How can you compete?


I've been putting out bids for VERY near cost just to get my name out there and to get a few customers monitored so I could get a decent monitoring rate for my company. I have not gotten one bid due to companies like ADT and Brinks & former installers from such companies. When they are charging $10 more/month for monitoring but only a few hundred dollars for a complete system install, how is anyone to break in to the market? Any info would be appreciated as I'm really getting tired of wasting my time on bids when I don't have a prayer of competing.
I would guess that ADT and Brinks are using much lower end equipment compared to the ELK you mentioned the other day. They make alot of money on the monitoring and also the service calls.

I have a friend that has a small alarm installation company that also provides monitoring through a third party. Well it used to be small. One thing that he does is provide free service labor. Its a gamble but as his company grew he makes a decent profit. He has gotten a lot of customers away from the bigger companies with the free service since a service call is about $80 in this area per hour plus parts.

I believe that many of the installations are lower end panels like a Napco GEM-P801, or -P816 or an Ademco Vista 10P or 20P. These are fine for those "free" systems etc. But if the customer wants more bells and whistles it will cost them plenty.

The big guys (ADT, BRINKS etc.) also buy in huge quantities so they get a great price on the equipment.

Lastly the big guys sign a customer up for 4 or 5 years at $25 or more per month. My friend charges about $18 a month and includes the free service. He probably gets about $5 or so per month in his pocket per account. Once he got a few hundred accounts he started making some money on the monitoring alone. The best way to do it is to take over an existing system that is no longer in contract with a CS. If the customer owns the equipment then its ok for you to take over I believe. You may have to change the panel if its locked out but salvage the rest of the system.

You may want to have your lawyer draft up a service agreement etc.
I even tried going with the Caddx NX-8 and couldn't compete on price. I like the existing customer idea as an additional option. I know the last customer signed a 3 yr contract for service but if the guy makes $10/month on the monitoring, that's only $360. I still don't see how he can afford to put in a system with 8 motion detectors & 11 magnetic contacts with that added to the small initial amount. I haven't seen the contract but there MUST be some other catch. The guy's grossing under $1000, I don't know how he can do it. I really appreciate your facts though, thanks Digger!

One other thing Digger, you said there is a possiblity of changing out the panel. If it's one of the systems you listed above, from the looks of it, I would have to get one of the same brand panels to use the rest of the system since the stuff isn't compatible with Elk or Caddx. Is the correct or am I reading other discussions incorrectly?
In my area, ADT is installing the Ademco Lynx and a couple of wireless door sensors. Because there's no central controller, the cost is extremely low. There's really no security to speak of, but then these systems are really just vehicles to sell monitoring service. I haven't seen the statistics, but I'll bet on average people remain customers for 5 or so years, so I'm sure that's factored into the equation.
I saw one house in connecticut that was an ADT job, it had 3 wireless sensors, front door, garage door and door to the garage (maybe one more to the back door).

The unit looked like the securelinc one Smarthome sells but it has been awhile. I didn't think to as but I would not be surprised if the monitoring was up there.

I know when I got a card recently from ADT in NY, it looked like a similar setup and was $34.95 a month for monitoring. I did not pay attention to the parameters since I had no intention of going with them.

I'm guessing they made their money on addons and monitoring. Once you get a large number of people signed up the high monitoring fees are going to add up (but are hard at the beginning if you are trying to build that base). Also, there are only a few sensors included, I'm assuming that can add up real quick.

I always thought of ADT being more in the business of razor blades, than razors themselves... I think the period for the card I got was 3 years.

People doing this are usually putting in a $100 alarm panel and charging $25-$35 per month for monitoring. If the customer needs extras, like wireless sensors, they are getting them to commit to an even longer contract normally.

They make their money on the monitoring.
Thanks ALL for the answers! That was my guess, I just need to focus more on the quality end of the sale. I really appreciate all the info.
The FREE or $99 installs use a very basic burglar control and offer a front and back door switch and one basic keypad. Any other options such as a LCD keypad, motion detector, smoke detector, additional doors, or window switches are extra. The average installation will cost the home owner $600 or more. All installations will be monitored for about $25 to $35 a month on a 3 or more year contract. Monitoring is where the real value is for the installer! You will never see an unmonitored FREE system.

You can not and should not try to compete with these type of systems using an M1. The M1 is an entirely different league of control systems from the FREE give aways. You may get your foot in the door advertising a basic burglar system such as the GE NX6 and upgrade the owner during the sale.
I am not sure this is the answer but how about marketing your system as a Home Automation system first with security as an included perk. I have not tested the theory yet but I have been thinking that with a system like the elk you almost have to go this route. Presentation seems to be a big part. Setup a phone system and show the potential customer how you can use any phone in the house to control the automation task. Build a real working demo display so that they can touch and feel the real thing.

Other than that I would think that you would need to offer an alternative to the elk at a very cheap price. If you are doing the installs yourself you may consider trying to become a independent contractor for some of the retail stores that are selling these systems. I am not sure but Brink and all those big names might hire out sub contractors.

My last word of advise is advertise. It takes money to make money. You would be amazed at how much business a $8,000 tv commercial running 3 times a day for a week can get you. Make sure you are in the phone book also and make sure you have a web site. The easier it is to find you the more potential customers you will have.

Disclaimer: I am just starting so I am not a experienced pro. These are only my thoughts and I am not saying they are accurate.
I think that taking over existing accounts is one way to get your foot in the door. Some panels (nota lot) can be defaulted back to the mfg settings so you can even salvage the panel.

Play with the numbers and come up with a strategy. Lets say you take over a system and can salvage everything. So you sell the homeowner by giving them a deal that the big guys dont want to offer.

Example: Current contract is $24.95 a month. You offer $21.95 (as long as you can make a reasonable profit on that) and throw in one additional motion to increase their coverage. And for service if the big guys charge $80 maybe you charge $60 or something (my friend does free but it took him a while to really start making money). I would definitely replace the battery when you do a take over also (its a good selling point and cheap enough).

The homeowner will probably go for it since they are saving a little each month, getting a little more coverage, and cheaper service (maybe even say 3 months free service or something if they sign a contract of at least 2 years). Once they seem sold on this you can always say that you can suggest additional coverage if they want..........(Smokes, Keyfobs, etc)

Then hopefully the word of mouth effect will bring you more business.
Man, you guys are good. I agree that the Elk should be promoted as an automated service first and a security as a bonus. Maybe Caddx could be my "cheap" line. I don't want to get as cheap as the big boys I DEFINATELY want my name to be associated with quality. One of the selling points I use on my surveillance is the much much higher quality for nearly the same price as the competitors (some times I'm even lower priced). I'm thinking the only time to use a ultra cheap set-up would be if the existing accessories are not compatible with the systems I carry. I really appreciate all the feedback. Thanks again for all your help!
Zang, next week at the EHX show in Orlando we will have fully functioning Elk systems running with MainLobby user interface. This combo is a killer in promoting to a customer something that their current alarm system provider has no offering.
There might even be some show specials :)
Wish I had the finances to go there or to the show in Vegas on the 4th & 5th. BUT, since I'm just starting I have negative funds so sadly I won't be able to make it all the way down to FL. Maybe I'll set up a system at my place for a full demo.
Spanky said:
You can not and should not try to compete with these type of systems using an M1. The M1 is an entirely different league of control systems from the FREE give aways. You may get your foot in the door advertising a basic burglar system such as the GE NX6 and upgrade the owner during the sale.

Selling is not easy, but here are a few ideas that I have learned from successful salespeople:

1. You must clearly identify what is your market:
- residential vs. commercial (or both, but at the beginning it is more difficult if you do not have focus)
- primary target: protecting just the property vs. protecting lives
- profile of average customer (i.e homeowner with income range from X to Y and house of value X to Y in given neighborhood, ages from X to Y, family compsition, etc.)
Why? You dont want to spend your energy and time selling to a customer that is not able to affort your premium product (Elk). You want a customer with a real need (to keep your good name, you dont want to sell what the customer does not need). A single guy that is never at home prefers property protection, whenever a head of family that travels frequently and leaves the family alone for several days seeks protection of live - more about this below. You also want a customer that is interested in the advantages of the premium product (per instance, young people appreciate and feel more confortable with innovative products).

2. You also must decide how you are positioning your product.
Squintz mentions an example. I would position it the other way. An alarm with unlimited capability to grow in the home automation area with minimal investment. I would use a laptop with a presentation highlighting the benefits of an automated-enabled alarm. How weak are the cheap alarms at protecting the lives of the people that is in the house (once a burglar breaks in, your live is in danger even it the alarm notifies a monitoring system). The value of an automated-enabled alarm is the ability to trigger events when a burglar (or a big dog, or your lanscape serviceman) is in your yard to let you know that something is happening, but without having to necessarily cause a full burglar alarm event. You can make it turn the lights one, make it say a warning message, turn on the sprinklers or call you at your cell phone to enable the 2-way voice interface. Prevention before the burglar breaks-in is the key to save lives. Protecting the property should be secondary.

3. Understanding the product that competes with you in the same market, is good.Being able to sell it yourself is better.
If you invested a lot of time presenting the benefits of the premium product, but the customer still cannot (or do not want) to pay the extra cost, Then you should be able to sell them the cheap one - not without first raising your reserves on the bad value proposition (cost/benefit) that the cheap product has in comparison to the premium one. You can have one sample of the cheap product (not too clean, a broken part is not a bad idea) with you and ask "this is the cheap one that they are offering you?, I can sell it too." They sometimes change minds after looking at the difference. I admit it, this is a dirty trick - but it almost always works. And when it does not work, if anybody is going to take the money it better be you.
Don't forget the M1EZ8 for a lower cost security and automation control.

It is still not your give away FREE control, but it is less expensive than the M1 Gold.