Would you sell? Would your client purchase?

[mad fridgie]

If there was a gizzmo for commercial refrigeration that saved power, would you sell it and would your client purchase it.
(any currency, same percentages, around this value)

If you sold this product for 6000 Euro, you made 1200 Euros, (not including install) are you making enough. (of course we all want more) if not what what would you expect or is this greater than normal.
Would drop your profit for a greater number of sales.

If your client saved 1500 euro, would he pay the 6,000 Euro for this product, or how much would he need to save so that he would buy it.

Lets say the product has a life of 10 years (normal for refrigeration equipment)

If a goverment grant was available would you leave the sale price the same or increase the price.

[chemi-cool]

In the first instance, I would say yes.

I have been there selling Hysave refrigerant pumps for a local company.
You have to come to a company with all the details of how much they are consuming now, how much it will save them, cost of product, cost of installation, time of payback and most important, you need to use your tongue better then your hands.

My bottom line is that if its a good product, it will sell even if it will take some time.

[desA]

First rule:
You are selling a solution, not a product

Second rule:
The customer has to convince himself to buy.

Third rule:
Price is immaterial, if the solution fits.

Fourth rule:
Get someone to market for you, who can sell tons of ice to Eskimos, in Winter.

[Abe]

If there was a gizzmo for commercial refrigeration that saved power, would you sell it and would your client purchase it.
(any currency, same percentages, around this value)

We have seen these "gizmos" in the UK about 10 years ago. They reckoned they saved electricity. All they did was ruin healthy compressors
========================================
If you sold this product for 6000 Euro, you made 1200 Euros, (not including install) are you making enough. (of course we all want more) if not what what would you expect or is this greater than normal.
Would drop your profit for a greater number of sales.

That would make a margin of around 20%, which is about right. I would drop the margin to obtain higher sales
========================================
If your client saved 1500 euro, would he pay the 6,000 Euro for this product, or how much would he need to save so that he would buy it.

Lets say the product has a life of 10 years (normal for refrigeration equipment)

If it lasted 10 years, he would save 10 x 1500 = 15000 Euros

15000 - 6000 = 9000 Euros /10 + 900 Euros a year saved

900 Euros is arouns 600 Pounds.

Question is: Would you spend 6000 to save 900 a year?
I think, unlikely

The solar industry has proved that
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If a goverment grant was available would you leave the sale price the same or increase the price.

Increase?
If product cost 6000
Government gives say 2000
Customer pays 4000

I say keep the price the same
Unless you have a patent on the item.

[mad fridgie]

If we take this a little further, this energy saving "solution". Is sold with by the contractor (6000Euro) with a an acceptable 20% margin, he will only sell if he guarantees a minimum saving. (not maybe, could be, possible maximum) totally open book with the client on how savings are made. (needs clients) input.
How much would he need to save a year to ensure a "slam dunk" sale

[freezetech]

we already work in this field and put our product into high profile buisness at cost monitored savings over a set period to prove to other clients before they part with their money there is a load of opportunity in this area at the moment

[desA]

Mad_fridgie:
If there was a gizzmo for commercial refrigeration that saved power, would you sell it and would your client purchase it.
(any currency, same percentages, around this value)

Abe:
We have seen these "gizmos" in the UK about 10 years ago. They reckoned they saved electricity. All they did was ruin healthy compressors

Can you elaborate further, Abe?

[desA]

we already work in this field and put our product into high profile buisness at cost monitored savings over a set period to prove to other clients before they part with their money there is a load of opportunity in this area at the moment

What is your product, exactly?

[freezetech]

the product is sold by vphase it reduces voltage to 220v instead of an average in the uk 247v thus saving energy on the appliance being used and can be fitted to a consumer unit thus savings on all appliances

[mad fridgie]

Not that sort of Gizzmo, but the principle should not change. (no black magic here)
If the product saved 9000 Euro a year would your client snap your hand off?
easily done but very limited client base.
if the client saved 3000Euro a year, would he still snap of your hand. A bigger client base.
At what point could you not sell a energy saving device. commercially based not enviromentally based

[Magoo]

MF
to add to DesA's 4 point statement, the pay back period theory supported by the 100% warranty, for the payback period.
So client gets his money back in "xy " months period for no risk, extended after 12 months for example, and for a small fee extend warranty to 5 years parts only. [ same methodoligy as the major appliance suppliers.], generally appliances have a 3 % warranty dollar failure rate with high volumes.
Another selling feature is interest free for xy period, which of course you build into selling price with a reputable finance company, you get cash up front they collect. Another option is use a factoring company, same deal you get money upfront, they generally want volume sales 1 mill plus type volumes pa.,

[desA]

MF
to add to DesA's 4 point statement, the pay back period theory supported by the 100% warranty, for the payback period.
So client gets his money back in "xy " months period for no risk, extended after 12 months for example, and for a small fee extend warranty to 5 years parts only. [ same methodoligy as the major appliance suppliers.], generally appliances have a 3 % warranty dollar failure rate with high volumes.
Another selling feature is interest free for xy period, which of course you build into selling price with a reputable finance company, you get cash up front they collect. Another option is use a factoring company, same deal you get money upfront, they generally want volume sales 1 mill plus type volumes pa.,

Some very interesting points here. Food for thought.

Further thoughts:
Sell the service - energy reduction, not the product.
Lease the solution-mechanism to the client, for a monthly fee based on energy-savings.

[mad fridgie]

What I trying to find out is: what is the different perception in different countries of a reasonable payback period and what the selling contractor would be happy to make as margin.
Being a commercial product, it would be backed up directly through the wholesaler, then the manufacturer.
For example in NZ (my opinion) anything over a 3 year pack would be difficult to sell, anything under a 2 year payback would be easy to sell.
If the contractor is not making enough money he will not sell it, if the end user is not saving enough money he will not buy it. On a purely commercial basis.

[Magoo]

Hi DesA,
comment on leasing equipment, for cash flow reasons it can be more profitable to sell to a financing/equipment leasing company. You sell at wholesale discounted rate, clip the ticket for a spotters fee, get money in hand when agreemnt settled. Does not tie cash flow up as a manufacturer. Then sell service and parts to after market with a franchised network of service agents. A winwin alround. Mainly your money is in your bank account earning offset interest at 30 day deposit market rates.
Food super markets do it all the time, hi cash flow turn over, money in the bank daily, pay creditors after 30 days or longer, use cash money on spot market floating high interest rates.

[desA]

Hi DesA,
comment on leasing equipment, for cash flow reasons it can be more profitable to sell to a financing/equipment leasing company. You sell at wholesale discounted rate, clip the ticket for a spotters fee, get money in hand when agreemnt settled. Does not tie cash flow up as a manufacturer. Then sell service and parts to after market with a franchised network of service agents. A winwin alround. Mainly your money is in your bank account earning offset interest at 30 day deposit market rates.
Food super markets do it all the time, hi cash flow turn over, money in the bank daily, pay creditors after 30 days or longer, use cash money on spot market floating high interest rates.

Agreed. This is a neat business model. The trick is to locate a supportive financing/equipment-leasing company.

[Abe]

Can you elaborate further, Abe?

Perhaps I should not air a sense of scepticism without knowledge of this product, which may for all intents prove a great device and beneficial.

The "gizmo" I was thinking of was a smallish device about 5 inches square, it was installed in commercial refrigeration equipment, mainly multi decks.

The targets were small shop owners who have this type of equipment.

It was sold on the premise that it would cut electrical consumption by a third and were sold for around £200

They then dissapeared from the market. This was more than ten years ago thinking about it, it was marketed around 1994 onwards.