Winning Against Dirt Cheap DIY Systems

Never, ever discount the value of your labor and expertise in an attempt to compete against dirt cheap DIY systems. I have declined to even bid many small jobs because the customer was price shopping me against Costco systems. I do that in cases where they seem competent enough to handle a basic installation and keeping costs down is a critical factor for them. I am friendly and helpful with them, I give them an honest impression of what they can realisitcally expect from the system (including telling them it will meet their needs if that is the case for what they are trying to accomplish) and wish them well. I also offer a friendly invitation for them to give us a call if they need assistance with anything, or if they decide they want it professionally installed, or at least the looks of the installation cleaned up a little. I have had customers buy a $600-700 4 camera Costco system, and then pay me $1000 to install it professionally. I warrant my work, but not the gear, and Lorex is on the hook for the technical support, not me. Pretty hard for me to lose in that deal, and guess who they call if the system isn't cutting it for them and they want to upgrade hardware? With dirt cheap HD systems hitting the market now, there will be more times I will be honestly telling people that system will probably meet their needs. That's just a changing industry, and instead of sweating it, we can find the ways in which it can benefit us, such as on the service side.

The truth is, this is much less about shrinking sales and installation opportunities for us than it is about a VASTLY expanding low-end video surveillance market place. How many of the people buying a $500 DIY surveillance system were going to buy your $5000 professionally installed system anyway, if the cheap option wasn't there? A few, yes. And for every potential REAL lost sale (not just a new entrant into the market because prices are so cheap), there will be another new potential customer created for the professional installers of the world. Why? Because as video surveillance around the home becomes more ubiquitous, more people will want it and be willing to pay for a quality job who didn't even have it on their radar 2-5 years ago. It is becoming a commodity, and there will always be a significant number of people who are not DIYers.

Consider this: If this is a death knell for professional surveillance installers selling small systems profitably, then aren't Home Depot and Lowe's the death knell for... plumbers... electricians... carpenters... landscapers... house cleaners... painters... lighting desgners... ? After all, within 5 miles of most of us there is a big box store that will not only sell you everything you need to do all those jobs cheaply, they will even sell you the books on how to do it AND give you a free hands-on class to show you how its done. So in what year do any of you project plumbers will become extinct? Or have to resort to working for free in order to "compete" with Home Depot? Electricians? Landscapers? ANY trade?

You have a vast amount of expertise the customer doesn't have. Some will pay you for that expertise, others will DIY it. So what? Does Jiffy Lube cry about having to compete with those damn auto parts stores that sell people oil and filters direct so they can change it themselves? Or Midas , about brake parts? I sincerely doubt it. Recognize your worth, and charge for it.


Andrew, thanks for leaving this thoughtful comment! I've copied it from the AnalogHD kit test so more members could see it and discuss.

A few thoughts on points made:

"this is much less about shrinking sales and installation opportunities for us than it is about a VASTLY expanding low-end video surveillance market place."

Looking back to when I started in the industry 12 years ago, I feel the market for professional integration is a lot smaller, most importantly in total revenue and profits. I remember numerous deals we won for mom n' pop restaurants and small local businesses where we charged $15,000 for an 8 camera system, with 100% equipment markups, etc. Now, nearly everytime I go to such places, I see a costco / lorex kit that, all in, cost 80% or 90% less.

"You have a vast amount of expertise the customer doesn't have. Some will pay you for that expertise, others will DIY it. So what?"

The main thing to me is that it's tougher, a lot tougher. I am not sure it's going to get any easier for integrators serving the low-end market place.

I am sure some integrators will do well but will have to operate on a much leaner basis, given the decline in average revenue and profit for customer.

What do you think?

John,

I forgot to reply to this before...

You are right, of course. The opportunities to sell high priced systems to small sites is drying up rapidly. No question, the market is changing drastically. Evolve or die is, in fact, a reality in this case for companies currently dependent on selling surveillance to that part of the market. That was really my meaning, though - our focus needs to be on finding the opportunities to evolve, not on lamenting the inevitability of advancing technology, plummeting prices and vanishing margins on commodotized products.

One way I have been exploring that in this market segment, for example, is with NAS units as NVRs - with extras. That comes with both pros and cons as the installing company, but what it really does is return to me much of the ability to sell features and benefits, and therefore identify and meet multiple customer needs, rather than playing low-ball on commodities to get sales with insufficient margins. For us, the jury is still out on whether this will be a solid, profitable way to stay competitive in this market. For many companies this would be largely non-workable. It's just one way I am looking at to adapt profitably.

This is what the HiFi industry has already gone through. Compared to 20-30 years ago there are very few storefronts dedicated to audio / video and custom installation. Same reasons - advancing technology, plummeting prices and vanishing margins. Shoot, many security companies have added to the misery of that industry (myself included) because it is so easy to add audio systems as additional installation offerings. Yet there are, even in the slumbering economy of the last few years, dedicated audio stores doing very well for themselves. It is not lost on me that none of them I am familiar with have survived and thrived by trying to compete with Best Buy and Amazon in selling low-cost systems. Walk into the showroom of one of my customers, in fact, and you won't be shown a $120 system-in-a-box... but you may very well get hit between the eyes with the price tag for a $25,000 turntable. That is at the extreme upper end of his offerings, of course, and it is more reasonably priced - but definitely not low-end - equipment that drives his product revenues. But the point is he knows his expertise, he knows his worth, and he unabashedly charges for it. He is so confident of it, in fact, he still has the decades-old term "HiFi" in the company name, even though his shop can support MP3 enthusiasts just as easily as they do vinyl enthusiasts. And he does very well for himself.