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The Shifting Market

High-end and entry-level jobs keep coming in, but mid-size projects seem to be disappearing.

More and more we are noticing that our jobs are bifurcating. Our smaller jobs are getting a little bit smaller, in fact, they are on average about half the size of what they used to be, and our larger jobs are getting larger and have gone up in size by 25 to 50 percent. The middle seems to be disappearing. For us, it is a combination of the economy with the middle-size budgets just getting smaller but the ultra-luxury clientele is not feeling the impact. Plus, there are supply chain issues where more professional/luxury equipment is getting diverted to larger projects and, in order to feed the smaller projects, we are using alternative suppliers and products that are in stock and available for installation.

Smart Home - The Source Home Theater
Photo courtesy of The Source Smart Home Automation.

We can tell you one thing — we are busy. Ever since the summer of 2020, we have been getting busier and busier. I keep expecting things to slow down and the effects of inflation and economic uncertainty to hit us hard, but we just keep growing and calls keep coming in. And it appears the strategy outlined above is working.

We were already seeing our entry-level projects creep down in size and scope. However, with the uncertainty in the economy today, we both see that escalating. Projects that typically would have been $40,000 to $50,000 are now $25,000 to $40,000. For Todd, that has come at the expense of some subsystems such as lighting and shading being pared back or de-scoping rooms. For Mark, it is often using a simpler and more consumer-oriented approach, like a Smart TV and Sonos soundbar and subwoofer, obviating the need for a universal remote, eliminating the control system altogether (unless other smart home features are in play), and removing the costs of video distribution. This type of setup is becoming more and more common among entry-level, mass-market projects, and is not going away. We have heard anecdotally from some dealers out there that 70-to-80 percent of their new installations are streaming video only, with no set-top boxes at all.

Also by Todd & Mark: Curing the Service Call Collection Blues

The luxury clients are still subscribing to our top-tier support plans, which provide them with 24/7 remote support and priority on-site service calls. The entry-level clients tend to eschew monthly service plans but are then upset when we are not available 24/7, charge for remote support, or take longer to get on-site when needed.

The best solution we have found so far is to just over-communicate the benefits of the support plans and the compromises clients will be making when they elect not to participate. We do this during our selling phase, when the project is accepted, at final installation/handover, and at subsequent service calls, as well as through our phone tree message and email signatures.

Any ideas on how to improve communications are more than welcome!