As other portions of the security industry appear to wax and wane depending upon the economy and competition, the fire market has remained as steady as the rock of Gibraltar.
Dealers report installing 119 fire-only systems in 1996, according to the 1996 Security Sales Dealer Survey. That figure represents a 40 percent increase from 1995’s average number of fire-only systems. Residential fire systems have an average installation cost of $859. The data are just as “glowing” on the commercial side. The average commercial fire-only system has an installation cost of $4,245. However, servicing fire systems is a hidden side to the market that is proving to be as profitable as installing FACPs, smokes, heat detectors, waterflow devices, etc. Dealers who specialize in servicing fire systems have pinpointed a profitable niche, whether the revenue is obtained via service contracts or by hourly billing of non-contract customers. A new study confirms the value of the fire alarm service market at $580M annually in the United States.
With this kind of revenue to be captured, it is surprising more dealers aren’t “sparked” to “ignite” a fire service wing in their operations.
Study Shows Service Hourly Rates Are Higher Than Install
A new study by Sandra Jones & Co. of Chardon, Ohio, and FIREPRO Inc. of Burlington, Mass., sheds some enlightening statistics on the fire service market.
The report, entitled “Automatic Fire Alarm System Service: Market and Operation Considerations,” reveals that dealers invoice clients at a higher rate for service than any other function. In fact, service technicians are able to charge an average of $10 more per hour than installation techs.
The $65 per hour fee by a service technician can add up quickly. Most companies have a combination of clients with service agreements and others without. According to the Jones/FIREPRO survey, 48 percent of alarm companies report using both fixed fee service rates and hourly rates.
How To Price Your Fire Service Agreements
Determining your service agreement price will always be influenced by what the market will bear, according to Alan Kruglak, author of “Growing Your Service Revenue,” a new book published by ARK Solutions Inc. If the market prices are tough to come by, Kruglak advises charging a range of 7 percent to 15 percent of the installation price. For example, if the original installation was $20,000, charge between $1,400 and $3,000.
Fire Safety Quiz Can Be Part of Your Sales Pitch
By Lou Sepulveda
There is almost nothing more devastating than a fire. It takes education and practice to truly be prepared in a fire. Here’s a quick quiz for you and your prospects to test fire safety knowledge.
1. If you are trapped in a smoke and heat-filled house on fire, the air nearest the floor is safest? True or False?
False. The air nearest the floor is coolest, however, that air is deadly. While heat and smoke do rise, the gases given off when plastics, nylons, dacrons and other chemically produced products within our homes burn are heavier than air and therefore, sink to the floor. These gases are extremely deadly. One breath will kill. The safety zone is approximately 18 inches above the floor, below the descending heat and smoke and above the deadly, heavier-than-air chemicals that sink to the floor.