Q&A, Part II – Manufacturers Go Into the Witness Chair
Earlier this year, Parking Today reached out to more than 7,000 of our readers by e-mail and asked what they would like to know from revenue control manufacturers. We then edited those questions and sent them out to 25 different companies. The companies below responded to our request.
We discovered that our readers wanted to know a lot, and that our respondents wanted to say a lot. So we have divided this response into a number of parts. What follows is Part II, including questions about parking meters, the cost of parking equipment, delivery time, service agreements, lane counting systems, and cash vs. credit. Note that we have edited some of the responses for length; however, we did not change the answer or the tone. If a company is not listed as a responder, they either elected not to respond or felt the question not appropriate for their product line.
The first four questions were answered in October. The final three questions will be answered next month. Editor.
5. Are parking meters moving toward credit card acceptance?
Digital Payment Technologies – Our company has several clients where credit card payment represents over 70% of all transactions. Cashless systems like credit cards are becoming more and more in demand for all transaction-based systems, including parking meters.
MacKay Meters - Yes. As technology continues to improve, so will payment options in the meters.
Metric Parking – Approximately 90% of our current orders are for machines accepting credit cards.
Parkeon – Our on-street multi-space parking meters have accepted credit cards for over 10 years now. And we’ve done it with real-time online authorization, lowering our clients’ risk of fraud and eliminating the need to purchase and manage blacklists of bad card numbers. Off-line credit card acceptance is no longer a viable solution in today’s world, and we provide real-time credit card acceptance in both pay-and-display and pay-by-space meters. Anything other than that structure is not serving the client well.
POM – Not at this time. With the high PCI-compliance costs (see late-summer PT Parking Blog entries) and the high credit card fees that cut into city revenue, it just doesn’t make good business sense for us. We’re still up to our ears in orders for meters that take cash and smart cards, so we’ll just keep doing what we do best. Note that most on-street equipment that take credit cards are multi-space or P and D equipment, not single-space meters
WPS – Apparently all pay devices seem to be. I think cell phone payment is a better alternative for meters/P and D.
6. Why is parking equipment so expensive compared with other sectors/technologies? Our clients argue that prices of computers are going down every year, but parking equipment is still expensive.
Digital Payment Technologies – Difficult question to answer without having a specific sector or technology to compare against; however, client demand for more features within parking technology drive software development costs, as well as the need for more advanced hardware and new devices that can add to the cost.
Federal APD – While there is no question that parking equipment can be compared to a computer, remember this is only one component of the products that comprise a parking and access control system solution. There still is a significant amount of additional hardware that comprises what constitutes lane equipment and the total parking facility management solution. Today’s parking solution manufacturers are faced with significant rising cost in raw materials (metals, electronic circuitry, mechanical hardware, etc.), as well as the OEM automated currency handling components associated with automated cashiering stations. The industry requirement for increased levels of automation and custom operational functionality requires additional development costs on behalf of the leading parking solution manufacturers. Purchasers of these solutions should take into consideration that every equipment provider has competition and it is their ability to choose that continues to keep the cost for equipment reasonable.
Hamilton – The volume of parking equipment sold is limited when compared to products sold in many industries, requiring that development costs be recovered over fewer products sold. Also, the volume of components purchased to manufacture equipment is not sufficient, in many cases, to obtain larger discounts from suppliers.
MacKay Meters – Unlike computers, parking equipment has a very narrow market to recoup development costs and overhead (primarily municipalities). Computers recoup by selling volume. You probably have at least one computer in your home, but you likely don’t have a parking meter. Raw material prices, cost-of-living adjustments, increased shipping costs and competition all put pressure on a company’s bottom line. Not to mention that parking meters have to be engineered to withstand vandalism and extreme weather, as well as to constantly feature new functionality.
Metric Parking – The prices are going up because of the demands coming in from the customers. Free trials, PCI-compliance, included extended warranty, custom software (that can be used only for a specific client). These features cost money to develop, test, then build and implement. Additionally, these units have more than a PC. They have metal casings, metal vaults all made to be vandal resistant, and many other features that have cost. I have been in the P and D industry for over 12 years, and the prices have come down over the years!
Parkeon – A multi-space parking pay station is much more than a computer. It is an amalgam of wireless communications (modem), ultra-efficient solar-power technology, super-sensitive coin and bill validators, credit card readers that also accept smart cards, sophisticated on-board machine self-diagnostics, high-security locks and vaults, specially engineered trigger-shut collection devices, specialized housing that can withstand the elements and thwart vandalism attempts, and much more.
POM – Computer volume is much, much higher than parking equipment volume. Volume drives down the cost of components, creates manufacturing efficiencies and lowers shipping costs. Additionally, housings for parking equipment have to be rugged enough to withstand the elements, vandalism and tampering. Those materials are more expensive than the materials used to house computer components.
Scheidt & Bachmann – I argue that the equipment, when a realistic comparative assessment is made, is actually priced commensurate with other similar technologies. However, keep in mind that while it appears that computers are going down, the needs and the expectations of the users, particularly from an IT and data-sharing prospective, are increasing dramatically. For example, while one could state that a Dell desktop could be had for about $800 compared with, say, $1,500 seven years ago, the operation that was stand-alone five years ago (and could use the desktop unit) now has online credit card processing, a high-speed connection router, and a network connection to a server in the main office. The demands that are commonplace today far outpace the incremental decrease in unit hardware.
Standard Parking Systems – Parking equipment is a specialized business. It’s not so much the cost of a PC but the cost of the software that runs on the PC. These software packages are written specifically for the parking industry and cannot be sold to any other vertical market.
T2 – Traditionally parking equipment has been built utilizing proprietary technology and communications protocols. As a result, the decreasing prices of computers and other general technology components have no effect on parking equipment. Utilizing standard components and communication protocols in parking access and revenue control systems enables customers to reap the benefits of decreasing price of technology.
WPS – Great question! The answer is simple economics – volume! Also, when PC-based products are purchased by businesses or end users, an inordinate amount of time to load applications and provide setup are managed internally by the buyer, along with a one-hour wait to Help desks. In parking, the added costs from manufacturers also covers the many hours spent “hand-holding” the client during their system setup and PC skills training – it really can be tasking.
Zeag – It is really a question of value versus price. We are certainly all aware that the price of home computers continues to move in a downward trend. There are many factors, however, that create distinctions between the computer industry and the parking industry. Not the least significant of these is the fact that computers are, for the most part, mass-produced with very few variations in the overall design or function. Parking is a niche industry with site-specific requirements. In real terms, the price of Zeag equipment has come down over the last 20 years. In addition to the savings offered through technology, we continue to improve efficiencies by sourcing and assembling in the United States.
7. What is the average time from a PO until installation for equipment in an already established parking facility – for example, installing a count system?
Digital Payment Technologies – Depending on manufacturing lead times and the amount of installation preparation and public notification of such a change, times can be as short as a week to several months.
Federal APD – This can vary depending on the size and complexity of the system (even just a count system). But, on average, for Federal APD from PO to complete installation on a retrofit is six to eight weeks.
MacKay Meters – Depending on the technology ordered and the quantity, typically 30 to 60 days from receipt of client specifications.
Metric Parking – If the customer has been talking with vendors for several months about a project, the equipment should be in local inventory and can be installed within a month. However, when a customer just calls one day and says they need 40 meters, companies don’t always carry large inventories of custom equipment.
Scheidt & Bachmann – Ten days to three years. Is this an add to an existing system, a replacement? Is there civil infrastructure, product development, etc.?
Standard Parking Systems – Four to eight weeks depending on inventory and site location.
WPS – It depends on the type of count system and how much work needs to be done on-site. My estimate for a counting system for four levels would be four to six weeks, assuming there are no bureaucratic delays with permits and scheduling.
Zeag – It isn’t really possible to make a generalized statement about the installation of equipment since there are a myriad of variables that make it improbable, if not impossible, to determine timing. However, upon receipt of an executed contract and mobilization payment, Zeag normally delivers equipment within four to six weeks with an install period determined by customer needs and site conditions.
8. Do most suppliers furnish a service level agreement along with preventive maintenance agreements? What is the standard time for investigating a customer complaint on a ticket spitter, gate arm, card reader, automated equipment, etc.?
Digital Payment Technologies – Our company furnishes a service level agreement as part of our warranty and scope of service. We also establish preventive maintenance programs in association with our local resellers. Time to investigate a customer complaint depends on the nature of the problem, but our goal is to respond to any customer complaint within an hour of receiving a call/message.
Federal APD – That probably varies from supplier to supplier. We have agreements, and although each market can have slight differences, our clients have the ability to purchase service and preventive maintenance agreements that are customized to meet the unique requirements of their facilities. When under an agreement, clients should receive priority service over a (work) site that has a service request but is not under an agreement. The time to address a service- or maintenance-related issue varies slightly from market to market, and response time can be dictated by the service agreement. Keep in mind that the faster the response time, the higher the cost. Typically, service agreements call for a four-hour response time during normal working hours Monday through Friday (i.e., “call in the morning and we will be there in the afternoon; call in the afternoon and we will be there the following morning”). After-hours, weekend and holiday service are available for a premium.
Hamilton – Technical support is available six days a week.
MacKay Meters – We prefer to train our customers to handle non-warranty maintenance issues themselves. MacKay provides toll-free tech support (usually included in price) when needed.
Metric Parking – Yes, within 24 hours of the logged call.
Parkeon – Two answers. First, we do supply a service level agreement as well as a parts agreement and/or warranty. Second, in an on-street parking environment, the municipality or its contractor is responsible for the system and its care and operation. So Parkeon would supply a preventive maintenance schedule to the buyer, but the buyer or contractor would perform the preventive work. Also, any customer complaints would be up to the client to investigate.
POM – We offer extended warranties and service either through local distributors or pickup/turnaround service from our factory. Service is normally priced based on the actual repair parts/labor used.
Scheidt & Bachmann – Most of our projects are under some level of extended maintenance. Those that are not have on-site staff that has received a level of front line service training. Our goal is to provide service within a four-hour time frame. In some cases, we are there before the four hours and in some cases beyond the four hours. In every case, we attempt to have at least one site person able to address simple service items such as ticket jams and putting gates back onto a bracket. Some clients are amenable, while some expect hands-on service regardless of the issue or time of day.
Standard Parking Systems – This all depends on the dealer installing the equipment.
WPS – Yes, we do. Response times vary, but most should be handled within four hours or same day.
Zeag – We provide service contacts based on the individual needs of the customer. Without question, some sites require 24-hour coverage, while others seek to minimize their cost impact with options relating to response and repair times. We offer online software support and on-site support with a one-hour maximum response time. As the manufacturer, we also offer fully comprehensive support contracts, allowing the owner to budget their entire support cost for the year.
To be continued …
The final three questions will be answered next month in Parking Today. They focus on “green” issues, specialized counting, and cash vs. credit card.
Article Abstract from November, 2008