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Avionics company jacking up price to work with equipment purchased elsewhere

Based on the recent Airworld UK thread I checked their prices against those quoted by the Hungarian avionics company I am in contact with. For the TT-21, the difference is huge, 20% in the net price for the total set (transponder, antenna and cables) and I could also benefit from the 20% UK VAT vs the 27% Hungarian VAT. The problem is that the Hungarian company is telling me that a 20-25% markup (based on their sale price of the device) would be due if I bring my own device, complete with all the paperwork and accessories… Is this regular practice? They listed a couple of reasons for the price difference, but most are so wild that I would not even list them here.

Also, Airworld UK would ship immediately, while no one in Hungary has the TT-21 in stock, so their higher price actually represents a much longer lead time.

I am of course not at all pleased with their conduct and started to actively look for alternative options for the installation.

Hajdúszoboszló LHHO

regular practice I fear. In my experience even if they estimate the same installation price there is always a cost overrun.

EHLE / Lelystad, Netherlands, Netherlands

This is standard practice in the avionics business.

There are several reasons for it:

When the shop supplies the equipment, they get a dealer discount on it – say 25%. So if e.g. you spend 10k (retail list price) on avionics, the dealer buys it for 7.5k and makes 2.5k profit, just by purchasing the stuff. He then charges you for the installation labour, which might be another 5k. So he makes 2.5k+5k=7.5k gross profit, of which 2.5k came for almost no work at all and the other 5k he has to work for (design work, metal cutting and wiring). If you free-issue the stuff to him, he makes only the 2nd part i.e. 5k. So he will likely increase the installation charge to 7.5k (if he is politically adept) or charge you a 2.5k uplift on the free-issued equipment plus 5k for the installation (if he doesn’t mind you thinking that you were ripped off )

When a shop does an avionics installation, they acquire a liability for the entire job and they have to offer you some kind of warranty. But how are they going to finance the warranty when they made nothing on the equipment supplied? If they supplied the stuff, they get warranty backup from e.g. Garmin on the actual Garmin hardware, and the 7.5k gross profit should cover rectification work (e.g. bad wiring, design mistakes, etc) which Garmin won’t be responsible for. But if you supply the hardware, and “something” stops working, you take the plane back to the shop and now they have to spend hours or days working out whether it was their wiring (which they got paid for) or the Garmin stuff (which they didn’t get paid for). If it was their wiring, all well and good, their problem and they must fix it. But if the issue was with the hardware, they are now some hours or days of labour out of pocket, and their options are (a) to swallow the loss (and keep you happy) or (b) send you a bill for their labour (which is prob99 going to p1ss “you” off, and it will inevitably look rather greedy).

The next reason shops don’t like this is that customers who are so concerned about costs are the sort of individuals who are likely going to give them a hard time. And this is how most avionics work is. The typical job is not a €70k G500+GTN750 installation. Well, you can get that in certain areas of the market, with certain types of customer. But a lot of GA work is scraping out the bottom of the barrel. The typical job is e.g. a Mode S installation in a syndicated PA28 where the five members make damn sure they get five quotes and they go for the lowest one. That is just life in GA…

The plane the shop gets to work on is likely to be full of old avionics work, mostly undocumented, badly done, a lot of it not working to start with (because it was bodged or it is 30 years old) and maybe some of what worked may stop working when the new stuff is added (which the shop must sort out because “they broke it”) etc etc. For example, a large % of owners don’t know how their autopilot actually works, and it’s easy to blame the last shop which worked on the plane…

Then you get some customers who free -issue stuff they bought on US Ebay of which approximately 53.6% doesn’t work. With some installations, the plane may be grounded until a new box is obtained and installed, so you have one very unhappy customer.

I know this sounds like I run an avionics shop but actually I have absolutely zero business involvement in GA or avionics. I am just laying out the reasons you got the response(s) you mentioned.

I am not offering an opinion on whether you or anybody else is supposed to be happy about it

Of course the other side of the story is that even if you never argue for even 1 second about the cost, turn up with a beautiful modern plane with no bodges and in which everything works, work constructively with the shop on how to integrate the new stuff with the existing systems, even help them to fix design bodges which they did, and finally pay their £12,000 bill within days of getting it, there are some shops who still do crap work – example (read under Installer Performance). I am not going to say who that was (I have already been threatened by them) but it was a “top shop” with every approval possible.

If for whatever reason you want to install equipment which you purchased yourself, you should find a good freelance installer. He will positively want you to free issue the stuff because if he supplies it he

  • not being an official dealer he won’t get the trade discount, so has to charge you on top
  • doesn’t want to get pushed towards the mandatory registration for VAT (currently £83k in the UK) especially as he is likely to be working for cash and is not declaring the income for tax
  • he likely has a day job at some avionics shop and doesn’t want e.g. Garmin to see a purchase order with his name on it because they may tell his employer that he is moonlighting … GA is a very small world.

Also he won’t offer you a warranty of any kind, so you need to be a “good team” with him and jointly make sure the stuff works perfectly, and then you need to implement warranty returns yourself. You won’t get the temporary loan box which some dealers will offer you (IF you have a good relationship with them – don’t be fooled by stories from people who got this because they do have such a relationship and it likely took them years to get it) so the guy’s liability is just basically fixing broken wires in the work he did.

I like using freelance avionics guys because I do my own design work and most of them don’t actually understand avionics; they are just wiremen. That suits me fine. I make sure the work is legal, under a Field Approval or an STC, etc. But this is not for everyone. Ultimately one is limited by facilities e.g. a heated hangar to work in and in which work is permitted by the airport. As in the example above I will still use a shop for bigger stuff. But in terms of quality of work this remains Russian Roulette in GA…

@Jesse who posts here on EuroGA has had a number of good reports from people I know…

Administrator
Shoreham EGKA, United Kingdom

I suppose if a box costs the dealer €5K and he figures that the labour will cost him €6K, then he might set his price as

Box €7K
Labour €4K.

The total is still €11K but it looks like his costs are cheaper.

All works well, until the customer tries to buy the box elsewhere, and still expects the labour for €4K.

EIWT Weston, Ireland

Thanks for all the unanimous responses that this is standard practice. I still do not think that it is an acceptable practice. Probably just another nail in the coffin of the very industry that these companies are working in.
I have received a single suggestion via PM with the opposite answer. I have e-mailed them to see what they offer.

Peter wrote:

There are several reasons for it:

It is a nice writeup, as usual from you. I knew what their real reasons were (I work in a similar business, just for a manufacturer), but it is disappointing to see that there is so little competition that owners have no real option other than tolerating the shenanigans of avionics companies.
Btw, had they been upfront and when questioned, explained what extra service I could expect for their 20-25% commission, I would be much happier now and probably would have ordered the device and the installation straight away.

But if the issue was with the hardware, they are now some hours or days of labour out of pocket, and their options are (a) to swallow the loss (and keep you happy) or (b) send you a bill for their labour (which is prob99 going to p1ss “you” off, and it will inevitably look rather greedy).

I would be absolutely happy with a prior agreement that in case of equipment malfuction I would pay for their time, if in case of an installation problem they paid for my downtime.

The next reason shops don’t like this is that customers who are so concerned about costs are the sort of individuals who are likely going to give them a hard time.

(Bolding mine.)

Being concerned about a 20-25% price difference equals to “being so concerned”?

But a lot of GA work is scraping out the bottom of the barrel. The typical job is e.g. a Mode S installation in a syndicated PA28 where the five members make damn sure they get five quotes and they go for the lowest one. That is just life in GA…

How else should it be? A Mode S transponder is exactly the piece of equipment where the cheapest working solution is the best solution for most owners. Just like third party coverage on cars: insurance limits are mandated by law and you deal with the insurer of the other party, not yours, so you have almost zero incentive to choose anyone, but the cheapest, unless tangible benefits are offered by those quoting higher prices.

Then you get some customers who free -issue stuff they bought on US Ebay of which approximately 53.6% doesn’t work.

I entirely agree that avionics companies would not want to work with such equipment, neither would I.

If for whatever reason you want to install equipment which you purchased yourself, you should find a good freelance installer.

I will try to source one locally, but I am not sure that there are any east of the Leitha (the usual border between the tho “blocs” from the Hungrian point of view).

You won’t get the temporary loan box which some dealers will offer you

For a 20-25% markup all of them easily could… This would definitely not be the case here, btw.

@Jesse who posts here on EuroGA has had a number of good reports from people I know…

If only the Netherlands were closer… :-)

dublinpilot wrote:

All works well, until the customer tries to buy the box elsewhere, and still expects the labour for €4K.

All works well, until the customer does a Google search and finds out that the quoted price for the box is 10% higher than any price found on the internet and about 20% than the current apparent best deal. Not a nice way to build confidence and start a long-term relationship.

Hajdúszoboszló LHHO

Doesn’t strike me as unusual. If they supply the equipment and the install it is simpler in case of problems and more profitable. The problem for installers is that if it goes in and doesn’t work, everyone blames the installer including the seller of the hardware.

Unless you find an installer to work on a day rate who is freelance the same applies with kitchens, home audio.

EGTK Oxford

The same applies in my business. I rely quite heavily on parts profits as part of my business planning. Unlike most garages, I will not sell you something you don’t need, but I will expect to make a profit on everything I sell. As others have said, some of that profit is insurance against the job coming back but I also like to me in control of my supply chain. I only buy from suppliers who I know will give me the level if service that I aspire to provide my customers. If the customer wants to supply his own materials that immediately introduces an unknown variable which makes me nervous. The last thing I want is a dead car stuck on one of my ramps because the supplied part is wrong or defective and the supplier (the customer) is not in a position to expedite a resolution. He expects to get around to fixing this problem on his lunch break or after work or when he’s taken the kids to music class whilst my staff and equipment go unutilised.

Forever learning
EGTB

I wouldn’t own a plane if I were forced to use maintenance businesses as opposed to individual mechanics. Its just too annoying for a hobby vehicle. For my modern ‘driver’ cars I sometimes find it to my advantage to use the dealer – mainly because the dealer has special tools that force me to use a dealer, by manufacturer design. This is also a well known fact for Garmin and some other GA suppliers, and it doesn’t exactly encourage me to do business with them!

What is the Hungarian company quoting you in relation to suggested retail price for the parts? Continuing with the annoying car example, when ordering a job from a car dealer, I generally get a parts quote from the service salesman, then check the part numbers against dealer retail on my phone. More often than not (and at two different dealers) the quoted parts prices are 10-20% above supposed dealer retail. When I show the guy that another dealer will sell me the parts on the internet for below retail, he takes the info to the parts manager and I then get a “discount”… to 100% of retail. The whole business of vehicle repair is filled with tricks and rip offs, and more often in my experience from companies with the biggest ‘presence’ and most visible credentials to do the work. As you go lower on the food chain, in my experience you can sometimes find people with less BS and better performance.

I’d suggest finding the best solution for you, the guy with the money, and not worry about reasons or rationalizations from potential suppliers if it won’t affect you or the service you receive. There are many potential suppliers with a story about why its only fair that should pay more, despite there being no benefit to you in doing so.

Last Edited by Silvaire at 09 May 19:28

I think that if hangarage where people can work, heated, etc, was common, and the Euro regs on certification were favourable, the avionics business would be full of freelance people.

Administrator
Shoreham EGKA, United Kingdom

I was thinking of that the other day when noticing that a guy had started a business offering a large commercial style hangar in my (US) area for DIY aircraft work. At first I assumed he’s an A&P IA but was told he isn’t, he’s retired from a different business and just rents the hangar/workshop for projects or maintenance with the owner bringing his own skill and labor in whatever form is appropriate. He’s got enough space for maybe three planes, one of which I’d assume is his own.

Something like that specializing in avionics might be an interesting retirement business for Peter, or others in Europe If nothing else you’d get a large hangar!

Last Edited by Silvaire at 09 May 19:21
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