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How Low Do You Go?

Discounting and undercutting is not the way to success.

Competition is fierce. There are multiple home technology companies bidding on every job. And to add insult to injury, last week I received an email from Amazon with an offer to mount TVs for $69. $69!! How is that even possible? And are things really that bad out there that installation companies (because anyone that inexpensive cannot be called a home technology professional) are willing to take something under $69 (Amazon has to take their cut, too) for a TV mounting? How can that even be profitable, even for a single owner/operator — a man in a van?

This reminds me a little bit of 2008–2010 in the doldrums of the recession. Integrators, as we called ourselves then, were in a race to the bottom. Everyone was discounting and undercutting each other to just get some work to keep the lights on and put some food on the table. That was what had inspired me to begin the Home Theater Rebuild — a program I started where I would help companies that had fallen on hard times or who were just getting started to get on their feet with management help, product advice, growth strategies, and farming out work to them.

Also by Todd Anthony Puma: Keep Social Media Positive

For the dozens of companies we helped, it was an amazing experience for me. But there are thousands of companies out there and I can not get to them all personally, but I hope to reach some through this blog and through social media outreach. We cannot be undercutting each other and driving the industry to the lowest price again. We have all seen what that has meant with TV manufacturers — there is now very little profit in selling TVs. If we go that road with our businesses, we will have very little profit in anything we do.

Back to the initial question about the Amazon offer. While TV mounting is far from our bread and butter, it is often an in-road that leads to larger, more profitable work. Very often the client needs a universal remote or an upgraded network, and we can turn a $300–400 project into a $5000–10,000 one, or more. If Amazon and other competitors, like PULS, siphon off all of this entry-level work, it will impact our bottom line when it comes to the add-on sales and upgrades. Is that what the installers doing this work are counting on? Are they treating these jobs as loss leaders to get their foot in the door? I would think the customer enticed by such a low-ball offer is a price-shopper, and would be less likely to upgrade and pay full price for our other products and services.

What do you all think? Does it make sense to lose money on the initial TV mounting in the hope of getting add-on sales? I don’t think so — not with the market that will be interested in this offer.

But I want to hear what you think.