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How To Implement Pricing Structures and Add-on Services

Starting a physical security business means taking the time to properly set up a pricing structure and add-on services. Physical security businesses thrive when they implement their pricing structure correctly. Knowing how to determine your base cost per service, and which additional services you should offer, is essential to success in this field.  

Understand the Importance of Formalizing a Product Structure 

One of the first steps in setting up a physical security business is creating a formalized product structure. This will help customers understand what services you offer and how much you charge for each of them. It also helps with internal communication, as all employees will know exactly what type of service is being offered and how much it should cost. 

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A product structure looks like a tiered system, with each tier representing a different type of service. In physical security, you may have tiers for services like security audits, risk assessments, and surveillance equipment installation. Make sure that each tier is clearly defined and priced according to your business model. This will help you stay organized and ensure that all customers are being charged the same rate for each service they receive. 

For instance, if you offer a security audit as one of your services, your product structure will clearly list the cost for that service. It may also include additional add-on services like an on-site visit or consultation, which would be priced separately from the audit itself. 

Determining The Formula for Finding Your Base Cost 

The base cost of a service is determined by adding up the total cost of all materials and labor needed to complete the job. This includes any upfront costs, such as buying equipment or hiring employees, as well as ongoing expenses like utilities, insurance, etc. Once you have the sum of these costs, add an additional 10 to 15 percent to cover overhead and other expenses. This will give you the total cost of the service, which can then be used to calculate your base pricing. 

It's especially important to set up this formula early on so that you know what your base cost should be for each service. This will help ensure that you don't unintentionally undercharge, which could lead to financial losses overall. 

For example, if the cost of materials and labor for a particular job is $200, then you should add 10 to 15 percent ($20 to $30) to cover overhead. This means that your base price for this service would be $220 to $230. Make sure to add in any other costs that may be incurred during the job, such as travel time, disposal fees, and so on. 

Determine What Services You Can Offer as Add-ons 

Most physical security businesses offer additional services as add-ons. These can range from installing security systems to supplying monitoring and maintenance services. When deciding which services to offer, it's important to consider the needs of your customers and how these services can help them better protect their property. 

Once you have decided what added services you can provide, you will need to set up pricing for each one. This should be based on the formula described above and should also consider any unique requirements or costs associated with that particular service. 

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For example, if you are offering installation services, the cost may be higher than other services due to added labor and materials needed for installation. Considering this when creating your pricing structure will help ensure you don't undercharge for a service. 

Implementing a pricing structure and figuring out your add on services is an essential process for any company, but with physical security companies, it can be especially important with such tight margins and high overhead expenses. 

Robby Coles
Robby Coles
Robby Coles is a born and raised Nashville, TN resident. He has been a marketing content writer for the past 14 years and has recently joined the Thinkcurity team as a Content Marketer. He enjoys writing compelling content that drives engagement. Robby is a wine enthusiast and dog dad that splits his time between Nashville, TN and Vienna, Austria.

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