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Old 05-20-2014, 08:54 PM
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eclairagepaysager eclairagepaysager is offline
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Location: Boisbriand, Québec Canada
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Has LED changed your maintenance contract?

Hi,

Now that LED is more and more common, have you changed or added a different maintenance contract to your customers?

Before one reason to offer a maintenance contract was to replace bulbs that were burning every so often and the usual trimming, relocating, cleaning lenses, adjusting timers etc.

Now with LED lasting much longer and the lenses that doesn't bake residues as much, the overall time to fix all rest ( trimming, adjusting ...) to make the system optimum does take less time.

So are you going by fixture, hourly rate or fixed price?

Thank you
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  #2  
Old 05-20-2014, 09:53 PM
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Classic Lighting Classic Lighting is offline
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LED has made maintenance contracts much harder to sell. I tout the longevity as a big selling point. The client is not physically seeing a burned out lamp so they see no need for a maintenance visit. I have resorted to calling the client and trying to sell a maintenance visit to clean fixtures, lenses, grease o-rings, grease sockets, readjust, shrub trimming, set timers, etc. LED has certainly decreased the maintenance revenue.
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Old 05-20-2014, 10:10 PM
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Lite4 Lite4 is online now
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LED has had a two-fold effect. One- it has reduced maintenance contracts to merely an annual cleaning and check-up based on a single hour rate (depending on project size). Second- It has reduced the quantity of warranty calls I have to perform, giving me more time to sell and install new projects or upgrades.

I would rather my clients be happy and not worrying about bulb burnouts all the time, besides, I make more in new upgrades and installs than maintenance- so I can focus my energies and time there.
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Old 05-20-2014, 11:14 PM
David Gretzmier David Gretzmier is offline
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while LED has certainly made maintenance a harder sell, we still try. since more and more folks want them on all night long, we are still leaning retrofit rather than dedicated LED fixtures to give us the ability to replace bulbs easily and at about 1/3 the cost of a new fixture. but that also means you have to pull bulb, grease and replace yearly or risk rotted pins in sockets. it seems as though the LED systems we have out there for the past 2 years are nothing like the LED systems we experimented with the previous 5 years. we have replaced a few bulbs but not too many. while I would like to believe the bulb revenue would be replaced by LED upgrade pricing and I would have "more time" to sell jobs, that has not been the case for me. we do rebulbs during the slow times, and no matter how much I advertise, we still can't keep 2 guys busy in my market full time.

So, bottom line, as I have predicted for years, LED, for me, hurts sales, hurts residual income for my business, and over time, will reduce the value of my company to a potential buyer. a landscape light company that has 100-200k in rebulb revenue every year is worth far more to a buyer than a company that may have a history but has to reinvent 400k in install every year. sure, it is easier and faster to install LED systems, but they cost substantially more to buy, which is negated somewhat by less wire and smaller trans, but based on my market and competition, I am making less on all fronts.
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Old 05-21-2014, 10:57 AM
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starry night starry night is online now
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It really doesn't matter if the growing use of LEDs reduces profits from maintenance. It is, what it is. Good businesses adjust to changing markets. I started my business when LEDs were already developed to a reliable point, so I never counted on much maintenance other than cleaning and greasing fixtures and lamps. I expect in the future the market will change again and we all will have to adjust in some other way. What if Dr. Tesla's hopes for transmitting energy through the air is developed? What would we do if we couldn't make money on replacing others' poor wiring and connections? Or lose the markup on wire that we now use?

I welcome all the advancements in technology and will adjust my profit mode accordingly.
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Old 05-21-2014, 12:56 PM
David Gretzmier David Gretzmier is offline
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Quote:
Originally Posted by starry night View Post
It really doesn't matter if the growing use of LEDs reduces profits from maintenance. It is, what it is. Good businesses adjust to changing markets. I started my business when LEDs were already developed to a reliable point, so I never counted on much maintenance other than cleaning and greasing fixtures and lamps. I expect in the future the market will change again and we all will have to adjust in some other way. What if Dr. Tesla's hopes for transmitting energy through the air is developed? What would we do if we couldn't make money on replacing others' poor wiring and connections? Or lose the markup on wire that we now use?

I welcome all the advancements in technology and will adjust my profit mode accordingly.
It seems it adjusts my profit mode down. And it adjusts the selling value of my company down to the tube of 50-80%. And it has added multiple competitors to my market that now feel comfortable installing lighting where before they were not. The adjustment I have made is to spend more on marketing, to get less per fixture, for a more expensive wholesale price. While I "sell the effect" , LED has really added competitors here that also "sell the effect". If I did not have a substantial Christmas light biz I would not have survived this spring. Overall sales are down about 40%. And the Margin from the other 60% are down. The sad thing is I have an excellent reputation and brand here, but there is only so many landscape light jobs that go in per 500000 folks. I will probably survive, but not thrive in this environment.
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  #7  
Old 05-21-2014, 05:52 PM
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The Lighting Geek The Lighting Geek is offline
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Quote:
Originally Posted by starry night View Post
It really doesn't matter if the growing use of LEDs reduces profits from maintenance. It is, what it is. Good businesses adjust to changing markets. I started my business when LEDs were already developed to a reliable point, so I never counted on much maintenance other than cleaning and greasing fixtures and lamps. I expect in the future the market will change again and we all will have to adjust in some other way. What if Dr. Tesla's hopes for transmitting energy through the air is developed? What would we do if we couldn't make money on replacing others' poor wiring and connections? Or lose the markup on wire that we now use?

I welcome all the advancements in technology and will adjust my profit mode accordingly.
Intel is among some high tech companies who have invested millions into wireless electricity, with some success in the micro voltage range. It is just a matter of time.

I am experiencing similar results as Tim. Maintenance is annual and a lot less warranty issues. We get more repair calls for existing clients from damage done by others, ie: gardeners. We just adjust to current market shifts and move on.
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  #8  
Old 07-08-2014, 03:27 AM
Chris J Chris J is offline
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I thought about this at great length when adjusting to LED. Long story short, I simply increased the per fixture cost associated with maintenance contracts. These products still live outside and endure extreme conditions in some cases. Although lamp replacement is no longer a selling point, there is still the need to maintain the lighting system as mentioned earlier. Cleaning, moving, trimming etc... it's all about staying involved with the client and they appreciate that. Realistically, more money could be made by charging per visit. The only problem with that is ensuring that your clients will use you instead of calling the next advertiser who winds up in their mailbox. Service contracts are a good thing in many ways.
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Old 07-08-2014, 11:14 PM
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INTEGRA Bespoke Lighting INTEGRA Bespoke Lighting is online now
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David, sounds to me like you are pricing / selling your product/service mix wrong. Using a flat margin method the dramatically increased profits from selling new LED systems and LED retrofits to existing systems should more than recoup any lost profits from selling replacement incandescent lamps during maintenance visits.

Im not going to get into the nitty gritty details here, but its the same as selling cheap fixtures vs. expensive fixtures. I would much rather make margin provided from the sale of an LED lamp than that of the sale of a halogen lamp. And, if you are marketing it right, you should be winning over retrofits of systems that others in your market installed, Thereby gaining new customers who are gladly paying to upgrade their systems to LED.

LED has been nothing but a huge win for us here. More profitable installations, more profitable retrofits, more profitable service calls and much happier clients.

INTEGRA started installing LED lamped systems in 2006, moved into them in a big way in 2007 and by 2008 was pretty much installing nothing but LED. In 2009 I had my own line of LED MR16 lamps developed and launched the world's first line of miniature LED lamps for landscape lighting in 2010. That is 8 years of experience in an industry that most would say has only been around for 5 to 6 years. You might say that LED has been very very good to me.
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