The refresh is never actually a surprise. What surprises people is that nobody set the money aside while the system was still new.
Two weeks ago I wrote about a console we pulled from service that still powered on and still worked, and argued that end of life belongs in the buying decision from day one. Seth Garrepy took that into his own world in the comments and brought his replacement cadences with him: “servers at 4 to 5 years, endpoints at 3 to 4, switches at 7 to 10, access points around 5”. Then he added the part my post left out. Annualize the replacement cost into an accrual account so the money is there when the system reaches the end of its life.
None of that is new outside AV. Call it a reserve or a sinking fund if your accountant prefers. Every other durable asset in a building gets handled this way, and AV is one of the few that routinely escapes it. A $500,000 system on a 7 year cycle is roughly $70,000 a year. Fund that from the day it goes live and nobody has to find $500,000 in year 7.
I have watched customers arrive at this two ways. Most get there after a failure, when something critical dies and the replacement has to come out of a budget that had no room for it. A few get there at the end of a large capital install, when the system is new and the conversation is easy to have.
Years ago I was the director of technical operations at a performing arts center near Boston, and there was no replacement money in the budget for anything we owned. Building the first version of that plan was one of my projects, and the board discussion was painful. Nobody wants a line item for equipment that is working fine. The argument that finally hit home was that the money was leaving either way. The only question was whether we planned for it in the budget or scrambled to find the money when we were forced to.
Our industry does not make this easy. Accrual language does not appear in proposals, and no integrator gets a contract for it. The account managers worth having help their customers build the plan anyway, because the customer who has the money ready is the customer who is still buying in year 7.
Ask what the replacement year is, ask what the system costs today, and divide.