Are You Selling All Your Services?

I’ve written columns in the past decreeing (more like begging) the virtues of selling services over selling gear.

There’s been one on selling design services – sort of like design consultants do for big clients and big systems out there.  There’s been one on selling integration services – basically installing other people’s systems regardless of whether or not they bought the AV stuff from you.  And, there’s been more than one on selling what I’ve coined as proactive service contracts – this is the preventative maintenance contract where you not only perform reactive service when something goes wrong but also you continuously perform on-site maintenance to keep things from going wrong!

And, over the years, I’ve received all sorts of calls and emails asking me a plethora of questions about selling services.  But, there’s one question that is most constant:

What do I charge?

It’s amusing that, of all the questions that salespeople ask, this is the one that’s asked most often.  Good salespeople are artists when it comes to selling, and can sell almost anything they want to clients that see them both as valuable resources of information as well as partners in their project.  In fact, just recently, I was teaching a class for CEDIA (the high-end Home AV association) where one of the attendees – one who also owns a well-known commercial AV firm – said that when it comes to selling gear, he aims to sell it for 20 percent over list.

Yes, you read that right.  He said 20 percent over list price.

Bravo!   He gets it! 


What the heck am I talking about?  Well, it’s clear to me that he’s selling his expertise as part of his art of selling AV gear.  He’s not simply a vendor/supplier to his clients; he’s selling the expertise of knowing what to and how to design systems by putting together the perfect AV solution.
He’s selling intellectual property – the most valuable thing he has!

What’s he charging?  In his case, it’s a 20 percent service fee – or in some cases, you could actually see it as a 30 percent or even 40 percent service fee (or tip) as I’m sure there are a lot of you out there that are selling AV gear for as much as 10-20 percent below list.  Figure it out.

No, I’m not oversimplifying this at all. It’s as simple as you just read.  He’s charging an intellectual property fee – or a systems design fee – with each and every product he sells.  But, you can package it any way you wish.  If you want to start it all out by selling systems designs as a separate fee, that’s fine too.  What should you charge?  Well, start with 10 percent (of the total system price) and go up from there.  You can (and should) get more.

What about for integration services?  400 percent – that’s the number you should AT LEAST shoot for.  If your cost is $2500, charge $10,000 – a 400 percent margin.

Your expertise is valuable – a heck of a lot more valuable than your competitors – don’t you believe that?

If you don’t, send your competition your resume – as they’re better than the company for which you work. You just said so…

And, what about proactive service contracts?  Well, in the ProAV market, I’d start with at least 8 percent of the serviceable products in the system – but that’s as low as I would go.  We have many, many clients we’ve worked with in the past that are charging way more than that and regularly start their first year’s service contract at 15 percent.

Look, I can’t get more specific than that.  I’ve given you percentages.  You do the math.  But, no matter what you do, STOP GIVING AWAY intellectual property – it’s all you’ve got left.

But, the good news is that each and every day, you get more.

Didn’t you just read this column?


Reprinted with permission from Sound & Communications. Founded in 1955, Sound & Communications is the premiere magazine for AV systems integrators, contractors and consultants. To subscribe or read sample articles, go here.

Gary Kayye

About Gary Kayye

Gary Kayye, founder of rAVe Publications, is one of the most prominent personalities in the audiovisual industry. He has been a contributor to WIRED magazine and a technical advisor and columnist for Sound & Communications magazine as well as an opinionated columnist for rAVe [Publications] since 2003. In addition to his writing and market analysis, Gary has been a product, marketing and business operations consultant to dozens of AV companies in the U.S. and overseas. Clients have included companies such as Sony, Sharp, Epson, Lutron, InFocus, Sanyo, Mitsubishi, NEC and Philips.
 
Gary, who has been involved with the audiovisual market for over 20 years, was the recipient of the InfoComm 2003 Educator of the Year Award and the 2007 NSCA Instructor of the Year Award. Over the years, he has donated much of his time as an active volunteer in the AV industry’s trade association and served as chairman of InfoComm’s Professional Education & Training Committee (PETC), chairman of the ICIA Design School Committee and chairman of InfoComm’s Installation School Committee. In addition, he has served on the InfoComm board of governors. He also helped grow the InfoComm Projection Shoot-Out as the premiere AV industry trade show special event serving on the committee from 1991 through 1997, and was instrumental in launching the Shoot-Out in the European market at the Photokina Expo in 1994 and 1996 as well as the Asian market at the 1995 and 1997 INFOCOMM Asia shows.
 
Prior to founding his own company, Gary was vice president of sales and marketing for AMX Corporation (www.amx.com), a manufacturer specializing in professional AV and residential AV control systems. Prior to AMX, Gary spent nine years at Extron Electronics (www.extron.com), rising to the position of vice president of sales and marketing.
Gary earned his bachelor’s degree in journalism in 1987 from the University of North Carolina and is currently Adjunct Faculty at UNC in the School of Journalism teaching a class on how future technologies will affect the future of advertising, PR and marketing.
 
He is also the founder of Swim for Smiles, a non-profit that raises money for the N.C. Children’s Hospital through swimming and other fitness-related events for kids.
You can contact him at gary@ravepubs.com..