The Digital Signage Insider

Budgeting for a Digital Sign or Electronic Sign Network

Published on: 2004-09-13

Ever since we added the "suggest a topic" box featured in green at the top of each blog page, I have received a number of requests to add both topics and new features to this weblog. However, many questions were related to one specific FireCast feature or another, and were better answered via email or live chat. However, I got a great question a few days ago that I feel is worth working out, namely:

How to budget for a dynamic digital signage network

Update: Since we write a new pricing article every year, we've created a page that lists all our articles about digital signage budgeting, cost estimates and price guidelines. This is also a handy page to link to if you want to point your friends or clients to our latest pricing data, since we'll be updating the page whenever we add another article in the series.

Kiosk and digital signage projects share a number of components, but there are some key differences that need to be taken into account when planning. But for today, I'm just going to look at digital signage. Expect a similar estimate for kiosk projects some time in the future. If you're new to the digital signage industry and want to know what it's all about, I suggest you first go and read our digital signage overview to get a feel for the terminology, technology and common business models that we use.

1. Hardware costs
Though obviously a necessary component of any electronic signage project, hardware costs are quite variable. For example, depending on the application, a digital sign might be a large plasma screen or a bank of smaller LCDs. Additionally, while a plasma screen might cost $2,500 and have a life expectancy of 2 or 3 years, you also have the option of spending $5,000 or $6,000 for a similarly sized LCD that will last twice as long. For the purposes of this experiment, I will assume that our hypothetical digital signage project will use 42" plasma displays at $2,500 apiece.

Also necessary is some sort of signage player device. There are many different types of player, from embedded devices all the way up to multi-processor server. Prices can range from a few hundred dollars on the low end, to $20-$25,000 on the high end. For our example, I'll use our FireCast Media Appliance networked digital signage player or an alternative like the NEC Bluefire VC, both of which sell in the $1,000-$1,500 range.

We'll also need some kind of mounting hardware. A good quality floor mount will cost around $1,000, while a ceiling mount will cost between $350 and $500. Our network will use ceiling and wall mounts.

Finally, take into account any network equipment that you might need. If you're installing your own network, you'll need routers and switches, along with Ethernet cable. If you're working in a very large store and your signs are far apart (say, more than 300 feet apart, as the crow flies), you'll probably need to use fiber optic connections, which require their own specialized equipment. Libraries could be filled with books about building networks, so for the sake of this experiment, I'm going to assume that we'll be using an existing network, and I'll just budget in another $100 for miscellaneous costs, like cables, fasteners, etc.

2. Player software costs
There's not much to say here other than you'll have to buy player software (or it might come bundled on your player device). You'll probably pay a one-time fee for the software that actually plays content back on your player hardware. When it comes to digital signage, reliability is key. Look no further than our FireCast digital signage software for a great example. Player software will cost between $200 and $2,000 per copy. For this experiment, I'll use a cost of $500, which should give you a choice of several popular products.

3. Management software and technical support
You're also going to need some kind of digital signage management software to control your screens, change content, and generate playback reports. And depending on the type of software that you choose, the matter of technical support becomes very important, so I've listed these two items together. You see, there are two basic models for selling software in this industry: the up-front buyout, and the monthly subscription. The up-front buyout is the model advocated by companies like Scala, who have you purchase your server and player software up-front. On the downside, this method can be very expensive up-front. On the plus side, customers and VARs can run the software on their own networks out of their own datacenters, which is something they seem to like. The other model, the monthly subscription, is the one advocated by WireSpring and a growing list of other providers. Our ClientCenter digital signage remote management software is hosted on our servers, so there's no infrastructure costs or large up-front purchase. On the downside (some people seem to think), unless you've got a really big project planned, you can't host the software yourself, and you have to rely on us. Given some of the details in my previous article about disaster recovery planning, that shouldn't really bother anybody, but some people like to "own" the whole network. The other thing to note, is that with many subscription-based services (like ours), expert technical support and no-charge upgrades are included, whereas these often must be purchased separately from the up-front buyout guys. In either case, you'll also have to pay extra if you want 24/7/365 (also known as nights, weekends and holidays) support. Depending on your needs, this may or may not be necessary. It does add a bit of cost, though. And just to give you an idea of how much costs can vary here, the up-front buyout might cost you $25,000 to $50,000 for a small to medium-sized network. Managed services can cost from $35 to $100 per month per player, and 24/7 service can easily add another $100 per month per player. For the sake of our hypothetical network, I'll use a monthly service with 24/7 support, and say it costs $150 per player per month.

4. Installation and project management
The last major cost component is installation and project management. Installation should hopefully be a one-time cost. Project management, depending on what you put into that category, could be either a one-time thing or it could be ongoing. For example, our friends over at Digital Media Assets provide both initial deployment management and ongoing project management. On average, they find that a installing a digital sign hung from the ceiling and running the necessary power and network cables will cost between $1,100 and $2,000 per screen. Additionally, they also offer a monthly service that includes things like front-line management, hardware maintenance, cleaning and on-site repair coordination, hardware warranty services, and the like. They'll even sell and place ads for you, if that's what you want. Depending on how much or how little you want them to do, these services can cost between $45 and several hundred dollars per player per month. Because of the complexity of calculating these costs, I'm going to assume that installation will cost $1,400 per screen, and initial project management will be about $300 per screen (about 10% of hardware cost), but we won't use any of the supplemental services (although you might want to consider them for your own project).

There are other costs to consider, of course, but the major ones are captured in the 4 items listed above. Still, keep some of these in mind: Internet connectivity: from free (use your host's network connection, if you can), to $50-$500/month for a business DSL or cable connection per location, to $75-$100/month per player for a cellular connection; Hardware replacement: between 30-45% of your original hardware costs; Content creation: if you have the skills to do it in-house, you can save some money. Freelance graphic artists charge between $35-$125/hr. Creative agencies charge more. The list goes on and on...

So what does this all add up to? Let's look at the cost for a single screen for 3 years:

42" plasma screen $2,500
Player hardware $1,500
Ceiling mount $500
Player software $500
Management software (36 months) $1,800
24/7/365 technical support (36 months) $3,600
Installation $1,400
Initial project management $300
Total $12,100


So you're looking at about $335 per screen per month if you break it down over a period of 36 months (it should be fair to amortize the hardware this way, since it will be useful for the entire life of the project, but check with your accountant for an actual depreciation schedule). Overall, I think this is a fair estimate of the cost of running a digital sign. There are other fees here and there that I've missed or omitted for brevity, but then again, there are certain economies of scale to be had when you have multiple screens in one location. And of course the most important thing -- the content -- has been completely left out of the equation. If you plan on running your own creative content, it will cost money. In fact, even if you plan on running nothing more than advertising content given to you by your clients, include some money for software or services to clean up the content, level colors, change audio volume or provide voiceovers, and the like.

Finally, while the above is probably a fair estimate of a signage project using WireSpring's digital signage solutions, it might not work so well with other vendors. Keep that in mind as you're shopping around!


Comments   

0 mike 2008-02-15 02:09
Bill Interesting Blog. The cost per screen seems prohibitive. Clearly, network owners must be worried about the cost per instance of LCD. Do people use video splitters. I have heard about products from Minicom etc which provide those solutions. Ofcourse by using video splitters, we loose the ability to schedule to individual screens but that seems like valid compromise if you dont want to pay for $1500 $500 for player and software. I would be interested to get your take on it. Mike
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0 Bill Gerba 2008-02-15 15:29
Hi Mike: First, this article is pretty old - we update it every year. Here's [[http://www.wirespring.com/dynamic_digital_signag e_and_interactive_kiosks_journal/articles/A_new_lo ok_at_the_costs_of_digital_signage_networks_and_co ntent-338.html|a link to 2007's version]]. Second, capital costs are considerable, but coming down. Also, many companies have technological or financial ways of making multiple screens per venue more affordable, so that cuts down on the price a bit. But of course, if you're installing more screens you'll still need to pay for more hardware (screens, mounts, cables), and installations, which is something that can't really be avoided. We personally recommend you only add additional channels in a venue when they're actually going to add value. While running lots of different content pieces at once can be impressive and give you additional ad inventory to sell (if that's your game), it can be overwhelming to the viewer and venue if not well done and well thought out.
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0 Steve 2009-02-14 03:57
I'm interested in developing a digital sign network but don't have enough info on rates advertisers are willing to pay. If anyone has info on medical waiting room ad rates, please pass along.
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0 Mordehay 2009-05-28 12:24
Very nice and impressive work. There is one thing that should somehow reflected in the numbers - video distribution. According to the numbers, using video distribution system is much cheaper than player per screen. Assuming that most of customers use the same content per group of screens, the cost are much different (distribution system cost is about 300$ per screen - one time investment). Pleae advice,
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0 Bill Gerba 2009-05-31 16:36
Hi Mordehay, Seems like you're making the rounds on this blog, eh? Well, I can tell you one thing: had I included the cost of video distribution equipment in this 2004 article, it would have looked very bad for you guys (you're from Minicom, right?) However, as I noted in response to another of your comments, we will be addressing video distribution in 2009's budget review. You can always find a copy of the most recent budget article [[http://www.wirespring.com/dynamic_digital_signag e_and_interactive_kiosks_journal/articles/Digital_ Signage_Cost_Estimates_and_Price_Guidelines-672.ht ml|here]].
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