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How Can I Profit from Plasma?

There are three ways to approach this problem. You can find higher margin plasmas to sell. You can think of plasmas as a piece of the install and bundle them with additional labor dollars. Or, you can take a longer, more strategic, approach and see the plasma TV for what it really is. It is a tool for profitability in other areas of your business.

Find High-Margin Plasmas. First, dont sell or support low-margin plasmas. Whats low margin? Anything easily shopped on the Internet, or available from a national discount chain. That rules out most of the brand names with which customers are familiar. That also means you should stay clear of popular brands sold through distributors. Not only are they easily shopped, but your margin is squeezed as well.

There are limited distribution brands available right now, even through distributors. For example, Fujitsu plasmas are relatively profitable and easily available through national distribution.

Another solution is to configure your own high margin item. Its easy. Purchase a commercially rated set with a swappable video card. Install a high-quality PIP video card from a supplier like Aurora. This way, you are creating value through a custom (and improved) version of the plasma set, and you can price it accordingly.

Go into any major carpet store, and you will find all of the same top brands, with the same styles, patterns and colors. Yet when you look at the product and color names, you will find that they are store-specific. A sample called Sea Foam Green in one store is called Sea Breeze Green in another. This is a way for the stores to avoid direct price comparison on like items.

Using this theory, you can create a new model number for the customized set that you just produced. Take the plasma TV model number and add the model number from the upgraded video card. Viola! You have a new part, thats justifiably better than an off-the-shelf alternative. When your customer tries to search for the product on the Internet, they wont find it. Instead, it gives you an opportunity to tell them how you have added value.

Bundle Plasma with Labor. One of the pitfalls of the CI business is forgetting to add labor to every item you sell. Remember that you are in the custom installation business, not the I can get it at wholesale and mark it up business. Ruths Chris Steakhouse doesnt price its ribeye based on the wholesale cost of meat plus a profit margin. They add in the cost of preparation, delivery to the table, plus the overhead of running a nice restaurant. With a bit of research you could find out that the restaurant chain pays less than eight dollars for the ribeye steak that its happily charging you $26.95. Are you appalled at the mark-up? Do you try to dissect the price of the steak into its components of steak, inventory management, preparation, delivery and clean up? Of course not. But were so conditioned in this business to quote the steak at eight dollars plus delivery that the customer has been conditioned to parse the pricing.

Instead, only show engineered, delivered pricing for every item that you sell. So when a customer says, How much is the plasma? you can respond by stating your price, plus this comment: Our installed price includes delivery, running an AC socket with power conditioning, mounting brackets, installation, hook-up, tuning and three-year warranty.

Remember that you dont just sell plasma TVs. The same way Ruths Chris doesnt sell meat by the pound. You sell an installed, wired, functioning plasma set. Its a big difference.

Look at the Bigger Picture. Why do you sell plasmas in the first place? Because the demand for flat-screen technology is there. Seen another way, if there were no demand for plasma TVs, your business would be reduced considerably. How many customers have entered the market only because they wanted a plasma? Plenty. Its been a huge catalyst for sales.

So if plasma TVs bring customers in, why not look at the category as a marketing tool, and therefore, a marketing expense. The plasma brings in the customer, but its your job to present and sell all the parts of the system your customer either was ignorant of or uninterested in (home automation, lighting control, distributed audio, better quality sound, etc.)

Heres a simple rule of thumb. Make sure the plasma represents less than one-third of the total value of your proposed system. If not, you are underselling.

If all that you do is satisfy the customers request for a plasma, an inexpensive A/V receiver low-budget speaker package and simple remote, then you have done yourself and the customer a disservice. Why? Because that wasnt a CI customer to begin with. It was a mass merchant customer who wanted to buy from you, either because you offered a deal, you could install it better than the national chain, or because you failed to sell them anything more than what they asked for. Next time, let them buy from a mass retailer.

If you are unable to upsell this type of customer, its either your fault, or their inability to buy. Do you have the capability and confidence to sell sophisticated systems to seemingly low-performance customers? If not, its time to find out why. Most of these customers have the means to buy more advanced systems; theres got to be something in your presentation thats not clicking right.

But if this customer doesnt have the means to buy a higher performance system, it wasnt your customer to begin with. Remember the rule: the plasma needs to represent less than one-third of the total. That means a $6,000 plasma should be part of a sale no less than $18k total.

Are you interested in having your CI business questions addressed in this column? Send them to [email protected]. Please include your full name, company name and address.

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