KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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How inflation affects your subscriber contracts
June 16, 2021
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How inflation affects your subscriber contracts
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You don't need to be an economist to know that inflation isn't something that might happen; it's here. You also don't need to be a Wharton grad to have an idea what inflation means, at least for our purposes. It means most everything costs more. Rising costs affect everything: food, utility, gas, employee wages, salaries, health insurance and employee benefits, cars, parts and material, interest rates on loans, credit and just about every. Sure your house is up in value, but so is the next one you're looking to buy.
Guess what's not going up in value? You guessed right, your alarm contracts. They may, in fact, be going down in value. This is for several reasons:
* buyers who need financing will have to pay more in interest, so they can borrow less
* you may be locked into rates with your subscribers so as your cost to service increases your revenue is stagnant
You can't do much about the interest rates, and you can't do much about your rising costs, but you can do something about your revenue. How? If you use the Kirschenbaum Contracts ™ you have taken the first step to do something about your revenue. Every Standard Form [and you should be using the All in One agreements] provides for an annual right to increase the RMR. It's a simple formula and all you need do is exercise your right to the increase. Best of all, the subscriber has already agreed to the increase. We should all hope that the specified percentage increase will not be exceeded by the rate of inflation; I doubt it will and in any event it's close enough.
Over the past 4 or so years you didn't really need to be concerned with the right to increase the RMR, but those days are over. Potential buyers of your business are very keen to check what you are charging for your services because they not only need to be competitive, they need to be profitable. While the spread for monitoring may seem sufficient to withstand some modest increase from the central station or third party vendors, the cost of labor, material and even gas can have a big impact on the profitability of repair service and inspection RMR. It makes sense, especially if you are positioning to sell your accounts, to offer RMR plans for repair service and inspection, but you better retain the right to increase those fixed charges as costs increase.
Get updated Standard Form Agreements, and don't get caught with raising costs and your pants down.
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ISC schedule - FINAL CALL
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I’ll be at ISC in July and we are now scheduling private meetings and participation in round table discussions, topics and guest speakers TBA. Time for private meetings are limited so please reach out to Stacy Spector, Esq at 516 987 8428 or SSpector@Kirschenbaumesq.com. Concierge Clients with appointments are all set.
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To order up to date Standard Form Alarm / Security / Fire and related Agreements, click here: www.alarmcontracts.com
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CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY
You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
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THE ALARM EXCHANGE
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There is no charge to post a listing here.Include your contact information, phone, email and web site. If you would like to submit a post, please send an email to ken@kirschenbaumesq.com. To create a reciprocal link to our website, click here.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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