This article originally appeared in the August 2024 issue of Security Business magazine. Don’t forget to mention Security Business magazine on LinkedIn and @SecBusinessMag on Twitter if you share it.
In the rapidly evolving smart home market, security pros play a pivotal role in bridging innovative technologies with end-user expectations. The lines between security products and smart home products continue to blur. Security professionals are faced with the challenge of adopting new products and devising pricing models that not only ensure competitiveness but also enhance customer satisfaction.
Before delving into pricing strategies, integrators must grasp the market dynamics of smart home products. According to Parks Associates, 31% of U.S. households have a smart home security system. As more products and manufacturers enter the market and it becomes more competitive, product pricing also needs to remain competitive.
Understanding consumer expectations, market trends, and technological advancements is key to developing a pricing model that reflects value and quality.
How Do I Charge for That?
Flexibility in pricing models is essential to cater to a broad spectrum of customers. Here is some food for thought on how integrators can freshen up smart home pricing strategy to meet customer needs:
Rethink Subscription-Based Models: The subscription-based model is “old hat” for security professionals, but as homeowners want to add devices into the fold, integrators may need to consider what support will need to be provided to ensure those devices continue to function seamlessly. Don’t be afraid to adjust the subscription model or offer several different options to suit a client’s needs.
Gradual Product Upgrades: The rapid pace of technological advancement in smart home products necessitates a flexible approach to pricing. Integrators should be prepared to adjust prices based on new entrants to the market, seasonal demand fluctuations, and emerging consumer trends.
This agility can be facilitated by a close relationship with distributors, who provide insights into market dynamics and product availability. There will always be customers who want the latest and greatest technology added to their system. Most of the time these are easy adds for integrators – they just have to make their customers aware of the availability.
Showcase Your “Menu” in a New Way: Not unlike product upgrades, many customers don’t know all the services an integrator offers unless it is presented to them. Presenting a base-level package is a great place to start, with additional menu add-ons and how they can enhance the homeowner’s lifestyle. From there, walking through a customer discovery session can help identify other key areas for upgrades and add-ons.
When asking a homeowner about their biggest pain points, perhaps they always forget to close the garage door, or they would like to be alerted when their kids make it home from school. These are easy additions that can offer big value.
Financing Options for Consumers
To further enhance affordability, integrators can explore offering financing options by partnering with financial institutions or leveraging fintech solutions. This can enable customers to invest in smart home technologies without the burden of significant upfront costs.
Options include:
Customized Payment Plans: Security integrators can collaborate with financing partners to offer tailored payment plans that match the financial circumstances of different consumers. This could include low-interest financing over a set period or flexible installment plans that accommodate varying budgetary needs.
Lease-to-Own Options: By allowing consumers to lease smart home equipment with an option to purchase, integrators can cater to those who prefer not to commit to immediate ownership. This approach can also facilitate regular upgrades, ensuring that consumers always have access to the latest technologies.
These financing solutions can help overcome price barriers, making smart home technologies accessible to a wider audience. Distributors can also play a role in facilitating financing options for integrators to offer to their consumers. By negotiating favorable terms with financial institutions or offering their own credit solutions, distributors can help integrators overcome one of the significant hurdles to consumer adoption.
How Distributors Can Help
The relationship between integrators and distributors is foundational to navigating the complexities of the smart home market. Distributors serve as more than just a supply chain conduit; they are strategic partners who contribute to every facet of the dealer’s business model.
Distributors possess a wealth of data on market trends, consumer preferences, and product performance. This intelligence is crucial for integrators to refine their pricing strategies, anticipate market shifts, and tailor their product offerings to meet emerging needs.
Additionally, distributors offer invaluable training and support services that empower integrators to stay ahead of the technological curve. This support extends beyond product knowledge to include insights on installation best practices, system integration, and troubleshooting.
Distributors can act as partners to integrators, offering flexible pricing and financing options, thereby enabling integrators to better serve their customers.
As the smart home market continues to grow, integrators and distributors must work closely to navigate the complexities of pricing and financing. By adopting flexible pricing models, offering financing solutions, and leveraging the support of distributors, integrators can meet the evolving needs of consumers. Ultimately, this collaborative approach will not only drive the adoption of smart home technologies but also ensure a sustainable and profitable business model for integrators.
Dennis Holzer is the Executive Director of the PowerHouse Alliance, a consortium of regional wholesale technology distributors. https://powerhousealliance.com (412) 973-7974
