How do you price CCTV service contracts?

Have a question or want to start a discussion? Post it! No Registration Necessary.  Now with pictures!

Threaded View
Hello everybody,

I'd like to tap the collective wisdom of this nice group.

Reading the latest BICSI News newsletter, in the "Secure your bottom
line..." article the author argues that typical charges for a CCTV system
service contract is 1/3 of the contractor's equipment cost annually. I
plugged the numbers into an estimation for a customer that's asked for a
service contract on a 70+ cameras system we recently installed. Holly cow!
I would have to charge $1250/month PLUS additional labor for cleaning the
cameras once a year as per that article in BICSI News. Is this realistic
here in North East US? I mean, this particular customer already turned
down my last $400/month proposal that I sent based on how I would have
priced a phone system service contract that I'm more familiar with.  
So, what would you say? Walk away or raise the proposal to $1250/month? My
boss would love the last one for sure, but I doubt it's sellable.
Any real life input anyone?
Thanks!
D~


##-----------------------------------------------##
Delivered via
http://www.secure-gear.com
The Internet Knowledge Base for the security industry
no-spam access to your favorite newsgroup -
alt.security.alarms - 17523
messages and counting!
##-----------------------------------------------##

Re: How do you price CCTV service contracts?
I'd base it on how many manhours + materials + profit it will take to
service 70+ cameras. Then propose it as such...this is how much you're gonna
pay me when we come out without an contract and this is what it's gonna cost
you with a contract...maybe cut them a little discount with the contract.

1250 a month?....sounds really high to me.


| Hello everybody,
|
| I'd like to tap the collective wisdom of this nice group.
|
| Reading the latest BICSI News newsletter, in the "Secure your bottom
| line..." article the author argues that typical charges for a CCTV system
| service contract is 1/3 of the contractor's equipment cost annually. I
| plugged the numbers into an estimation for a customer that's asked for a
| service contract on a 70+ cameras system we recently installed. Holly cow!
| I would have to charge $1250/month PLUS additional labor for cleaning the
| cameras once a year as per that article in BICSI News. Is this realistic
| here in North East US? I mean, this particular customer already turned
| down my last $400/month proposal that I sent based on how I would have
| priced a phone system service contract that I'm more familiar with.
| So, what would you say? Walk away or raise the proposal to $1250/month? My
| boss would love the last one for sure, but I doubt it's sellable.
| Any real life input anyone?
| Thanks!
| D~
|
|
| ##-----------------------------------------------##
| Delivered via http://www.secure-gear.com
| The Internet Knowledge Base for the security industry
| no-spam access to your favorite newsgroup -
| alt.security.alarms - 17523 messages and counting!
| ##-----------------------------------------------##



Re: How do you price CCTV service contracts?
I have to agree with crash. figure the cost without and then play "lets
make a deal"
--



Crash Gordon wrote:

Quoted text here. Click to load it

--
Posted via a free Usenet account from http://www.teranews.com


Re: How do you price CCTV service contracts?

"Tommy" <tommy at leesecurity dot net> wrote in message
Quoted text here. Click to load it

I think that's the original question...? How do you actually figure the
cost? It's one thing to figure the time needed to do an inspection but how
you anticipate outages, repairs, replacements, retraining, technical
assistance and adjustments needed? Do you have a different calculation?



Re: How do you price CCTV service contracts?
I only cover routine inspection and minor repair. major malfunction
(dead camera, lightning struck equipment for example) should be covered
by warranty or customer. a service contract is for upkeep oh their
equipment not a blanket insurance policy.  it will save them a service
call charge but major parts are extra. i usually cover things like
batteries, fuses things that are usually right at hand, but if i have
to order a part, chances are that the customer will get charged.
--



JW wrote:

Quoted text here. Click to load it

--
Posted via a free Usenet account from http://www.teranews.com


Re: How do you price CCTV service contracts?
Yep.

And, you might include and equipment "discount" on major broken parts
replacement if they are under contract versus not under contract. That's how
I'd sell it, since you'll not be able to predict any real pricing going
forward.


"Tommy" <tommy at leesecurity dot net> wrote in message
|I only cover routine inspection and minor repair. major malfunction
| (dead camera, lightning struck equipment for example) should be covered
| by warranty or customer. a service contract is for upkeep oh their
| equipment not a blanket insurance policy.  it will save them a service
| call charge but major parts are extra. i usually cover things like
| batteries, fuses things that are usually right at hand, but if i have
| to order a part, chances are that the customer will get charged.
| --
|
|
|
| JW wrote:
|
| >
| > "Tommy" <tommy at leesecurity dot net> wrote in message
| > > I have to agree with crash. figure the cost without and then play
| > > "lets make a deal"
| > > --
| > >
| > >
| > > Crash Gordon wrote:
| > >
| > > > I'd base it on how many manhours + materials + profit it will
| > > > take to service 70+ cameras. Then propose it as such...this is
| > > > how much you're gonna pay me when we come out without an contract
| > > > and this is what it's gonna cost you with a contract...maybe cut
| > > > them a little discount with the contract.
| > > >
| > > > 1250 a month?....sounds really high to me.
| > > >
| >
| > I think that's the original question...? How do you actually figure
| > the cost? It's one thing to figure the time needed to do an
| > inspection but how you anticipate outages, repairs, replacements,
| > retraining, technical assistance and adjustments needed? Do you have
| > a different calculation?
|
| --
| Posted via a free Usenet account from http://www.teranews.com
|
|



Re: How do you price CCTV service contracts?
Quoted text here. Click to load it

I think the gentleman was referring to the original cost to install the
system.  That cost (yours, not the client's) is a useful gauge in estimating
the cost to maintain a system.  For example, suppose the system cost you
$12,000 labor and materials.  Now suppose you expect to replace the whole
thing in 10 years' time.  It could be five years or twenty years.  You have
to figure that out based on what you sell.

Suppose your annualized replacement cost is $1,200 (original cost / service
life of system.  Now estimate inflation will double that in 10 years (again,
you have to estimate these things yourself; this is just a suggested thought
process in determining what to charge).  Inflation doesn't all happen at
once it's a bumpy slope like a blue square ski run.  If you anticipate a
100% cost increase in 10 years, consider including an 8% annual price bump
in the wording of your agreement.  (1.08^9 = 2)  That will allow you to
charge a given fee in the first year and to gradually raise it by 100%
during the succeeding 9 years.

Now you have to decide what is a comfortable markup for your business to be
competitive while remaining profitable.  Suppose you decide to mark
everything up 30%.  Your annual fee for servicing this hypothetical system
will be $1560 or $130 monthly during the first year and will increase by 7%
each year thereafter.

For clarity's sake, I'm not suggesting that the above figures are
representative of your actual costs or mine.  They're just things you need
to figure out for yourself in order to decide what to charge.  You might
decide that your client's system has a five year life expectancy and that
inflation will triple the cost in that time.  If Dubya attacks Iran next
that might be too conservative a guess.  You might also feel that 30% is not
enough markup for your business to thrive.

Of course, you should also try to determine what the competition is doing.
Several folks here have posted what they do and that information can help
you gauge what you ought to do.  Whatever you do, don't just throw something
at the wall and hope it's right.  You'll either end up overcharging and
unable to compete or undercharging and run out of money.

Best of luck.

--

Regards,
Robert L Bass

=============================>
Bass Home Electronics
4883 Fallcrest Circle
Sarasota Florida 34233
941-866-1100 Sales & Tech Support
http://www.bassburglaralarms.com
=============================>



Re: How do you price CCTV service contracts?
Also Be sure to spell of in detail what your service contract covers
and explain it to the customer twice. you could end up with a service
tech visisting that coustomer twice a week for a year over silly or
unrelated issues.
--



JW wrote:

Quoted text here. Click to load it

--
Posted via a free Usenet account from http://www.teranews.com


Re: How do you price CCTV service contracts?
JW wrote:


Quoted text here. Click to load it


That was exactly my point, thank you JW.
The article I was referring to was written to sort of guide contractors
through the process of adding additional business line - CCTV, but I was
left rather confused.  It seems like the guideleines they give - 1/3 of
the cost are real hard to justify unless CCTV equipment breaks and
requires lot more ongoing service than telecom equipment I'm more familiar
with. So, I'm basically looking for some real life examples if possible
for service contract pricing on a comparable size system.

Thanks!
D~






##-----------------------------------------------##
Delivered via
http://www.secure-gear.com
The Internet Knowledge Base for the security industry
no-spam access to your favorite newsgroup -
alt.security.alarms - 17553
messages and counting!
##-----------------------------------------------##

Re: How do you price CCTV service contracts?


Quoted text here. Click to load it

Way to aggressive. You will never compete with that formula.

Quoted text here. Click to load it

They teach that to support the BICSI training center they have here in
Florida. Quite the operation. First class.

Quoted text here. Click to load it

If it is, I am moving.

Quoted text here. Click to load it


First, what are you proposing. Don't confuse service with maintenance.
Although, people lump them together, they really are two different issues.
If you are offering maintenance, check with your attorney because there are
some legal issues that you may or maynot be aware of. Maintenance lends
people to believe it is your responsibility to make sure they are working
24/7. After all you are receiveing money to "maintain" them in working
order. If a camera is out and it is their responsibility to contact you
about the problem, then they are requesting "service". I used to have
Service and Maintenance agreements that I used for everything. Now, also
have just service and just maintenance, as well.  Be specific as to exactly
what your obligation is on any agreement. You need to take everything into
consideration and then find a program that will satisfy both parties. Items
to consider are, How long of an agreement are we talking about? As needed?
Scheduled? When called? Service only? Maintenance only? Service and
Maintenance? How often? Part replacement? Parts only? Labor only?
Parts and Labor? Is your warranty different than the manufacturer's? Are you
passing on the manufacturers warranty? Normal working hours? 24/7? Where is
the location in conjunction with your office? Are talking portal to portal?
Actual time on job? Any which way you configure the program, there will be a
price difference. This shouldn't be a one shoe fits all senerio. If there
was one, we could all sit and throw out prices for installations over the
phone without seeing the job.You need to sit down with your customer and
build a program that fits their needs and budget. Best formula? One that
makes you money and fits within your customers budget. Sounds simplistic,
but it is reality.



Site Timeline