Despite Access Evolution, Pricing Remains Outdated

Integrated systems are an increasingly strong trend in the security industry, and more security dealers have joined systems integrators to penetrate the market for customers with system needs. As the trend has matured, new products in both the access control and video surveillance markets have appeared.

At the same time, more systems are being integrated into single networks. A few years ago, two systems were integrated into one network; now, it’s an average of three systems. These three-system networks are also being integrated into the IT system of the user’s infrastructure in a number of cases.

Industry Changes, Pricing Doesn’t

With new products always debuting, the complexity of integration planning escalating as more systems are tied together and the connection of some systems to IT networks, I thought the pricing trend of access control systems would have changed significantly from what it was four or five years ago.

I pulled up the research from my 1999 access control report and compared it with the 2004 report. Bearing in mind that those mentioned above are not the only changes that occurred in the access market, I was surprised at what the comparison showed.

During the same period, some dealers merged with others, larger dealers entered the systems integration business, systems integrators began accounting for a larger percentage of the integrated business and the distribution function changed.

The market hardly looks the same, but dealers and integrators are still pricing a system pretty much as they did in 1999. In the chart, the percentages shown are the results of two completely independent nationwide surveys conducted five years apart.

Yet, the single biggest change in the pricing of an access system is the fee charged for a site survey – falling from 8 percent of the total fee in 1999 to 4 percent in 2003.

Pricing Pressure Keeps Fees Low

The numbers suggest there’s pressure on pricing for the hardware and installation labor in a system. Combined, those two major elements have risen from 63 percent of the total system fee to 67 percent during the four-year period. Software has also become more important in the pricing mix, while system design, first-year maintenance and site survey have declined in importance.

I expected some major changes in service fees, but the only significant change is for site survey work. Despite all the structural, system and product changes in the access control market during the past few years, project proposals aren’t changing much.

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