Sound & Communications April 2008 issue

Are You Selling All Your Services
Intellectual property counts, too!
By Gary Kayye, CTS
I’ve written “Sight Lines” in the
past decreeing (more like begging)
the virtues of selling services over
selling gear.
There was one on selling design
services, sort of like design consultants
do for big clients and big
systems out there. There was one
on selling integration services,
basically installing other people’s
systems whether they bought the
AV stuff from you or not. And, there
has been more than one on selling
what I’ve coined as proactive service
contracts, the preventative maintenance
contract for which you not
only perform reactive service when
something goes wrong, but you also
continuously perform onsite maintenance
to keep things from going
wrong in the first place.
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 questions
for salespeople to ask, this is the one
that is asked most often. Good
salespeople are artists when it
comes to selling, and can sell stuff
for almost anything they want, to
clients who see them as valuable
resources of information as well as
One question
that is most constant:
What do I charge
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 (who also owns a wellknown
commercial AV firm) said
that, when it comes to selling gear,
he aims to sell it for 20% over list.
Yes, you read that right. He said
20% 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 do 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% service fee or, in some
cases, you could actually see it as a
30% or even 40% service fee (or tip)
because I’m sure there are a lot of
you out there who are selling AV
gear for as much as 10 to 20% 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% (of the total system price) and
go up from there. You can (and
should) get more.
What about for integration services
400%. That’s the number you
should shoot for at minimum. If your
cost is $2500, charge $10,000: a
400% 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 résumé, because they’re better
than the company you work for; you
just said so….
And, what about proactive service
contracts Well, in the commercial
AV market, I’d start with at least 8%
of the serviceable products in the
system—but that’s as low as I would
go. We have many, many clients
who are charging way more than
that and regularly start their first
year’s service contract at 15%.
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
have left.
But, the good news is, each and
every day, you get more.
Didn’t you read this column ■
Gary Kayye, a member of Sound & Communications’ Technical Council, is principal of Kayye
Consulting. He was InfoComm International’s 2003 Educator of the Year, and NSCA named
him 2007 Instructor of the Year. Send comments to him at gkayye@testa.com.
14 Sound & Communications
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