10.20.2009 — "My business model is to make money on the products that I carry," says Scott Sullivan, president of SoundVision in Novato, Calif. "I won't carry any product that I can't make money on."

That's a common refrain among many custom installation companies, which have built their business models so as to garner the fruits of product margin.

That business model does not mean, however, that you shouldn't satisfy the lifestyle needs of your customers. After all, "The client is king," as the old saying goes.

There are products and services on the market offering tangible benefits to customers that don't necessarily provide a healthy margin of any consequence for the CE pro.

A few years ago, the lack of mark-up for big-screen TVs was the transitional problem.

Today, one of the key categories is IPTV video streaming and downloading services, such as Apple TV or Vudu. Integrators are often forced to recommend such services as DirecTV, Verizon FiOS or Netflix.

What should you do? Basically, there are three options:

Don't Offer it, Don't Connect it

If you aren't going to make the necessary mark-up on a product, one option is to simply not carry it. This keeps your business model intact.

Integrators can prepare a system fully to handle these products to be connected later, whether that is by the homeowner or another integrator.


Gaming products, like Sony’s PS3, are prime examples of components with which custom installers can’t earn markup, but integrating these with a home theater will create a more satisfied customer.

Don't Offer it, but Connect it

This option requires the CE pro to make sure he has a good installation contract. For example, does your contract cover you if the homeowner buys the product himself and it "blows up" while you are integrating it into the A/V system?

That's why many integrators who offer this option make sure they are absolved of all liability when connecting a product that they did not purchase. Likewise, having an established rate program for connecting no-margin legacy components is a good idea and has spurred some integrators to boost their labor rates.

Offer it, Connect it

If your goal is to go above and beyond your duty to satisfy your clients, then this third option is probably your only way to go. Especially with a fully integrated system, custom installers are often faced with legacy equipment that the homeowner already owns.

That's why, when you are engineering the system, it's advisable to get a complete list of all the legacy equipment and cross-check it against your proposed system.

For incompatible electronics, some dealers who sell equipment online will offer to take those old components and post them for sale, remitting some of the proceeds to the homeowner. For new equipment, the common scenario is to simply run to Best Buy or the Apple Store and buy the component yourself. This turnkey service is sure to impress the customer.