How Much Do Security Companies Charge Clients? Rate Guide
How much do security companies charge clients? Discover the average hourly rates, pricing strategies, and factors affecting costs in this complete guide.
Setting your service prices strategically can help you secure more contracts and stand out from competitors.
This guide helps security companies fine-tune their pricing.
We’ll explore average rates, proven pricing models, and the key factors that should influence your numbers.
How much do security companies charge clients?
According to the U.S. Bureau of Labor Statistics, security guards make an average of $17.82 per hour, while the lowest 10% make $13.70 per hour, and the highest 90% make $27.60 per hour.
Security companies often use markups to calculate their bill rates. This ensures they cover all the necessary costs, such as taxes, insurance, equipment, and profit margins.
According to general staffing practices, the bill rate is typically calculated by adding a percentage markup to the guard's hourly wage. For instance, If a guard earns $30 per hour, and the company applies a 50% markup, the client would be charged $45 per hour.
However, as rates have risen, security companies could charge clients up to 2.5 times the hourly wage they pay their guards.
Here is an overview of some average rates:
- California: Unarmed security guards in California make an average $32.46 per hour, depending on the region. In cities like San Francisco or Los Angeles, rates for premium assignments can be higher, reflecting the higher cost of living.
- Colorado: In Colorado, security guards typically earn $17 to $22 per hour, varying by location.
- New York: In New York City, the average hourly rate for unarmed security guards is around $24 per hour, depending on the location and complexity of the assignment.
Additional security costs
Other costs must be considered in addition to the hourly rate. Companies may charge additional fees for training, equipment, or travel. It's always wise to get a detailed breakdown of all charges before signing any contracts.
Specific types of security also come with their price tags. For instance, event security typically ranges from $20 to $40 per hour, while the cost of executive protection can soar past $150 per hour, particularly for VIPs.
Residential security, on the other hand, can range from $15 to $40 per hour.
Remember, these are just averages. Your final bill could be higher or lower depending on various factors, which we'll explore in the coming section.
Factors affecting security pricing
Having covered the question, "How much does private security cost?" let's now dive into the key factors that influence pricing:
- Type of service provided: Armed guards command a higher rate than unarmed guards due to the additional training and liability involved. Similarly, services like mobile patrols or 24/7 surveillance monitoring will likely add to the overall cost.
- Geographic location: Security services in bustling urban areas or high-crime zones tend to be pricier than those in quieter, rural settings. The cost of living and operating a business in different regions also plays a role.
States like Colorado and California, and those in the northeast, generally experience higher rates due to factors such as local living costs and the specific industries they serve.
- Client requirements: Clients who need 24/7 coverage, specialized guard training, or advanced security technologies will see costs adjusted accordingly. The more tailored and complex your security needs, the higher the price is likely to be.
- Experience and expertise: Highly trained guards, especially those with military or law enforcement backgrounds, often command higher rates. Similarly, well-established security firms with a proven track record might charge a premium for their services.
- Duration of contract: Long-term contracts might offer some cost benefits compared to short-term or one-time services because they often lead to better rates.
- Company size: Smaller companies with lower overhead costs might offer more competitive rates than larger firms. However, larger companies may have more resources and a wider range of services available.
- Government contracts: Contracts with government agencies often command a premium due to the specialized requirements and higher level of scrutiny involved. Government contracts can sometimes offer higher bill rates than private contracts due to specialized requirements and compliance standards, but this can vary significantly based on the scope and location of the services.
Note: Another key aspect of pricing involves the use of multipliers, which security companies apply to cover non-wage costs. We’ll provide a breakdown when we discuss pricing strategies.
Typical pricing models in the security industry
The security industry, much like any other service industry, employs a variety of pricing models to cater to the diverse needs of its clientele. We will examine some of the most common models:
The hourly rate
The most common pricing model is the hourly rate — you pay for each hour of service.
The average hourly rate typically falls between $35 and $50, but this can fluctuate depending on factors such as the guard's experience, the level of risk involved, and your location.
In some cases, for large properties or high-value assets, the hourly rate may be adjusted to reflect the increased complexity of protecting said assets or locations.
The flat rate
For events or situations requiring a defined period of security coverage, a flat rate might be offered.
This provides a fixed cost for the entire duration of the service, regardless of the exact number of hours or personnel involved. It can simplify budgeting for events like concerts, conferences, or private gatherings.
This model can also be tailored to secure specific assets or locations, with the total cost reflecting the complexity or size of the area to be protected.
The retainer fee
Some security companies offer a retainer fee model, particularly for clients needing ongoing or recurring services. You pay a set fee upfront to secure the company's services, and then additional hourly or project-based fees might apply.
This model translates into priority access to security personnel and a more dedicated service relationship. The retainer can also be adjusted depending on the number of assets or locations that need protection, making it a flexible option for businesses with multiple sites.
Tiered pricing
Tiered pricing offers different levels of service or coverage at varying price points. This allows clients to choose a package that aligns with their budget and security needs.
For example, a basic tier might include unarmed guards for daytime patrols, while a premium tier might offer armed guards, 24/7 surveillance, and advanced security tech.
For larger properties or multiple locations, tiered pricing may include higher levels of service to cover increased security demands, making it another way to account for per-asset or per-location complexity.
3 pricing strategies for security companies
We’ve explained how much security companies charge clients. Now, we’ll explain the strategies they use to do it. Let's explore seven strategies that can help you strike the right balance:
1. Competitive pricing
In this strategy, you set your prices based on what your competitors are charging. The goal is to stay competitive without sacrificing your profit margins.
This approach is effective for new companies if their services are similar to those of others in their area. It’s important not to get caught in a race to the bottom — companies should always emphasize the value they bring to the table, even when offering bundled services.
Bundling services
For instance, bundling patrols, surveillance monitoring, and alarm response at a slightly lower rate than competitors can make your offering more appealing while keeping you competitive.
This strategy encourages clients to opt for comprehensive solutions, making your service stand out against lower-priced competitors.
2. Cost-plus pricing
This strategy involves crunching the numbers. You calculate the total cost of providing your services — including labor, materials, and overhead — and then add a profit markup.
It's a simple and transparent approach, but it's key to accurately track your costs and ensure your markup covers all expenses and leaves you with a healthy profit.
Most security companies calculate their rates by applying a multiplier to the average officer’s hourly wage. This multiplier covers all the additional costs associated with providing security services, such as:
- Insurance: Security companies must carry General Liability (GL) insurance and workers' compensation. Costs vary widely depending on location, the level of risk, and whether guards are armed or unarmed.
- Uniforms and equipment: Uniform costs and equipment like radios, body cameras, or firearms (for armed guards) add to the overall cost. The level of gear needed and the frequency of replacement can vary significantly between contracts.
- Holiday pay and overtime: Many security guards are paid at higher rates for holidays or overtime, which can result in increased billing rates during these periods. Standard industry practice typically applies a 1.5x or 2x multiplier for overtime work.
- Administrative and overhead costs: Managing a security firm involves significant overhead, such as payroll processing, training, scheduling, and compliance management.
- Profit margin: After covering all expenses, security companies typically apply a profit margin, which can range from 10% to 15%, depending on the size of the company and the complexity of the services provided.
Example of pricing using multipliers
For instance, if the base wage for an unarmed guard is $18 per hour, a company may apply a multiplier of 1.5 to 2, resulting in a final billed rate of $27 to $36 per hour.
Note: Do keep in mind that these are hypothetical averages for the sake of simplicity. We’ve also avoided sharing specific cost structures and figures in our breakdown as they vary wildly from company to company and contract to contract.
Discounted packages for long-term contracts
Many companies use discounted packages for long-term contracts as part of their cost-plus pricing strategy. Offering discounts to clients who commit to extended contracts can lock in predictable revenue while keeping costs stable.
This strategy works well for businesses that provide recurring services, as it reduces the likelihood of fluctuating prices and allows for more stable cost management.
3. Value-based pricing
If you offer unique benefits like cutting-edge technology, highly trained personnel, or exceptional customer service, value-based pricing might be the solution for you.
This strategy focuses on the perceived value your services offer clients. It allows you to charge more, but you need to communicate the added value clearly to justify the higher price.
Premium pricing
A related strategy is premium pricing, where companies set prices significantly higher than the market average to convey exclusivity and superior quality.
This approach positions your company as a high-end provider, but it's crucial to back up the pricing with exceptional service and a strong brand reputation.
Dynamic pricing
Dynamic pricing can also be integrated into value-based pricing. When demand is high, companies can charge more — such as during peak seasons or for last-minute events — as the added value of immediate availability or specialized services increases client willingness to pay.
This flexibility allows you to maximize revenue during high-demand periods while maintaining your high-value positioning.
How to determine the right pricing strategy for your security company
Understanding how much security companies should charge clients also comes down to finding the right pricing strategy. What variables and considerations should be taken into account before choosing?
Let’s analyze them in more detail:
Assessing your costs
The first step is to have a crystal-clear understanding of your costs. This includes everything from your guards' wages and benefits to the cost of uniforms, equipment, office rent, and insurance.
The cost-plus pricing model emphasizes this, ensuring your prices cover your expenses and leave room for profit.
For example, offering discounted packages for long-term contracts can be linked to the cost-plus model. Providing discounts to clients who commit to extended services ensures stable revenue while keeping costs covered.
Understanding your market
It’s crucial to research your market and competitors. What are they charging? What are your potential clients willing to pay for security services in your region? This knowledge can help you adopt a competitor-based pricing strategy.
For price-sensitive clients, consider bundling services to offer more value, such as combining patrols, surveillance, and alarm response at a reduced rate. This approach keeps you competitive and attractive to budget-conscious clients.
Evaluating client needs
Every client has different needs. Armed guards, 24/7 coverage, or specialized training will naturally come at a higher cost than more basic services. In cases like this, value-based pricing can help.
Clients seeking premium services may justify paying higher rates if you highlight the value of what you offer.
This is especially true for dynamic pricing — raising rates during high-demand periods or for last-minute services. By adjusting prices based on demand, you can maximize revenue while ensuring you meet client needs.
Flexibility in pricing
The security industry is dynamic, and your pricing strategy should be, too. Be prepared to adjust your prices based on market conditions, client budgets, and the specific services required.
Offering discounts for long-term contracts or bundling services can attract clients and ensure steady revenue. Smaller companies might have more flexibility in their pricing due to lower overhead costs.
Boost your bottom line with Belfry
In this primer, we’ve answered the question, “How much do security companies charge clients?” We've also explored the typical range of hourly rates, the different pricing models used in the industry, and the key factors that can affect your pricing strategy.
Setting the right price is just one piece of the puzzle. To succeed in the competitive security industry, it is essential to optimize profit margins. That's where a powerful security management software like Belfry comes in.
Belfry streamlines security operations with tools for automated scheduling, payroll, and real-time tracking to enhance efficiency and profitability.
Here's how Belfry can help you increase your profit margins:
- Optimize scheduling and payroll: Eliminate manual processes and reduce administrative overhead with Belfry's automated scheduling and payroll tools. This frees up valuable time and resources, allowing you to focus on growing your business and protecting your clients.
- Gain operational efficiency: Belfry's officer tracking and reporting features give you real-time visibility into your security operations. This enables you to identify areas for improvement, optimize resource allocation, and reduce unnecessary costs.