SSI logo

Spotlight on ISC West

Top Story
4K Video, Cloud VMS Among Hot Security Technologies Seen at ISC West

SSI filmed a series of product demonstrations from various booth visits on Thursday.
Presented By

How to Transform Your Company Into an RMR-Generating Machine

Learn how to build your company's recurring monthly revenue by implementing a three-step model.



By ·


I was fortunate enough to be able to sit in on a couple of educational sessions I had handpicked as being among the most intriguing on the ISC West schedule. One was titled “Structural Challenges in Converting Product Companies and Product Offerings Into RMR” and featured Brian Lohse of Secure-i and ASG Security’s Bob Ryan.

One of the great things about the RMR model is it is a win-win for the company and the customer since the latter obtains products/services for a low upfront cost while the former winds up with at least three times the value. RMR is all about building incremental value for the business. They walked attendees through the three-step process of:

  1. developing an RMR model
  2. creating a sales model
  3. instilling an RMR cultural change

Lohse and Ryan pointed out how a project-based business and a perpetual business are entirely different propositions. In fact, they said owners/operators should look at the business as being an RMR enterprise rather than specifically security or anything else. The model should be based on four elements:

  • properly structured contracts
  • automatic payment
  • fixed term with evergreen clause
  • the ability to institute price increases

Not so coincidentally, those are also key factors both prospective buyers of the company and creditors look for as well.

Lohse and Ryan offered some formulas to help better illustrate RMR concepts. They said while it takes about $20 (products, labor, etc.) to create $1 of RMR, that $1 becomes worth $50. In other words, $100 RMR costs $2,000 but is worth $5,000. The Rate Creation Multiple (RCM) is an important metric that is calculated by determining the number of months required to pay off the cost of acquiring a customer. RCM variables are: equipment + labor + sales commission = direct job cost. And so the RCM formula is: direct job cost – customer installation charge = net investment / RMR = RCM (direct and excluding overhead that would yield fully loaded RCM).

Page 1 of 2 pages 1 2 >


Article Topics
Business Management · Blogs · Business · ISC West · RMR · All Topics

About the Author
Scott Goldfine
Scott Goldfine is Editor-in-Chief and Associate Publisher of Security Sales & Integration. Well-versed in the technical and business aspects of electronic security (video surveillance, access control, systems integration, intrusion detection, fire/life safety), Goldfine is nationally recognized as an industry expert and speaker. Goldfine is involved in several security events and organizations, including the Electronic Security Association (ESA), Security Industry Association (SIA), Security Industry Alarm Coalition (SIAC), False Alarm Reduction Association (FARA), ASIS Int'l and more. Goldfine also serves on several boards, including the SIA Marketing Committee, CSAA Marketing and Communications Committee, PSA Cybersecurity Advisory Council and Robolliance. He is a certified alarm technician, former cable-TV tech, audio company entrepreneur, and lifelong electronics and computers enthusiast. Goldfine joined Security Sales & Integration in 1998.
Contact Scott Goldfine: [email protected]
View More by Scott Goldfine

Security Is Our Business, Too

For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Security Sales & Integration is like having a consultant on call. You'll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add sales to your bottom line.
A free subscription to the #1 resource for the residential and commercial security industry will prove to be invaluable. Subscribe today!

Business, RMR









SPONSORED LINKS

Don't miss out! Subscribe to Security Sales & Integration magazine today. - Security Sales & Integration

LATEST SECURITY RESOURCES


View all security resources & downloads

EDITOR'S CHOICE