Professional home automation and its ridiculous pricing strategies

//Professional home automation and its ridiculous pricing strategies

Some customers ask us why the OpenMotics price is so low compared to the traditional professional home automation vendors. Some don’t believe the same quality can be obtained when comparing to the traditional vendors just looking at the price.

If we compare our way of working with that of the industry, you will probably find some differences and some similarities. We all bear the cost of engineering a product, writing software and firmware, going through multiple hardware iterations, in-depth testing for hardware/software/firmware, source components, go through certification process, start-up a production file, keep stock etc. Firstly, OpenMotics has the advantage of getting help from the community, a closed source company doesn’t have that resource. Secondly, we also made the decision to cut marketing budgets.

These difference however don’t really explain the huge price gap. Being on the market with OpenMotics for almost 10 years, we’ve seen multiple aspects and heard several stories that could explain some reasons behind this. Let’s take a look at 2 of those stories:

Story 1: Office building

A company in Belgium was building a new 4-store office building and wanted home automation, control 80 shutters, automatic power-off for the 16 meeting room monitors and an API to integrate the controls with their own portal. A pretty simple and straightforward project. They requested price from the promoter in charge of the construction and project management. The total price was around 30000 EUR (excluding VAT). For reference the also request a quote from us which totaled only 6000 EUR, a factor 5 difference!
Understandably, the CEO of that company – quite upset about the price difference – forwarded our quote to the promoter in charge. Two days later we got a phone call from the electrician responsible for the other quote who was quite upset with our price to complain. He told us that we’re killing his margin and that he prefers expensive products. So I tried to explain that fair pricing will enable more projects with home/building automation resulting in more work and more projects for him in the long run. I also explained that fair pricing is the best way to gain returning customers. A few days later, we got the message that OpenMotics was selected against the will of the electrician. The system is installed for several months now and the customer is happy, the electrician however is not …

Story 2 – Hardware integration

We received multiple questions from customers and integrators to integrate with equipment of RTI. RTI has wall screens, remote controls and dedicated gateways to integrate TV’s, screens, hifi, home automation etc. RTI also has software to program the remote controls and in-wall screens in a very easy and straightforward way. RTI has really great products – perhaps a bit too expensive in our opinion – but definitely high quality. The disadvantage however of the RTI products is that the end customer has no access to the programming software. Some integrators give this software to the end user but in principle this is not allowed by RTI. So the question we got was to make a 2-way RTI driver for OpenMotics so lights, shutters, heating/cooling and power could be controlled and monitored by the remote controls and in-wall screens. We checked the requirements and it seemed that the 2-way driver should be written in Javascript. No problem, we have a lot of experience writing javascript tso this should be quite easy and lots of fun! So we requested the SDK from RTI to start writing the driver. The feedback we got is that we must first become a reseller before we can do anything. After a few weeks we got the contract signed and we were an RTI reseller.
Great, let’s download the SDK and get to programming! Unfortunately there was no way to find the SDK and a phone call later with the distributor we were informed that we had to subscribe to the RTI Development Program and had to comply to certain conditions to be accepted. We had to prove that we have experience in programming (no problems here) and that we’ve done a multitude of installations with RTI products (which we hadn’t). So we start mailing, calling and explaining our goal and convincing the value for our customers and for RTI. The final acceptance period took more than 3 months…

The problem of the professional home/building automation market is that it is closed by design. Hardly any vendor shares detailed information like protocols and API’s. Let alone schematics, PCBs, software and firmware source code. Only integrators get a limited amount of information; just enough to do their integration. And this information cannot be shared with end customers to protect margins and to restrict customers to do things themselves. The integrator must be in control, not the end customer.

What we’ve seen in IT is that the Open Source community has changed the dynamics, created competitive offerings and forced the traditional market players to change their pricing strategies. The typical commodity line has worked and changed the price in advantage of the end-customer.

In home automation, due to the much more closed environment, the commodity line has only received limited influence and kept its pricing too high. Almost every customer we’ve talked to perceives home automation as very expensive, right until the moment they see the OpenMotics pricing. We can’t believe there are still houses being built without any form of automation anno 2015! This is one of the few sectors where the commodity line has been at a stand still for many years and price didn’t lower for the same amount of possibilities.

Home automation vendors/integrators can still charge high prices but only to a limited number of customers. By not allowing the commodity line to move, the market size remains limited and only the Open Source community can change these dynamics.

By | 2015-05-26T22:39:08+00:00 May 26th, 2015|Categories: general|0 Comments

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