NOT EVERY NEW HOMEOWNER WILL SPEND IN EXCESS of $50,000 for a home theater. But with the way prices have come down on audio and video components, there are some very high-quality home theater packages available for under $10,000 that can generate high gross margins for builders.
Builders may still opt to refer customers to integrators as opposed to starting an internal home technology division, but since more customers are demanding home theaters you may want to take the time to learn what's possible.
BUILDER asked one home builder and two integrators to come up with sample home theaters for a variety of price ranges. The first home theater, from Village Homes in Littleton, Colo., is priced at under $10,000. This theater may not have the glitz of a 123-inch screen or the most comfortable seating, but it delivers a lot of value and is affordable enough for builders to easily roll the price tag into a buyer's mortgage. Plus, the 42-inch Fujitsu plasma screen is nothing to sneeze at.
The second theater is from Audio Advice in Raleigh, N.C. Leon Shaw, the company's president, challenged his salespeople to design a home theater package that could sell for about $20,000. The result is the Silver Theater, which lists for $19,838. This theater sports a Runco CL510 DLP projector and a 92-inch fixed Firehawk screen. Buyers can upgrade components, speakers, and video equipment to around $37,000.
The third and final theater is a $95,600 theater from Custom Audio Video in Bluffton, S.C. The custom home market is hot around Hilton Head, and Custom Audio Video is well positioned to service that market. Buyers of this home theater spend $20,000 on acoustical wall treatments alone and another $27,000 on a Runco VX5000ci DLP projector.
Clearly, the Silver Theater and the package from Custom Audio Video are not products that most production builders will offer. But there is a middle ground between the low-end “home theater in a box” systems that sell for $300 to $500 at Best Buy and the $95,600 custom system from Custom Audio Video. Look through these systems for ideas and tailor a home theater to a price point your customers can afford.
Affordable Home Theater:
Village Homes Sells A System That Delivers Above-Average Performance At A Fair Price. Builders looking to deliver an affordable home theater for under $10,000 should check out the package Village Homes offers its customers.
Village is a little different from the average builder in that employees from the company's TechTouch division actually specify and install the home theater and any other home technology requirements the customer specifies.
“In some ways, we're competing with our design center,” says Bob Micho, who heads up the division. “It's always a balancing act we play because customers can always go for the carpet upgrade, granite countertop, or better appliances.”
Micho's team typically meets with customers before the builder breaks ground to explain that structured wiring comes standard with the house and that it is the backbone for a home theater system if they are interested in installing one. A couple of weeks after the initial meeting, they meet again to discuss all the final options. TechTouch installers are on hand within three to five days of the homeowner moving in to set up the system and troubleshoot problems.
The TechTouch theater doesn't have the seating and lighting features of a high-end theater. And it doesn't deliver the performance of an expensive Runco projector, but this basic system delivers high quality for the price. The system feeds off a Marantz receiver and is viewed on a 42-inch Fujitsu plasma screen. The system's SpeakerCraft speakers are some of the most builder-friendly, in-wall speakers on the market, and the BassX-10 subwoofer adds clarity and performance to the low end of the bass—enhancing such effects as onscreen explosions.
When TechTouch does sell systems for more than $10,000, Micho says, it's typically the video and lighting systems that drive up the price. “Usually when the customer says he wants 2 percent better performance, that is what sends the price over the top,” Micho says.
Gross margins on the home theaters the TechTouch division sells range from 46 percent to 52 percent. Micho says TechTouch keeps the price point low enough that most buyers are willing to wrap the home theater into their mortgage. Home prices start at $320,000 and run up to about $550,000.
A Step Up:
Audio Advice Puts Together A Mid-Priced System That Custom Builders Use For Spec Homes The challenge for Audio Advice staffers was to put together a home theater system for about $20,000. The result is the Silver Home Theater that lists for $19,838. “It's amazing the level of performance that the Silver Theater offers, both visually and sonically,” says Leon Shaw, the company's president, who adds that the first week the Silver Theater was displayed in the store the company sold four systems.
“Many builders have come through our store and have been amazed at how good this theater is for the investment,” he says. “A builder could put the system in a spec home and get a great deal of value.” Some of his clients, he notes, put the Silver Theater in to increase future resale value.
Stephen Dilger, president of Raleigh-based Stephen Dilger Inc., says he recently used a Silver Theater to help sell a $1.7 million spec home. Dilger builds about four custom homes a year ranging from $1 million to $3 million.
“What this does is minimize my risk,” says Dilger, who points out that it makes more sense to invest the $20,000 in a spec home. “The Silver Theater is a good-looking, great-sounding home theater system that is also very economical,” he says.
The standard Silver Theater includes a Runco front projector, a 92-inch Stewart mounted screen, and a Rotel audio/ video surround-processor and power amplifier. The speakers included are two front tower speakers, a center channel, two rear speakers, and a pair of subwoofers from B&W. The system also includes surge protection, plus a custom-programmed Marantz touch-screen remote. With speaker, video, audio component, control, and cabinet upgrades, the system's price would jump to between $30,000 and $37,000.
“We install and calibrate with the same level of care and professionalism we use in Audio Advice theaters that sell for more than $100,000,” says Shaw. “What we've found is that the quality of projection technology has really improved over the past few years. A picture that used to cost $30,000 is now $6,000 or $7,000.”
Life Of Luxury:
South Carolina Integrator Delivers The Full Luxury Theater Experience. Custom Audio Video is in an enviable position. The company has had a booming housing market in the Hilton Head region during the past few years and seemingly more than enough customers willing to put down a $2,000 initial deposit and then pay cash for home theaters in excess of $50,000.
The $95,600 home theater system the integrator designed is top of the line in just about everything. From the $27,000 Runco DLP projector to the $13,000 Krell preamp, amplifier, and DVD changer to the $7,500 Crestron home theater control package, the gear specified could impress the most jaded corporate CEO, high-priced athlete, or Hollywood star.
“Our approach is to treat this like any other luxury purchase,'' says Custom Audio sales consultant Kris Lavery. “It's really about the experience.” Custom Audio started as a retail store about six years ago, but has branched out into a custom installation business that does high-end jobs for custom builders, health clubs, restaurants, and developers building private communities.
Lavery's advice to builders looking to do high-end jobs: Find a certified Custom Electronic Design & Installation Association (CEDIA) installer and get them involved early on in the construction process. He says design issues are critical in a custom job.
For starters, the architect has to take into consideration ambient light—that is, any light that may hit the home theater screen and detract from the image.
Other considerations: Seating distances typically determine the size of the screen, and the builder should plan to have a specified place to locate all the home theater gear. “A lot of times it goes into a closet,” he says, “but whatever you do, have close communications between the installer and builder so [everyone knows] where the equipment will go.”