Pricing Service Contracts - comments

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    Service contracts are great if every customer signs up for them.  You will always have those that use a great deal of service and the majority that don't ever call. The time to sell service contracts is at the time of sale. Unfortunately going back to existing clients to sell service contracts usually means  that only your problem accounts sign up and when you are doing quality work that may mean none!

    We took our pricing lead from the local phone and cable service providers.  We are in a very similar service category and they typically charge prices that covered our costs and left a reasonable profit. It also allows you to point your customers to a place where they can check the going rates for service without calling your competition who see servicing your accounts as an opportunity to pick up a new monitoring client and may offer to do it for a discount or even for free.

    We also found that charging every customer a travel charge equal to 1/2 hour of your hourly service fee works better than stating you have a one hour minimum. You can now quote your rate at the 1/2 hour rate and state that you have a 1/2 hour minimum. (For arguments sake you charge $50.00 per hour. When a customer calls you quote $50.00 per hour; but if you say we charge a $25.00 travel charge and $25.00 per half hour not once did you say $50.00.) Just a play on words that seems to work. 

    Also NEVER provide service to a customer who is in arrears. If they are behind on monitoring respond and provide the service only if they agree to pay any outstanding charges. Of course all of this gets a little blurred when servicing commercial customers who can't write a check at the store level.

    Finally, charge a billing fee ($10..00) for any service that is not paid COD. If a customer questions the billing fee just tell them that if they pay COD it will be waived. Over the years we found that service is very important when it is needed and not so important to pay after the alarm is repaired. (When we put a COD policy in place we went from around 50% current collections on service to well over 90%) You can always create a "GOLD" category of customer for those that are good payers and waive any and all billing charges. Many of us forget that genterateing an invoice and mailing it out is a part of your overhead when calculating costs and it probably costs you about $10.00 in hard and soft costs.

Good luck

Ron

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    We charge an average of 10% per year for invoiced installations up to three years. We have learned… do a great installation job and you will only go back out once a year to clean and update.

Howard Mason

Today's Integration

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Using refurbished equipment

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    A reminder, you should specify if used or refurbished equipment can be used in your repairs.  Especially on older systems where the new replacement board may no longer be available but a factory repaired board is on your shelf.  Just be sure if using refurbished parts that  you are not representing them as “New”.

Mike Fletcher

Heeth LLC

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Run Away Signals - comments

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Ken:

    I read your email newsletter every day and always enjoy hearing all the different opinions and topics that affect all of us in the alarm industry.

    I’ve never been prompted to write to you until I read the message from Chris regarding the alarm dealer in the early 90’s who wouldn’t pay and had accounts generating runaway signals.  The “solution” that they utilized to dispatch the police “every time we got a signal” shocked me.  It is examples like this that truly makes you understand why the police in many locations look at alarm companies and central stations as being a “nuisance” which has resulted in non-response ordinances and alarm registration and licensing.

    This appears to have been a business issue between the dealer and the central station.  The central station should have had mechanisms in place for “shutting off” a dealer that isn’t paying without having to resort to dispatching the police on “every signal” especially once it was established that it was a nuisance alarm.

Bob Gamble

Manager, Central Systems Operations

Security Instrument Corp.

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    It doesn’t matter if your central is reputable or not (we can assume most or all are) or what type of receivers they have.  The fact is that the call coming into the receiver ties up a receiver line.  The more cancelled/runaway systems that dial in, the fewer the lines available for receiving actual alarms.  It is of paramount importance that the system be disabled or prevented from dialing the central in the first place.  The argument can be made that doing so ties up manpower and that there’s no ROI.  If the central has dozens of lines, then I might agree.  But, to the small central station, preventing the receiver from even being called is important.

David Myers

Myers Protection Services

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Automatic Renewal - Minnesota

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Question:

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Ken,

    Is there anywhere on your site where I can find the Automatic Renewal Statutes for Business Burglar Alarm Monitoring Contracts in the State of Minnesota?  The contracts I've seen so far have 12 month renewals, not month-to-month.

Steve

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Answer:

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    See https://www.kirschenbaumesq.com/autorenewal.htm  No statute for MN

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City of Dallas permit fees

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Question:

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Hey Ken:

    Here's a question for you.  The city of Dallas requires that ANY business with an alarm system (intrusion in this circumstance) must obtain a "permit".  The problem is, that the Dallas Police Department will NOT respond to burglar alarms.  How is that legal?  I'm also curious how states can require permits and licensing for monitoring companies located OUTSIDE of their jurisdiction when not revenue is being generated from their state.  We monitor alarms for ONE national client and we receive monitoring monies from the Parent Company located in the state of Texas.

Any insight would be helpful.

Thank you,

Christopher Duke

AES

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Answer

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    I am surprised to hear that there is a permit fee for intrusion system and an offcial policy that police won't respond.  If true that decision may be a legal exercise of police power, but it does seem to me that it abrogates an important governmental function, to provide police protection.  If a business comes into the state then the state can tax it.  A central station monitors within a state it will have to pay taxes.