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Smart Home Tech Moves to Low Income Households
Smart home technologies are fundamentally changing the way we interact with our homes, and are expected to see significant adoption. But smart devices have traditionally been targeted at high income single family households.
According to a survey by PwC, groups showing the most interest in interacting with smart home devices are consumers with a household income of $100,000 or more. This is because smart devices are considered premium products and are priced at a relatively high level. While costs are expected to decline over time, many consumers are not ready to pay these prices when they have the option of purchasing perfectly functional traditional devices. Thus, large portions of the population are unable to engage in the smart home market.
Prohibitive Pricing Creates Limitations
Devices like smart thermostats are among the more expensive connected devices relative to their traditional counterparts. For example, the ecobee4 smart thermostat costs $249, while a simple programmable thermostat can cost as little as $25. Unlike some other connected devices, the energy savings associated with smart thermostats can help consumers save money and provide ROI for the device as soon as a person starts to use it. This means the energy saving benefits of smart thermostats are well-positioned for low income consumers, who spend three times more of their income than the US average to heat and cool their homes. The major issue with this, however, is the prohibitively high price of thermostats. As Jonathan Reckford, the CEO of Habitat for Humanity, has said, “…the people who would benefit most from energy upgrades are least able to afford them.”
Outreach Programs Aim to Assist Low Income Customers
Nest is one company that is starting to tackle this issue and the lack of smart home device penetration among low income consumers. In April 2018, the company announced its new Power Project to help raise awareness on how energy costs can affect low income households. As part of the project, Nest is installing one million of its thermostats into low and moderate income households over the next 5 years. The company is accomplishing this by partnering with Habitat for Humanity and Fannie Mae’s low to moderate income mortgage program, as well as income-qualified customers from select utility partners. Nest is giving these organizations special pricing on the Nest Thermostat E, and has donated the proceeds from thermostat sales around Earth Day to increase adoption and installation. There is still a lot of progress to be made in low income households, but this segment of the residential market is becoming a target for smart home technologies.