Is the integrator's margin on product critical? No, it is not. With the flattening of the world via the Internet, we should all agree there is no significant margin on today's security products not readily apparent to the customer. The end user can simply Google the part numbers and get pretty close to integrator pricing.
As I have said many times, if you want to sell cameras, stop selling cameras. Instead, sell what cameras can do. A friend of mine, until recently from outside this industry, went on his first security sales call. He was going up against a 29-camera and DVR quote for $8000USD. Cut and dried, product-only pricing. My friend walked out with an $14,000USD sale. How? Rather than selling cameras, he sold what the cameras could do. In this case, the customer is a daycare center, and he sold the fact that parents would have the ability to remotely access some of the cameras and monitor the goings on while they were at work. "Big deal," you might think. "Most any VMS can do that." Sure, but did the other integrator explain that? How many daycare centers provide that service to parents?
(Right now, that integrator is probably believing he lost the sale because his quote was too high. Nothing could be further from the truth)
Does someone buy a drill for the desire to own a drill? No, they buy a drill because they want holes. Don't sell drills; sell the holes your drills can make!
Previously in this space (scroll down after clicking the link), I wrote how you can buy an arterial stent online for ~$25USD. Should this cause panic among cardiac surgeons? Does such internet pricing "cut into the margins" of medical professionals? Of course not. Because you aren't buying the catheter, per se, but rather the expertise in knowing WHICH catheter, WHERE it should be placed, and the EXPERTISE needed to get it there.
(And if you think camera placement doesn't have value, check out the work by Stephen Bond. What he does -- providing better coverage with fewer, higher performance cameras -- bends my mind)
My advice to integrators is to STOP SELLING CAMERAS. Instead, sell your expertise and experience regarding threat analysis, surveillance design/visualization services, installation/placement/optics expertise, network engineering, storage management, training, repair, and maintenance. And also integration with other systems the customer may have.
When you are selling all that, the margin on the camera becomes no longer critical.
(I am not advocating selling directly to end users with this post; I am only responding to the question whether integrator markup on hardware is critical)
Disclaimer: These are my personal opinions and not necessarily those of my employer who pays for this IPVM subscription and frequently doubts his wisdom in allowing me to post my opinions.