RMR (Recurring Month Revenue) is targeted with hosted solutions as a sidekick.
As I stated before... integrators are going to be forced by the market to think outside the box. With Disti’s and online web sources selling equipment at or below the integrators cost direct to customers this will shape our industry drastically in the future. AND its ALREADY happening! The Data guys shift was about 8-10 years ago, the Telecommunications industry (which I have been apart of for over 35 years) has been shifting into this mold for a few years, the security and video industry will be shortly behind. With this happening the integrators which in the past relied heavily on making a 30-45% profit on all parts and another 50 %+ off gross labor will change drastically. The new platform will look something like this, the Integrator will Design/ Build a system for a client, help them get parts direct from web or Disty ( for a small fee) Install for regular fee’s or less and then charge an RMR to support, upgrade, maintenance and provide a few hours of light programming. This will in essence make up the bundle. Some companies will add other things like Gold, Platinum, or preferred accounts which will get them in the pecking order of their choice. Larger customers such as Enterprise will go for the Gold. In the end the Integrator should make way more money on that one project then he would have with Traditional. Let me explain how I have seen it transpire with competition and how we do it as well, as the market guys is shifting. Case in point a lot of the telecom guys said” heck with IP I don’t understand it, and I would never sell it to any of my clients” well guess what IP telephone systems have far out sold traditional systems in the past few years and as a matter of fact all the telecom companies and manufacturers alike are selling, guess what “hosted solutions” so those naysayers guys are getting left behind as we speak. Like it or not our industry is re-shaping.
Anyrate, back to my example. These numbers are pretty close but will slightly vary depending on your business model but the numbers will work out about the same.
Traditional System, take a 7 phone, 7 camera system either is about the same.
- The budgeting cost for camera system used to be $ 1,000.00 per camera depending on type and difficulty of installation and market area, but you get the idea. So based on the budget integrators
- Sell Equipment $2,500.00 to $3,500.00 depending on equipment, Installation $1,275.00 ish, Misc Materials included in equipment.
- Total sell $3,775.00 and maybe upwards to 7K, for this example we will take the smaller which is harder to sell. The larger the deal the easier it is to make a 60 month ROI.
- Total Profit, Including Labor $1,700.00 (this will be the one time without MAC) take home.
New RMR system, in contrast to above system
Design and build system for small fee $ 350.00
- Assist customer to purchase or maybe sell product at 10% max markup to run thru books. $ 377.50 ( to assist in getting best deal)
- Installation at $ 1,275.00 including Misc Materials) May or may not charge depending on situation, some companies will give free installation.
- Total upfront sell $ 2,002.50
- Plus client buys cameras/poe injectors or switches at ($ 700.00-1,000.00 from wherever)
- Total client upfront $ 2,702.50 -3K
- Total Profit Integrator upfront $ 1,512.00 (Taking out overhead from Installation)
Plus client will pay another $25.00 per camera per month for lifetime upgrades, lifetime maintenance, no upgrade equipment or fee’s etc…... This would be for a hosted solution with cloud NVR and Storage.
Integrator will make between 20 – 30% off the cloud company per camera per month. Or $7.50 per camera per month. Or $ 630 per year which you can see the integrator did not get all the upfront but in the first year will make that back plus any ongoing years is Re-occuring profit he did not have before.
These numbers change depending on the size of the Deal /NVR, amount of recording needed and time stored etc…., which adds cost for the traditional and skews the numbers higher but in the end the integrator will make more money but not all at once as he is used to.
Whats Good for the customer is much lower upfront, no licensing fees on hardware, and maintenance is included and no fork lift upgrade needed when they grow larger. This is more appealing to the customer and more so, the larger the deal is as well. Plus all VMS software /hardware and such are included in the RMR price. Some hosting also allows for on-site NVR with cloud backup so that will change deals slightly, however you see the idea.
That said for the guys that say it will never happen, the first time ABC company comes into your large customer and says, we can install your system with all these updated features with latest bells and whistles at no charge and you just pay a small monthly fee, and show them on a 60 month scale it can make financial sense then your sale is vulnerable. We all know that a life span on any technology gear is only good for 3-5 years and that most likely will have to be serviced before that and updated /upgraded. So if your always going to need a phone system, security system, data system, then this kind of approach will make sense to them. Especially since everything is going cloud service these days. Because cloud technology has No maintenance, no Licensing fees, redundant already, no lightning strike problems, no power related issues, security is good ( most are hippa compliant) and hacking is pretty much prevented from the start, no gear to wear out, unlimited storage, no upgrade fees, no travel time for programming, Can use system anywhere, no special routers with port forwarding needed, no updates that mess system up, no obsolescence on NVR or computer running an OS that’s outdated. And the list goes on to why hosted is much better for clients than traditional. Now more than ever do I see, even my clients, they get a quote and first thing they do is go to web and see how much less they can get it for. So anyone that says we are not in a buyers market has not been paying attention lately. I also find most customers, even the most faithful, when their boss tells them you need 3 quotes and the big blackbox companies come in and say the magic phrase, you will be only the next best price. I have seen it develop over the years and see it more rapidly approaching since the big guys (Manufacturers) are pushing for cloud technology, because in the end they make way more money and they can stay in the customers pocket longer a little at a time but if they do a good job and the client stays with them it can mean a big payday in the end. Anyway this is what I see from a consultant and Integrator’s eyes, so keep your eyes peeled and watch the “race to the bottom” question is…..where will you be?