February 2010

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The Cost(s) of BACnet

Perspectives on BACnet interface pricing

 

Andy McMillanAndy McMillan
President and CEO
Teletrol Systems Inc.


now a part of Phillips

President
BACnet International
Contributing Editor

Through responses to this column and in my role as president of BACnet International I find a fair number of questions regarding BACnet land on my desk.  Some are straightforward and simple to answer (e.g. Where can I get a copy of the standard?).  Other questions have so many facets that it’s hard to know where to even start the answer (e.g. What is the difference between Modbus and BACnet?).  Then there are the questions that are pretty interesting because the answer depends a lot on where you sit.  One of those interesting questions is, “What is the Cost of BACnet?” and it’s a question I would like to focus on today.

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Framing the Question

Questions about the cost of BACnet usually come from building owners, architects or consulting engineers who are considering their “first” BACnet project.  I can often tell something about their mindset by the form of their question.  For example, if they ask a neutral form of the question, such as, “How does the cost of a BACnet solution compare with the cost of other solutions?” this may be the first time they’ve asked the question.   If they frame the question with an implied answer, such as, “How much more will BACnet cost then my legacy solution?” then they have probably already talked to people enamored of proprietary solutions.  In either case, my answer starts out pretty much the same … “It depends.” 

The cost of BACnet to a user depends on a lot of things.  Speaking first from a manufacturing cost point of view, I’ve been with supplier of building controls for the last seven years (Teletrol Systems, now a part of Philips).  In that time we have designed, manufactured and built several generations of BACnet products.  Like most companies, we also continue to build a few of our legacy, proprietary products for customers who need replacement parts or small system extensions.  Where the same product is available in both lines, our manufacturing cost for the two are very similar.  And, that’s not surprising.  The reality is that any device of consequence these days has a microcomputer chip in it and even the simplest microcomputers can accommodate the BACnet protocol.  So, for companies like ours that design BACnet directly into their products, the added manufacturing cost is essentially zero.   

Cost and Price

Unfortunately, the fact that BACnet can be included in a product at no added cost does not always mean users can buy the products they want with BACnet interfaces with no added price.  The dynamics of the market and strategies of some suppliers can conspire to generate end user prices that are not zero and sometimes are far from zero.  For example, I recently talked to a building owner who was looking at packaged rooftop HVAC units and wanted to incorporate them into a BACnet building automation system.  Their preferred supplier suggested they use the supplier’s own proprietary interface but was willing to sell them a BACnet interface as an alternative …. at a price of $800 per unit.   

You might wonder how a supplier comes up with an $800 price adder for BACnet when we know the actual incremental cost of a BACnet interface can be near zero.  It’s a good question and there are a couple of possible answers.  One possibility is that a supplier might not incorporate BACnet directly in their product.  They could continue to build their product with only a proprietary network interface so when a customer wants BACnet the supplier has to add a translator module.  Such a module would certainly add some cost.  Just how much cost depends on a number of factors.  A simple translator can be built around a single chip processor costing less than ten dollars so the total hardware cost could be pretty minimal.  Of course there is a development cost (or license) for the BACnet protocol but amortized over any reasonable product volume even that should not be a huge cost.   

Of course, cost is not the only thing that drives pricing decisions.  If a supplier wants to leverage their expertise in mechanical equipment to force customers to adopt their sub-optimal control solution, they might consciously over-price their BACnet interface relative to their own proprietary network.  Or, if a supplier wants to ensure that they have the inside track on future equipment replacement they might do the same thing.  And, if users don’t have the knowledge or negotiating leverage to push back, equipment suppliers just might get that kind of strategy to work … for a while.  History suggests though, that suppliers who try to maintain a proprietary position in an industry that is moving to open systems lose in the long run.  Just ask the folks who used to work at Wang, DEC and Computervision.     

Cost and Value 

CatNet Systems While equipment with a BACnet interface should not inherently cost more to build, it might legitimately be priced higher to cover system integration costs or additional functionality.  Let’s start with system integration costs.  Using a packaged rooftop unit as an example again, debugging a system where the unit is controlled through a standard thermostat interface is easy.  If the heat does not come on when the space is cold a few measurements with a voltmeter can quickly isolate the problem to the controller or the unit.  However, if the same unit is controlled through a BACnet interface and the heat does not come on when the space is cold, isolating the problem to the controller or the unit requires more sophisticated tools and a higher level of skill.  This translates into additional system integration cost that must be included somewhere in the system price.  If the unit manufacturer assumes responsibility for the system integration than they might well include that cost in their price for the BACnet interface.  Of course, if the equipment manufacturer absolves themselves of that responsibility then they should not expect the corresponding price premium. 

Additional functionality is one more rationale for a price difference between equipment with a BACnet interface and the same equipment without it.  If we stick with our packaged rooftop HVAC unit example, the thermostat interface provides control points for heating, cooling and fan operation.  A BACnet interface will have those but is likely to include substantial additional capability for sequence control, monitoring and diagnostics.  These additional functions provide added value and are justifiably more expensive.  The more telling comparison is between a BACnet interface and a company’s proprietary network interface.  This is where a user should expect to see comparable pricing. 

Cost and pricing are complex issues and there is always some risk in over-simplifying or over-generalizing.  Answering the question “What is the cost of BACnet?” has to be situation-specific.  Even so, it’s clear that the emergence of BACnet as the industry standard communications interface is impacting the cost equation in building automation.  For many years custom, proprietary interfaces allowed equipment suppliers to extract price premiums and adders for their HVAC, refrigeration and other electromechanical equipment.  However, we are rapidly approaching the point where users expect equipment suppliers to offer a standard (BACnet) interface as part of the baseline product.  Savvy users can push back on price adders for BACnet interfaces (and some are).  All it will take to shift the equation for the whole industry is a little more time and perhaps a few major users working the issue collaboratively.  For anyone who doubts that they can, consider the way in which the Ethernet standard became ubiquitous in computers and manufacturing control systems.  History does tend to repeat itself. 

As always, the views expressed in this column are mine and do not necessarily reflect the position of BACnet International, Teletrol Systems, Philips, ASHRAE, or any other organization.  If you want to send comments to me directly, feel free to email me at andysview@arborcoast.com.

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