparation
• time for the design
• time for the documentation/drawings
• time for the purchasing and admin
• time to go to site and line-out installation
• time for job site meetings
• time for training our techs on new products
• time for calling tech support when the instructions are wrong or not clear
• time for replacing a warranted product that failed in the first month
• time for uploading new firmware to fix problems/bugs
• time for training the customer
• time to solve integration problems
• time to stay abreast, test and investigate new products
• etc...

Unless you are doing "cookie-cutter" where the true cost is more predictable, you must increase your mark-ups. Integrators are constantly dealing with integration issues such as compatiblity between products (e.g. Onvif does not mean compatible!). It's the unknowns and support issues that go with technology products that can quicly absorb your time and profit. All this is very different business model from the Internet where it is Sell - Ship - Forget - Go home at 5:00. If my customer calls, we roll a truck - 24/7 - because they expect it!

Take Axis - I really love their product but as long as they continue to publish an MSRP of 15% markup above my dealer price (unless I buy $xxK a quarter worth of product), then I will look for equivalent product from different manufacturers that don't hi-jack my ability to make a decent profit.

Be carefull what you define a gouge. I have markup up product 2x with reasonable hours for labor and barley broken even (I know you all get some of these customers). As an overall business, you have to be able to absorb the unknowns and true cost of doing business.

Unknown Dis. - Well written. My sentiment exactly.

This invoice was for the final 4 Nano Stations out of 10 deployed. The consultancy charge was for our introductory meeting with the client. In hindsight, I probably should have charged more for this???? Any feedback?? (Nano Stations MSRP around US$80 including pole mount adapters) Markup on the scissors lift was 90%. Server config. only needed an hour as the previous 6 units installed had set the pace.

Ted, you charge $225 per hour and you markup products 200%+. Wow!

Life in the Silicon Valley! Though, I suppose, it's all relative considering In-N-Out cashiers make, what, $20 an hour!

I am not sure that approach / levels would work in other regions.

product is 100 price for product is what the store pays. u pay 300 that is WALMARTS MODEL. they charge what they pay + the product next to it + 100% more. thus 200% mark up on each item.l per walmart indoctornation class in my youth!

this is very normal in the retail world. why not in ours..... whats the differance.

and it cost them less than .02 cents to make a cup of coffee!!!!

so the base im going for is everyone is doing it im suprised your suprised.

Seth, a few things:

In retail, markups cover labor costs. I don't buy toothpaste at Wal-Mart and have the cashier tell me "That will be $2.50 for the tube and 1.75 for handling." The one price covers both, unlike security.

In the IT world / model, which I believe most of us believe we are heading, markups are very low, and that's an expected standard.

We have survey results on integrator's real world camera markups and a 1 hour webinar on dealing with declining margins.

All jobs are not like this John. When the opportunity arises I take it. At the end of the day this probably took care of another job that had overruns?

My point really is that I don't have set pricing other than my minimum hourly rate of $126.81. It is important for me to always try and maximise profit on a per job basis. With this in mind I will always background check my customer prior to opening discussions just to get an idea of the quality that is expected. It takes 15 mins on Google to find out what kind of car the client drives, a look at his house and some public financials/clubs/donations etc. This is powerful info in ones ability to price a job even when you are dealing with facility managers etc. When the client appears to favor quality, you can equally loose the job by coming in too cheap!!!!

I was just letting the light shine on the rest of the merchants that do such

do i think it is right. no... no I do not.

but as you saw with mr silicon valley some places just do it.

in the midwest however that kinda stuff gets you out of buisness.

just not the market here

RICHARD: "It takes 15 mins on Google to find out what kind of car the client drives, a look at his house and some public financials/clubs/donations etc."

This is the business intelligence you use to establish your 'scaled' pricing structure?

Nobody begrudges a working man his ability to get paid for a good days' work. But I think your approach engenders an operational minefield that most integrators would hope to avoid.

Not to mention this approach is virtually unscalable in the internet age.

Hmmm, I wonder what % mark up is used in the following excerpt taken from the main article below??? Anyone like to guess?

Merchants may 'adopt' security cameras in Sikeston:

"But during the July 29 meeting, city council members authorized the purchase of a new DVR and a spare camera for the system at an estimated cost of $35,000."

"The new DVR will be able to record and store the video feed from up to 128 cameras."

Maybe that's why it costs ~$35K.... it's magic.

Good find on the $35k DVR. Carlton is going to call and request details from the city.

I'm sure there is a hefty "Mark up" on hardware as the town of Troy, NY will fork out US$180K for 6 to 8 cameras: Security cameras to be installed in downtown Troy

Yes...at best that equals US $22,500 per camera, installed of course! Still, it is likely the 200% mark is broken for hardware mark-up!!

Nothing wrong with aggressive "mark up" in my eyes!!

Ted, $22,500 per camera for a city surveillance project is high (even for city systems) but that's also because these projects are complex, very time consuming and use costly components (mesh wireless networks or fiber, PTZs, etc.). I've asked Carlton to pull any contract (if it's been awarded) so we can see what was bid.

There's a difference between you believing there is nothing wrong and our argument that 200%+ markups and uncommon / risky.

Interesting. I will now begin to google all vendors for what sort of vehicle they drive, where they live and what % above MSRP they spec for equipment. Anything above 127.3% or if you drive a "luxury" vehicle rather than a mid level truck or sedan and your bid is in the trash as you must be overcharging us.

I think Mark is being facetious, playing off Ted's early comment. Btw, nicely played!

Darn... I was hoping there was some online site that gives you insane info.

This reminds me of a scene The Incredibles, where Mr Incredible works at an insurance company and helps a cutomer sucessfully make a claim. He is called into the office by his manager and told off: "They are navigating through the beauracracy!"

We need to keep the beauracracy going... otherwise there won't be any scraps left for integrators!

Gotta hide our secrets from these high knowledgable end-users.

Help! ... head explodes.

John, that's correct. Margarita, there are ways but as they say, I could tell you but....... . And Bohan, that funny and very much in line with my previous post. Your posts and information are much appreciated.

It's always interesting to see the many sides to issues within various industries and this site is one of the best around for high quality and un biased information even if we do not always agree to the exact viewpoint of an article or all who post follow up responses. It's the diversity of members who provide commentary to articles or direct feedback to other members that adds great value to this site. So us end users will continue to navigate through the "beauracracy", price points and business practices but hopefully it will also provide some marketing insight for resellers/ integrators to improve or increase their business success. After all, I want a good system at a fair price and the supplier to make a good profit as well since everyone has bills to pay at the end of the day.

lol @ Mark

Well said Mark.

Carlton, thank you for investigating further. It seems reasonable now.

There needs to be a section just for integrators, otherwise all of us might as well find a different job. No one likes to have to fight to make money, and that's what these blog posts end up doing- pitting the end users against the integrator. I understand that is not the intent, but the more we contribute to these the more we are putting our cards on the table for anyone to pay $200 to see.

"There needs to be a section just for integrators, otherwise all of us might as well find a different job."

This seems slightly extreme. Even if we had such a section, we would still answer end user questions fully and accurately. Plus, it would still not stop some integrators for disclosing 'secrets of the trade'.

In particular, I think it's reductionistic to say that this is 'pitting the end users against the integrator'. Sure, some integrators who want to mark up products 200% are going to find these conversations to be against their approaches. But IPVM is not about maximizing integrator profits, it's about providing information that people in the security community can use to better their business (in whatever way that may be).

There are organizations dedicated just to integrators, like PSA, and I think they are worthwhile but serve a different role.

Sean, all, I created a new discussion "How Much Do Distributors Mark Up Products?" Sean, I think you are conflating OEMs (like yourself) with distributors (like ADI, Northern, Anixter). Let's debate that in the new thread.