Re: How do you price CCTV service contracts?

["Robert L Bass" <robertlbass@xxxxxxxxxxx>]

> 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?

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

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