CE Pro March 2022 - 4

From the Editor
by Jason Knott
Time to Embrace SubscriptionBased
Business Models
How many
streaming
video services
and on-demand
channels do you
pay for monthly?
Try to write them
all down. I can't
keep track at
our house.
ASK YOURSELF which of these options you
would choose:
Option A: A customer makes you a onetime
payment of $25,000 for a smart home
installation with no ongoing contractual
relationship and you never interact with that
client again.
Option B: A customer pays you a one-time
payment of $10,000 for a smart home installation
with a five-year monthly monitoring
and service contract of $150 per month.
You might be thinking, " What kind of a
dumb question is that? Of course, the best
choice is Option A. It's $25,000 in your
wallet immediately. Option B only adds up to
$19,000 after five years. "
More than 10 years ago at one of the first
Jason Knott is editor
of CE Pro. He can be
reached at jason.knott@
emeraldx.com and
@JasonWKnott
CE Pro Summits, I vividly recall a somewhat
similar scenario posed to a panel of integrators
during a discussion about potential business
models for the custom home electronics
industry. On the panel was Alex Dunn, who
at that time was vice president of Vivint Smart
Home. He was adamant that Option B was
the clear choice. And with the proliferation of
subscription-based businesses in all facets of
life today, it's evident that Dunn recognized
that contract-based business models that
foster ongoing, long-term relationships with
customers are more lucrative than short-term,
one-time transactions.
Dunn argued back then that with almost
100% certainty the Option B customer would
continue to be a client well beyond the initial
contract term. Indeed, the average residential
alarm subscriber remains under contract with
the same security company for an average of
11 years - and that's before any extra smart
home services are added to the system.
During that 11-year time span the original
system typically gets more devices and more
services added into it, expanding the monthly
fee ... not to mention any routine annual price
increases in the base fee that might kick in.
4 | CE Pro March 2022
Think about it this way: How many streaming
video services and on-demand channels
do you pay for monthly? Try to write them all
down. I can't keep track at our house. Just on
the streaming service side alone we pay for
Apple TV+, Disney+, Netflix, Amazon Prime,
Hulu and Paramount+, in addition to our Dish
service. We probably only watch one or two
programs regularly on any of those.
But do we question those fees every
month? Nope. I even subscribe to a streaming
service that allows me to watch the video
feeds on demand from local hockey rinks
where my daughters play.
It's not just consumers embracing " as a
service " solutions; integrators are paying
for them as part of business operations. The
business management software solutions
for the custom electronics industry have
almost all transitioned to cloud-based,
ongoing fee offerings.
The latest " as a service " salvos for integrators
are Indoor Air Quality as a Service, Smart
Water as a Service, and Savant's new Savant
Essentials smart home subscription program.
My point is that " as a service " is here to stay.
Recently, an integrator told me that
consumers would " hit their breaking point "
at some point and cut back on their monthly
burden. It was déjà vu because I recalled
hearing the same prediction 10 years ago from
another CE pro. They might be right, but it
hasn't happened yet.
Whenever we discuss the importance of
ongoing contractual relationships with your
clients, I get a slew of " hate mail " (more than
my normal) telling me long-term client relationships
are simply not part of the traditional
custom integration business model. I agree
- they are not, but " as a service " business
models are not going away. I predict they will
continue to expand, and you should at minimum
conduct an analysis of your business to
determine if they are a fit.
cepro.com
http://www.cepro.com

CE Pro March 2022

Table of Contents for the Digital Edition of CE Pro March 2022

CE Pro March 2022 - Intro
CE Pro March 2022 - Cover1
CE Pro March 2022 - Cover2
CE Pro March 2022 - 1
CE Pro March 2022 - 2
CE Pro March 2022 - 3
CE Pro March 2022 - 4
CE Pro March 2022 - 5
CE Pro March 2022 - 6
CE Pro March 2022 - 7
CE Pro March 2022 - 8
CE Pro March 2022 - 9
CE Pro March 2022 - 10
CE Pro March 2022 - 11
CE Pro March 2022 - 12
CE Pro March 2022 - 13
CE Pro March 2022 - 14
CE Pro March 2022 - 15
CE Pro March 2022 - 16
CE Pro March 2022 - 17
CE Pro March 2022 - 18
CE Pro March 2022 - 19
CE Pro March 2022 - 20
CE Pro March 2022 - 21
CE Pro March 2022 - 22
CE Pro March 2022 - 23
CE Pro March 2022 - 24
CE Pro March 2022 - 25
CE Pro March 2022 - 26
CE Pro March 2022 - 27
CE Pro March 2022 - 28
CE Pro March 2022 - 29
CE Pro March 2022 - 30
CE Pro March 2022 - 31
CE Pro March 2022 - 32
CE Pro March 2022 - 33
CE Pro March 2022 - 34
CE Pro March 2022 - 35
CE Pro March 2022 - 36
CE Pro March 2022 - 37
CE Pro March 2022 - 38
CE Pro March 2022 - 39
CE Pro March 2022 - 40
CE Pro March 2022 - 41
CE Pro March 2022 - 42
CE Pro March 2022 - 43
CE Pro March 2022 - 44
CE Pro March 2022 - 45
CE Pro March 2022 - 46
CE Pro March 2022 - 47
CE Pro March 2022 - 48
CE Pro March 2022 - 49
CE Pro March 2022 - 50
CE Pro March 2022 - 51
CE Pro March 2022 - 52
CE Pro March 2022 - 53
CE Pro March 2022 - 54
CE Pro March 2022 - 55
CE Pro March 2022 - 56
CE Pro March 2022 - 57
CE Pro March 2022 - 58
CE Pro March 2022 - 59
CE Pro March 2022 - 60
CE Pro March 2022 - 61
CE Pro March 2022 - 62
CE Pro March 2022 - 63
CE Pro March 2022 - 64
CE Pro March 2022 - 65
CE Pro March 2022 - 66
CE Pro March 2022 - 67
CE Pro March 2022 - 68
CE Pro March 2022 - 69
CE Pro March 2022 - 70
CE Pro March 2022 - 71
CE Pro March 2022 - 72
CE Pro March 2022 - Cover3
CE Pro March 2022 - Cover4
https://www.nxtbook.com/emerald/cepro/may_2024
https://www.nxtbook.com/emerald/cepro/april_2024
https://www.nxtbook.com/emerald/cepro/march_2024
https://www.nxtbook.com/emerald/cepro/janfeb2024
https://www.nxtbook.com/emerald/cepro/december_2023
https://www.nxtbook.com/emerald/cepro/november_2023
https://www.nxtbook.com/emerald/cepro/oct_2023
https://www.nxtbook.com/emerald/cepro/sept_2023
https://www.nxtbook.com/emerald/cepro/august_2023
https://www.nxtbook.com/emerald/cepro/july_2023
https://www.nxtbook.com/emerald/cepro/june_2023
https://www.nxtbook.com/emerald/cepro/may_2023
https://www.nxtbook.com/emerald/cepro/april_2023
https://www.nxtbook.com/emerald/cepro/march_2023
https://www.nxtbook.com/emerald/cepro/february_2023
https://www.nxtbook.com/emerald/cepro/january_2023
https://www.nxtbook.com/emerald/cepro/december_2022
https://www.nxtbook.com/emerald/cepro/november_2022
https://www.nxtbook.com/emerald/cepro/october_2022
https://www.nxtbook.com/emerald/cepro/september_2022
https://www.nxtbook.com/emerald/cepro/august_2022
https://www.nxtbook.com/emerald/cepro/july_2022
https://www.nxtbook.com/emerald/cepro/june_2022
https://www.nxtbook.com/emerald/cepro/may_2022
https://www.nxtbook.com/emerald/cepro/april_2022
https://www.nxtbook.com/emerald/cepro/march_2022
https://www.nxtbook.com/emerald/cepro/february_2022
https://www.nxtbook.com/emerald/cepro/january_2022
https://www.nxtbook.com/emerald/cepro/december_2021
https://www.nxtbook.com/emerald/cepro/november_2021
https://www.nxtbook.com/emerald/cepro/october_2021
https://www.nxtbook.com/emerald/cepro/september_2021
https://www.nxtbook.com/emerald/cepro/august_2021
https://www.nxtbook.com/emerald/cepro/july_2021
https://www.nxtbook.com/emerald/cepro/june_2021
https://www.nxtbook.com/emerald/cepro/may_2021
https://www.nxtbook.com/emerald/cepro/cepro_april_2021
https://www.nxtbookmedia.com