Getting All The Access Control Revenue You Can
It is important to stay on your toes and react to customer demands as quickly as possible for new and upgraded security systems. However, jumping right on a job and providing customer service within 24 to 48 hours can give rise to taking shortcuts and making mistakes.
Another potential danger in too much procedural shortcutting is the possibility that your revenue and earnings might also be slim. We’ve been tracking dealers and integrators in the access control field for a number of years and have developed a model that might be useful to determine if the full range of revenue is being received for a professional access control installation.
Model Breaks Down Components
The model we’ve created essentially relates to the sale and installation of a new access control system – systems that need preinstallation planning and calculating, since little may be known about facility layout and access authorization requirements. These installations involve site survey and system design services before installation, as well as maintenance and customer training after the sale.
In the meantime, the actual installation involves the hardware, installation labor and software required to provide the needed entry and egress. According to dealers and integrators, these components of the sale should generate revenue to some degree.
Suppose you are realizing an average of 33 percent revenue from the hardware alone on a new access installation and another 30 percent from the installation. These two items constitute the biggest part of the sale price (63 percent). Following the hardware and installation, the site survey and system design account for a combined 17 percent of the sale. Maintenance and customer training on the operation of the system account for 11 percent, while the operating software for the system – largely off-the-shelf products – accounts for 8 percent (see chart).
On top of that, the average gross profit (the sale price less variable expenses) from an access system sale is 36 percent. That ranges from 39 percent for the hardware down to 31 percent for the system design function. This is not much different in the gross margin levels. However, if all of the functions within the model are not provided, you could experience a significant loss of gross margin earnings.
We have seen situations where dealers or integrators are concerned about not being awarded a bid because a quoted price was too high and too many services were included in the bid. Handling situations like this can be a problem for the inexperienced customer contact representative, but selling the importance of those services can also be important.
You know best who your customers are and how much of a complete service package they’re looking for. We thought this model approach might help.
Joe Freeman is CEO of J.P. Freeman Co. and J.P. Freeman Labs in Newtown, Conn. Freeman can be reached at (203) 426-6023 or E-mailed at firstname.lastname@example.org. Visit his company’s Web site at www.jpfreeman.com.
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