By Mary Litsikas
Although some builders may shy away from offering the latest and greatest in technology, others are embracing the idea--and profiting from it. One key element to making the high-tech concept work profitably is to standardize offerings, according to Utz Baldwin, president of AD Systems (Houston); board member of the Custom Electronic Design & Installation Association (CEDIA); and chair of Indianapolis-based CEDIA's Outreach Committee.
"Make the offerings the same on each project," Utz recommends. "Costs and headaches are reduced with cookie-cutter packages."
According to Utz, the reasons for these reductions include the following:
- Installers become more familiar with the necessary techniques over time, so they work faster.
- Programming time is cut, because the same program can be used repeatedly.
- Because builder and remodeler sales reps can become more familiar with standardized products, they can speak more confidently and expertly about the offerings and increase their sales.
When developing these packages, contractors need to keep two criteria in mind: who the target market is, and how to offer logical, standardized upgrades. For example, potential buyers of $200,000 homes will feel more comfortable adding a less-expensive, high-tech option such as a wireless network. On the other hand, potential buyers of $1-million homes probably will expect a wireless network and be more open to automated lighting and distributed music systems.
"Offer systems that make sense to your business model. Look at the trends in your marketplace, and pick the products accordingly," Utz advises.
When it comes to upgrades, keep it simple and--again--standardize, Utz says. If a builder decides to offer a distributed sound system, he should develop two or three levels of options. The standard option can consist of three rooms and a CD player, while an upgrade can include eight rooms, an outdoor area and a CD player.
"Contractors should be proactive in developing their packages," Utz says. He compares it with selling new cars: Create a logical package of options, and then stick with it until the market dictates a change.
Where the dollars are
While the high-tech options are numerous, Joe Piccirilli, managing director, Avad (Hollywood, Fla.), offers some issues to consider during the decision-making process. When it comes to ease, his ranking of options starts with distributed audio as the easiest, followed by home theater. Security, a given expectation in many markets, is a little more complicated because of the monitoring involved, Joe says.
But when it comes to ranking in terms of profit margin, Joe ranks lighting as the most lucrative type of high-tech installation, with distributed audio and home theater following. However, Joe cautions, lighting work requires high-voltage experience.
Once builders and remodelers decide to offer high-tech options, they must decide who will do the installation. Utz highly recommends partnering with a company that specializes in such systems. "Build a relationship with a company to support these technologies," Utz says, adding that his builder and remodeler clients are happy to hand off keeping up with fast-changing technology and focus on their core business.
Another factor to keep in mind while contemplating high-tech offerings is today's consumer. "Today's home consumers are younger [children are a factor], faster, and smarter," Utz says. "They don't appreciate performance. They expect it."
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