CE Pro January 2023 - 28

RESEARCH
State of the Industry
es
Number of Incomplete Projects in 2022
Due to Supply Chain Woes
2022 Incomplete Projects Due
to Supply Chain Woes
17%
26+
11 to 25
13%
8 to 10
13%
5 to 7
16%
Amazingly, 6% of integrators report that EVERY project
they started in 2022 was unable to be completed due to
lack of product supply. However, 15% of integrators said
they did not have a single project held up last year.
Selection
ojects Due
es
2022 Purchasing Sources
Primary Business Location in 2022
Home Office, Use
as Showroom
13%
Commercial
Office with
Retail
Showroom
Commercial
Office with
AppointmentOnly
Showroom
24%
16%
Home
Office,
No Showroom
20%
Commercial
Office,
No
Showroom
26%
Primary Business Location
in 2022
None
15%
7%
2 to 4
20%
1
Primary Business Location
in 2022
to $21,670 per month or
$260,051 on an annualized
basis. That represents nearly
double the percentage
growth of RMR compared to
the prior year, in which dealers
reported earning 6.5%
of their 2021 revenues from
recurring sources. Of course,
while the increased RMR
percentage rate is exciting, it
still pales in comparison to a
traditional security integrator
who targets to earn 50%
of revenue from RMR.
Revenue Source Diversity
- The custom electronics
In total, 33% of integration companies work out of a home
office of some type. That is down 6% from last year.
urces
Sources of Recurring Revenue in 2022
1. Security Monitoring
2. Remote Power Managed/Remote Reboots
3. Service Contracts
4. Remote Cloud Video Storage
5. Commercial Remote Managed Services
In all, dealers report earning 12% of their total revenue from
recurring monthly fees in 2022. That is nearly double the
percentage from 2021.
28 | CE Pro January 2023
industry was founded on the
business model of high-margin
equipment. Indeed, for
decades CE pros garnered
the majority of their revenue
from the resale of equipment.
While the reselling of
equipment still represents
the No. 1 source of revenue
at 37% of income, it no longer
accounts for more than
half of incoming revenues.
Dealers now recognize
that their greatest value is
their expertise, whether that
be during the design and
engineering, installation or
service phases. In fact, when
revenue from installation,
design, programming, engineering,
training and project
management is combined, it
represents 50% of revenue
(and as noted, RMR comprises
the remaining 12+%).
The labor-centric revenue
model is even more exciting
when you combine it with
the profit margin story.
Every integrator is fully
aware of the ongoing trend
of diminishing margin on
equipment. Products from
certain well-known consumer-centric
brands have
gained a foothold in the
2023 Revenue Outlook
custom installation industry
over the past decade. These
products generally do not
offer strong margins for
dealers. Slowly but gradually,
the profit margin on equipment
is eroding. According
to the survey, dealers earn
an average of 30% profit on
equipment.
At the same this diminishing-margin
trend has taken
hold on gear, dealers have
moved to boost the margin
the earn from their labor.
According to the data, the
profit margin earned on
labor in 2022 was 35%, up
3% from the prior year. Service
labor earns a solid 34%
margin, up 5% from 2021,
while programming labor
also earns 34%, up 6% from
the previous 12 months. This
positive labor profit trend is
a positive signal.
The Not-So-Good:
Commercial Market,
Labor, Supply Chain
Despite all the positive
data, there are still some
blemishes to this marvelous
growth journey that was ignited
in the middle of 2020
by the cocooning population
stuck at home during
the pandemic.
Commercial Market
2023 Revenue Outlook
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CE Pro January 2023

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