I have spent the best part of thirty years in pro AV. I have priced jobs as an installer, as an integrator, as a distributor and now from the strategic advisor seat at Specifi. Pricing an AV job is not a mystery, but it does have three quiet places where the money leaks out, and every shop I have ever audited leaks money in at least two of them.
This piece is the simple version of the talk I have given a few times at CEDIA. The headline is: every shop has a formula, every shop trusts it more than they should, and every shop is missing the same three line items. The good news is the fixes are not complicated.
The cost stack
An AV job has six cost stacks. Most shops account for the first three properly and under-cost the next three:
- Products. Cost from supplier, plus markup. The bit you are best at.
- Installation labour. Cable pulls, mounting, plate terminations, system racks. Usually billed at a loaded labour rate.
- Programming. Control code, system configuration, room calibration. Often billed separately because it is a specialist skill.
- Project management. The hours your PM spends sequencing the job, calling suppliers, talking to the GC and updating the client. Almost always under-quoted.
- Training the client. Walking the client through their new system, writing the cheat sheet, the two follow-up calls they will make the week after sign-off. Almost never quoted at all.
- Contingency. What you put aside for the part that ships late, the change order you cannot bill for, the day the client adds a room. Usually too low.
The three line items every shop misses
1. Project management hours
I have audited jobs where the project manager spent forty hours coordinating a thirty-thousand-dollar install. That is real time, billed at zero. The fix is simple: pick a project-management percentage (usually six to ten percent of the labour total) and put it on every job as a line item. The client does not need to see it on its own. It can be folded into the install rate. But it has to be in the cost stack.
2. Client training and handover
A residential AV job is not done at sign-off. It is done after the second follow-up call. Most shops budget zero hours for this and then absorb three to six hours of unbilled work per job. Multiply by twenty jobs a year and you have lost a person-month of time you did not invoice anybody for. Quote a training and handover line item explicitly. Two to four hours, depending on the job size. Clients will not flinch.
3. Supplier price drift
Between the day you quoted and the day you bought the products, the supplier moved the price. On a six-month commercial job, this is the silent margin killer. The fix is a contingency line for cost drift, typically two to four percent of the product subtotal, with a note in the proposal that final invoicing reflects supplier pricing on the day of order. Or, better, a supplier-collaboration setup that pulls live supplier pricing into the proposal so the drift does not happen in the first place.
Most shops do not have a pricing problem. They have an unbilled-hours problem dressed up as a pricing problem.
Joe R., Strategic Advisor
Margin guardrails by job type
Different job types support different margins. The mistake I see is shops applying a single margin number across everything. A rough guardrail (numbers will vary by region and by specialism):
- Residential retrofit: Aim for 35 to 45 percent gross margin on products, plus 60 to 70 percent on labour and programming.
- Residential new build: Aim for 30 to 40 percent on products (the GC negotiates harder), plus 60 to 70 percent on labour.
- Light commercial: Aim for 25 to 35 percent on products, plus 50 to 60 percent on labour. Volume makes up for it.
- Service and recurring: Aim for 70 to 80 percent margin. This is your highest-leverage revenue and most shops under-price it.
A simple sanity check
When you have priced a job, run the profitability calculator on it. The calculator pulls the product margin, the labour margin, the programming margin and the contingency line into a single number. If the number surprises you, the proposal is wrong. Fix it before you send it, not after the client signs it.
And when you can, get the live supplier prices into the proposal so the cost stack is current at the moment you quote. The Specifi product catalogue and the Echo supplier portal handle that automatically; if you are running your own spreadsheet it is on you to refresh it. Either way the rule is the same: price against the cost you are actually going to pay, not the cost you paid last quarter.
If your shop wants a second pair of eyes on the pricing model, book a demo. I am usually around for the pricing calls and I will tell you where the leaks are. That is what I am here for.