I got a phone call yesterday from an AV Integrator wanting to ask me a few questions on some material that he was reviewing from one of the classes that I taught that he had attended. Come to find out that he had attended the class “Selling Design Services: Stop Working for Free!” this past year at CEDIA Expo 2012. The really interesting thing was that he also attended the exact same class the previous year as well. So even though it seemed like the insanely obvious question, I had to ask, “Are you currently doing system designs and project engineering for your projects?” He proudly responded “Absolutely, when I took your class in 2011 I realized that in order for our company to rise to the level that we wanted to achieve we needed to spend time and engineer our projects before any wires were pulled.” So the next insanely obvious question followed, “Are you charging your clients for this engineering work?” This answer did not come as easy, “Yes, (very big sigh), well sometimes we do, we really try to but you know it is not easy.” And with that I had my answer as to why he was calling and why he needed my help.
It seems that after years of preaching from not only myself but many other consultants & advisers in the AV industry as well as professional organizations like CEDIA & InfoComm, integrators are starting to realize the true necessity of engineering systems before they are wired and creating system design documentation. However it seems like now we have a new problem.
I remember sitting at CEDIA’s headquarters in Indianapolis in October 2010, a month after Expo 2010, for the CAT (Content Action Team) meeting for the group of volunteers for CEDIA University. We were reviewing the surveys that had been completed by attendees with suggestions for classes for the next Expo. The survey that grabbed my attention had one simple request – “I get it, I need to do designs for the systems we sell, but how the f@*k do I charge my clients for all of that time that I spend doing the design work?” With that I had my mission and spent the next 9 months creating a class to teach integrators the lessons that I learned in my own business as a AV integrator.
Before we start laying out the plans for implementing design fees, we need to address the question of why do you need to charge for your design work? I think everyone’s response would be “Duh, Money!!” And that is exactly true – stop working for free! I would be willing to bet that most of you reading this do not run a Non-Profit company (I am referring to your corporate company classification not the status of last years P&L statement), and therefore working for free should be considered a bad thing and a big no-no.
We are all in this to make money, but if you allow me to peal back a few layers of the obvious answer, lets take a deeper look into this…
It’s about the money – but the biggest effect is not on your bank account
Setting the standard at the start of a relationship with a client that you will be charging them for the time that you spend designing the system for their home or office is extremely important since you are not beginning a relationship by giving something away for free. When it comes time for a change order sometime during the project, the client will be expecting that change order to come with a cost since everything else that you have done for them you have charged for your time.
Giving something away for free has become a popular business idea as a way to win a client for life, and while I definitely agree that giving things away for free may make your clients happy, it certainly does not give you a “client for life”. I believe that while these may end up being clients that love working with your company, the reason is not for the great work that you do or the level of service that you provide, but for the free stuff that you give them! And while it may seem strange to think this way, these are exactly the clients that you do not want – they will constantly expect more for less and end up being clients that you hopefully simply break even on, but more likely will lose money on over the course of the relationship.
So I can tell that a few of you reading this are really smart cookies and are starting to think that I am a hypocrite by telling you not to work for free, but you are reading this for free. Don’t confuse marketing and sales – while I am writing this article in order to market my company, I am not giving away my consulting services for free. For certain efforts you need to give away your services in order to market your company – a great example would be installing a flat panel for a charity or donating a flat panel install for a school or church auction. These are great ways to inform others about your services, which is a great way to grow your business, but these costs should be part of your marketing budget as it is money spent on promoting your business. What you must avoid is giving away anything (products, services or labor) in order to get the job.
The architect or the builder – which one do you want to model your company after?
When I started my own AV company almost 15 years ago I had started with a ton of ambition and ego that what I was selling was better than what the other guys were doing and that was all that I needed to gain business. After about 6 months of trying to get meetings with every builder in town, and refining my marketing material, and changing & reducing pricing structures too many times to count, I asked my father for some advice. He asked what I had tried, and after rambling on for 20 minutes I said something like “no matter how low I make my prices I still can’t get any interest” – at that point, he sat back in his chair and smiled. He started to paint the picture for me of the first two individuals that were part of the building of a new home – the architect and the builder.
The architect has a nice professional office, with nice furniture, professional photographs on the walls of their completed projects. The architect is dressed well, designer clothes professionally laundered, nice Italian leather shoes (you know, the ones without the steel toe), manicured hands. The architect drives a nice luxury car, freshly washed & detailed. The architect caries nothing heavier than the set of blueprints that he created. But most importantly, the architect has billed for every minute that he spent working on that house and at a rate significantly higher than what the builder charges.
The builder either works out of a job site trailer or an office in an industrial park, with only the furniture that is required, there is mud tracked through the office, and stacks of papers and blueprints piled on every available surface. The builder is always in jeans, typically with some holes, definitely with mud and other stains, and those muddy boots with the steel toe. The builder drives a pickup truck, almost definitely a diesel with a fuel tank in the bed to fill up the job site equipment, probably never been washed, and has a few dents scattered throughout. The builder has fingernails black with grime, hands of leather, and a body that is worn out from all the heavy lifting throughout the years. But most important, the builder had to bid on this job and compete with other builders based almost completely on his price. The builder’s bid is in the single digit percentage of the project and the builder is blindly hoping that everything goes as planned and nothing goes wrong and there are no delays or the project will not be profitable and possibly lose money.
Are you the architect or the builder?
Don’t get me wrong, we need builders. Without them there would not be any new houses or offices – only nice sets of drawings and maybe some foam board models. Every industry has “architects” and “builders” and the AV industry is no different. The important thing is to not confuse the two – we all probably know the builder that has tried to be the architect as well and that never turns out to be a profitable situation.
For those of you that want to be “builders”, there is great news – there will always be a job for you. The AV industry will always have a need for someone to hang cheap flat panels bought from the local wholesale club – head on down to your local big box retailer and pick up a job application.
For those of you that want to be “architects”, put your big boy britches on and come with me on the next few posts while I show you how to change the perception of your company by showing you just how easy it can be to get paid for your time and to start charging for your design work…
This is part one of a six part series on selling design & engineering services detailing the major aspects involved in actually charging for your design & engineering services.
About the Author
This post was written by DAVE KIRN
Dave is the President & Founder of D-Tools Certified Partner, k2 Dealer Services, a specialty consulting firm for the AV industry based in St. Louis, MO. Dave has been in the AV industry for 18+ years and owned a successful AV integration company for 8 years prior to starting k2 in 2007.