Virtually all alarm companies make you sign a contract when you agree to their services. Usually security contracts are for 36 months (ADT, AlarmForce, Reliance Protectron, Monitronics, Safetouch, Bay Alarm, Vivint, Rogers Smarthome Monitoring, CPI, Frontpoint and Protect America are all 36 month contracts). Ackerman will make you sign a one-year contract. Why is it these companies make you sign a contract and what value is it to you to sign it?
The reason why you have to sign an alarm contract to get home security monitoring from the companies above is so they can lock you in to being a customer and make you commit to continuing service for those 36 months. This allows them to more than cover the cost of any equipment you’re leasing and also they can make a good profit off you as a customer.
Alarm companies may have zero money down offers, but over the course of the contract you are will be paying significant amounts of money far beyond that of the upfront costs. Beyond that, by locking yourself into a contract, you are forced to stay with the alarm company, even if the service is bad.
So, what value does the customer get from signing a contract?
Truthfully, it all depends how you look at it. The alarm company will market the value as no money upfront and continued service, but the fact is that with most companies the cost of the monthly will be outrageous and the company will profit tremendously from you over the course of your contract. For example, monthly two-way voice monitoring with ADT is $39.99/month, and you have to sign a 36-month contract, so that guarantees that ADT will receive $1439.64 from you over the course of your contract. Vivint charges $49.99 for their basic monitoring package with a 36-month contract, so that works out to $1800 over the contract.
Large amounts of dollars guaranteed to the company, regardless of the quality of service.
Marketing-wise, the companies will claim the contract promises you no charge service, however there are certain things not included in the contract which will be required for servicing, which will result in money coming out of your pocket to pay for it.
Think protection is free? Not quite.
When a company starts to offer a premium alarm service without a contract, then the industry will change forever. Contracts aren’t necessary for the customers. In fact the customer benefits from not having a contract for their home alarm. The thought in the industry is that if a customer doesn’t sign a contract, then they’ll leave their monitoring service far before the 36 months, once a better offer comes around. Personally, if the alarm company is providing a superior home security service, at a low price, then the customer will stay with the company without a home alarm contract.
In fact, the lack of a home alarm contract could very well be the main reason the customer stays with the home security company.
ADT, Vivint, Frontpoint, Protect America, AlarmForce and the rest could never switch to a no contract model, since they have so many current customers already under contract, the rebound effect would be tremendous. Beyond that, if they did offer a secondary no contract offer, the monthly monitoring and upfront costs would have to be significantly higher, due to them eliminating some of the risk which would arise by not having a contract to tie down their customers.
Prospective customers should weigh all of their options when shopping for a home security system, and ask themselves if a 36-month contract is in their best interest. If it is, then sign the bottom line, but if they think protection can be found at a more reasonable price without a contract, then look elsewhere.