How do you price CCTV service contracts?

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

formatting link
Internet Knowledge Base for the security industry no-spam access to your favorite newsgroup - alt.security.alarms - 17523 messages and counting! ##-----------------------------------------------##

Reply to
DA
Loading thread data ...

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.
Reply to
Crash Gordon

I have to agree with crash. figure the cost without and then play "lets make a deal"

Reply to
Tommy

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?

Reply to
JW

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.

Reply to
Tommy

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.

Reply to
Tommy

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.

Reply to
Robert L Bass

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

formatting link
Internet Knowledge Base for the security industry no-spam access to your favorite newsgroup - alt.security.alarms - 17553 messages and counting! ##-----------------------------------------------##

Reply to
DA

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

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

If it is, I am moving.

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.
Reply to
Bob Worthy

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.

| > >

| > > 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

formatting link
| |

Reply to
Crash Gordon

Cabling-Design.com Forums website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.