A quick refresher on our survey
A few years back, we set up a single page of Digital Signage Cost Estimates and Price Guidelines for those who want to review past years' results or measure historical trends for themselves. This page is always my first stop when I begin to analyze the new survey data, since we try to employ exactly the same methodology year after year to provide consistent results. Once I have my columns labeled and rows lined up, I wade through the pages and pages of caveats and gotchas noted in past surveys to make sure I don't repeat any old mistakes. Oh, and I always keep the following disclaimer in mind:
Since digital signage networks can take so many different forms, we try to focus on what still makes up the most typical installation, and build price estimates as if one were planning to deploy a 100-screen network (that is, one screen in 100 different venues). While our previous cost estimates and ecosystem components have closely matched those from other industry analysts (so we don't think we're too far off the mark), the notion of a "typical" network continues to be something of a moving target. More vendors and network owners are choosing to implement screens with new formats and more varied locations, injecting more diversity into the projects. Plus, the idea that there's a standard staffing requirement for any digital signage network is pretty ridiculous. While we and others have proposed a list of key positions that need to be filled when creating a digital signage team, some networks are still very heavy on content production, while others might be composed almost entirely of sales folks. Still, as we looked across a wide array of networks -- representing not just our products but also our competitors' solutions -- we were able to get a reasonable feel for what most companies needed as far as the human resources side of things.We have started tinkering with our survey to try and glean some information about what really is "typical" these days, but that will have to wait for a future article. For now, I know the question on your mind is this:
What's the cost of a typical 100-screen digital signage network?
Last year saw the stabilization of the economy in the US (more or less), but pricing in the digital signage industry was anything but stable -- if our data is to be believed. While fees for initial project management, content management software and installation all saw double-digit decreases (the price of installation declined by more than a third!), the cost of digital signage software actually increased nearly 18%, and screens and players saw a small bump as well. Now, I know that we've basically had zero inflation for the past decade, and I would not be surprised to learn that we've already realized the vast majority of price decreases for most of the core items that we track. But to see such significant price increases for relatively common goods like LCDs and media players (most of which are just regular PCs) certainly gives me pause.
The resulting cost estimates appear in the table below. (If you're viewing this in your email or RSS reader and can't see the tables and charts, please visit /blog to get the full experience.)
|Cost of a digital sign for 3 years|
|40" LCD screen||$958|
|Management software & tech support||$720|
|Initial project management||$175|
Again, each item is priced as if you were going to buy 100 of them to build out a network of 100 screens in 100 venues. It stands to reason that prices for smaller quantities could be substantially higher, but I haven't yet broken down any of these numbers based on the respondents' experiences with larger or smaller networks.
What might account for some of the big price swings?
A few factors might impact the overall validity of our data this year. First, about 50% of our respondents are digital signage vendors, comprising hardware, software and service firms. While that's actually pretty standard for this survey, we had a significantly smaller respondent pool than last year (only about 150 valid responses). While this number still seems large enough to generate statistically significant results, a smaller total than in years past could also make the responses easier to game.
Looking at the individual components, the one that seems hardest to explain is the apparent 18% increase in the price of digital signage software. As a software vendor, I don't have any corroborating evidence of this. (I wish I did!) So about the only thing I can think of is that maybe a large number of survey takers have only dealt with small networks, where software does tend to be more expensive.
The 35% drop in installation costs is also peculiar, though I could see some legitimate factors coming into play there. For example, more companies are offering this kind of service now, and competition does tend to drive down prices. Also, while it looks like the bulk of installations do still revolve around the 40" screen, smaller screens are becoming more common, so maybe respondents were thinking of those scenarios when jotting down their installation price expectations.
Here's how the spending breaks down by category:
As you can see in the tables below, the cost of implementing a 100-screen network has only dropped 5.6% since last year's survey. While that doesn't seem like a lot, particularly when compared to previous years' drops, costs have fallen more than 58% since we started tracking the market way back in 2004. (Note: to ensure an accurate comparison, we removed the 24/7 tech support line from the 2004 numbers, since this was not included in subsequent years.)
What about personnel costs, content creation, etc.?
These past few years we've also started taking a much harder look at the other costs of running a digital signage network, most notably content and staffing costs. While we used to exclusively rely on nuggets gleaned from our own customers and other willing network owners, this year we actually expanded our survey to see if we could get a better picture of how much network owners really spend on an ongoing basis. I'm not quite ready to share the data on these items yet (since I haven't actually tabulated it), but suffice it to say that our next blog article will take a serious look at staffing and content to see how the money really gets spent in most digital signage companies.
Next week brings me to Las Vegas and the 2012 Digital Signage Expo, where no doubt these numbers will be the subject of some debate -- and that's OK by me. (You can catch up with me during the Preset Group Mixer or Conference Seminar S25.) While we never set out to establish the one and only authoritative source of digital signage pricing data, I do feel like our methodology is solid and our approach is transparent. As mentioned above, we'll be digging a little deeper into a few aspects of the data during the weeks ahead. In the meantime, I'd like to solicit some help from our readers:
Do your experiences this past year line up with the numbers above? Have you seen pricing anomalies like these in the real world? Leave a comment and let us know!