Developing strong pricing strategies that appeal to potential clients is critical to success for security guard companies. To appeal to more clients, it can be helpful to hone in on multiple security guard pricing strategies to maximize your profits.
We’ll share strategies to choose from when creating an hourly guard rate that will help you decide how much to charge for security guard services. Using a combination of these strategies will give you the best chance at a successful price point.
Before we dive into the strategies, it’s important to have a foundation for wage and labor in this industry.
In the current environment—with inflation and the evolving legal landscape—it can be difficult to navigate wage and hour law. Not to mention remaining competitive in a tight labor market.
To learn more about this topic, check out this webinar “Understanding the Complexities of Wage and Hour.”
Strategy #1: Pricing Based on Cost
The easiest way to price security services is by crunching the numbers. Determine your material, labor, and overhead costs to know how much you need to charge just to break even on each contract.
After you establish your costs, you need to add on a reasonable profit margin that will finalize the baseline for pricing your guard services. Aim for about 3-5% of your total costs.
Here’s what the equation looks like for this pricing strategy:
The strategy can be used safely and effectively with clients whose private security needs are going to remain relatively constant for as long as you will be contracted with them, (i.e. for a storefront, a warehouse, etc.).
But calculating costs is not always as straightforward as you’d like it to be. Factor in the cost of mobile patrols and pricing strategies can get a little more complicated. We’ve created a security guard pricing tool to help you understand how much to charge:
Download our Mobile Patrol Cost Calculator FREE
When deciding on your hourly guard rate, look at what the competition is charging for their security services to get a baseline for your own rates.
When you conduct this research, make sure you compare similar factors when using a cost-competitive model for pricing.
Here are a few factors to consider:
Different types of security services have very different impacts on what you can charge a client. If your competitors are charging much more than you, look at what kind of services they are offering. You might want to see how you can add those services into your security company.
For example:
But more important than any one specific service offering is diversifying your services. Being able to offer clients a wide range of security services is one of the best ways to grow.
The industries security companies work in can make a major difference in the prices they can charge for security services. Knowing if your competitors are working in industries that have a higher average price point can inform your guard rates.
For example, cannabis security has become a huge market - —from running patrols at farms to doing door security at dispensaries - —and demands a higher price point for security services because of the risk involved.
Just like with services, diversifying the industries your security business operates in can be a great way to grow.
Comparing your guard rates against competitors is very effective as long as you look at every factor that influences pricing. If you leave any factors out, you could price yourself below the reasonable market rate.
In the worst-case scenario, leaving factors out means you could price yourself out of business by under or overcharging for your security services. Especially for small security guard companies, getting pricing right is critical to maximize margins that will let you reinvest in and grow your business.
This strategy is best used when you are confident that your security services are the best in the business.
When you focus on customer value & success, you focus on two things.
Having detailed reports shows your clients the direct value your security services bring to their business. These sample reports are a great example of what kind of information you can show clients.
By understanding your cost, competitive market, and the value of your services, you can effectively determine what to charge for your security operations. This is a fundamental skill when starting a security business.
PRO TIPS:
As your security company grows, so do your software needs. Silvertrac Software can be your dedicated software partner providing you with simple and customizable solutions for guard management, incident reporting, guard tours, and more. No matter the size of your security operation, find the pricing plan that works for you.