D-Tools, a provider of business management software for electronic systems contractors, has published its first-ever industry health report titled the D-Tools 2023 Midyear Market Health Report. Going forward, Data by D-Tools’ reports will deliver timely, accurate, and actionable business intelligence to stakeholders in the residential systems, commercial AV, and commercial security industries on a regular basis.
The D-Tools 2023 Midyear Market Health Report examines several key metrics from the residential custom electronics industry for the first six months of 2023 versus the first half of last year. The data analyzed was extracted from nearly 100,000 project proposals created by integrators using D-Tools Cloud, the company’s comprehensive Software as a Service (SaaS) business management software.
The research reveals that the average residential custom integration firm had revenues fall by an average of 5.2% in the first half of the year, with month-by-month tracking showing that the market is following a similar pattern to the overall U.S. economy.
“The D-Tools 2023 Midyear Market Health Report offers the industry a valuable snapshot of how the year is progressing to date in 2023 for both suppliers and integrators,” said Jason Knott, data solutions architect & evangelist, Data by D-Tools. “There are several interesting and somewhat surprising data points in the report.”
Among the other important metrics tracked in the report include average number of proposals, closing rate, and project size. Other data examines the product-versus-labor mix, the amount of value engineering taking place, and the top equipment categories installed.
“The industry’s rapid adoption of D-Tools Cloud enables D-Tools to deliver valuable insights that stakeholders — integrators, manufacturers, distributors, buying groups, etc. — can use to track key industry health markers and critical trends within the custom installation market,” added Randy Stearns, D-Tools CEO. “This 2023 D-Tools Midyear Market Health Report is the first installment of what will become a series of studies aimed at helping industry players adapt to changing market dynamics and plan for the future.”
In other specific findings, the report cited that the ratio between products and labor as an important key performance indicator (KPI) for the industry. D-Tools’ research revealed that the higher cost of labor is being reflected in projects. In 2022, the average project had 79% of the total project devoted to products and 21% devoted to labor. But in the first half of 2023, the average project had 77% of the end-user cost a ributed to products and 23% to labor. That two-point boost attributed to labor reflects a 9.5% increase year over year.
In terms of dollars, those percentages equate to $3,508 devoted to labor and $11,726 attributed to products out of the average total project cost of $15,234. According to the report, “when you consider that the average overall installation price fell, but the percentage of labor rose, it reveals that any discounting that may have occurred in the first half of the year happened on the product side, not the labor side. That makes sense given the market was hit by wage inflation pressures that forced most integrators to raise the hourly labor rates they charge customers.”
According to the D-Tools data, the categories of equipment that integrators proposed and installed in the first half of 2023 remained largely unchanged compared to the previous year. Not surprisingly, electrical products, which includes cabling, power supplies, connectors, enclosures, junction boxes, surge protectors, conduit and much more, were the most-often-installed products every month this year.
The Lighting category, which includes keypads, faceplates, lighting panels, dimmers, controllers and more, was the second-most-commonly offered solution in January, February, March, May, and June, with only the month of April showing a lull in lighting offerings. Loudspeakers, Networking, Control Systems, Access Control and Video Surveillance solutions were the other frequently installed equipment categories.
Every report from Data by D-Tools will not only report findings, but also offer recommended actions that custom integrators can take based on the research. The 2023 Midyear Market Health Report is available as a free download in the Resource Center here, where you can learn what actions that D-Tools recommends and more.