Alarm companies charge varying upfront rates and monthly charges for their services. These can range anywhere from $99 upfront to hundreds of dollars and then monthly rates can range from $20/month to over $60/month. When looking at these amounts, we have to ask ourselves, why do alarm companies charge such high prices for their equipment and services?
The answer is simple – because they can.
The home security market is elastic. An alarm company will typically charge as much as they can, while remaining to acquire new customers. If the customer will pay the amount, then the company will charge it. Once the business volume is established, the company becomes locked into those prices.
AlarmForce charges $25/month for two-way voice security, CPI is around $30/month, ADT’s prices range from $29.99/month to $40/month for two-way voice protection and Vivint’s packages can from $49.99/month to as high as $70/month.
ADT and Protectron have dealers, so the pricing on their monthly monitoring ranges. AlarmForce, Frontpoint, Protect America, CPI, Ackerman, Bay Alarm and Vivint do not, so it’s more of a fixed price depending on features and equipment.
Prices range based on amount of equipment, type of monitoring, if home automation features are included, and the company’s feeling on what the market will pay for service. Supply and demand is a constant amongst the industry – however, different companies have differing views on what truly equals the best value for their customers.
Beyond that, alarm companies understand that it’s always easier to raise prices than lower them. When prices are raised, the company benefits but the customer loses out. Typically, most home alarm companies have it written into their contracts that they reserve the right to raise the monthly monitoring rates at anytime. And they do.
It’s hard for an alarm company to lower their monthly monitoring prices due to the negative effect it would have on the bottom line. If you already have 5,000 customers and you lowered your monthly monitoring prices by a $1 for new customers, then old customers would want the discount as well, or they’d cancel their contracts. Once the discount is given, then suddenly the alarm company is now down $5000 per month. The rebound effect is huge, which is why it’s almost never done.
So in summary, the main reason why home security companies charge the high amounts they do per month is because the market allows it. If prospective home alarm shoppers stopped going with these high priced home alarm solutions, like ADT and Vivint, then they’d be forced to charge less. Plus if another alarm company came into the market offering a lower cost solution for protection, customers would think of going elsewhere.
The alarm market dictates how much the companies can charge.