Not really. They just have to pay the full value of the installation which
means Manufacturers Recommended Price for the equipment and the prevailing
labor wage for the area in which the installation occured. If this were to
be paid, the installing company would make out better than doing the job at
a competetive installation charge and three years monitoring. At that point
the customer can find monitoring anywhere on the internet month to month.
Problem is no one will pay MRP and prevailing wage. They cannot have it both
ways.
RHC: It's interesting that you put it that way, and you are correct. I
have always said, if the consumer is willing to pay fair market price
for equipment and labour, then the monitoring should be without the
need for a long term commitment, since it's then simply a follow on
service that is not being used to finance a low front end price. And
you're right, the only reason I can do that is because that is exactly
how I run the business. As a result, many customers have to be "sold"
not on the equipment, or my company, or me for that matter; they have
to be "sold" on looking at their purchase over the longer term. Some
clients are aghast at my up front prices until they realize that over
a five year term, factoring in all costs, they still come out ahead.
As a result, the only clients I get are ones with decent incomes who
can afford this way of buying, and like the freedom of choice of month
to month term monitoring. It's clearly not for every client, and yes,
it is far more suitable for a small firm with limited overheads than a
large corporation with ongoing fixed costs.
If the truth be known Bob, I live in a government city where the
average annual income is over $60K. I would venture to say that most
of my clients have two incomes totalling well over $125K per year.
They are by nature very mobile either through wanting to upgrade their
existing home, or simply because their job in high tech requires it.
So this is a market niche that likely doesn't exist in most towns and
cities. These customers are very loyal and will stay with me for
monitoring services as long as I maintain high quality standards in
all respects. However, if I fail, or I let my service quality drop, my
name will go out over any number of large corporate evines which could
end up costing me in both reputation and future clients. In turn, I
give them the freedom to choose that is so important to them. They in
turn act as my best salesmen !! It also makes it particularly easy to
fight the "free system" types. These people are very sophisticated
customers and the first lie being thrown their way is a red flag to
chase the salesman away !! Then when I combine my system prices with
the necessary physical work ALWAYS required on any home, it becomes a
"one stop shopping event" and a no brainer of a decision !!
Of course it is self serving in a way but agreements are not a one way
street. My agreement outlines my responsibities to the client and by
agreement if I don't do what is outlined, I am in default. In fact, an
agreement with a client leaves a company open to legal action if they don't
perform. Without an agreement there is no expectation on the company to
perform.
RHC: Agreed ! My responsibilities and the customer responsibilities
are clearly outlined in my contract just as in yours. The ONLY
difference is the term it applies for (one month). Clients know I must
perform or they have the option of giving me the boot ! I likewise
have the option of terminating them with one month's notice -
something I have done for a number of reasons (non payment, switch to
VoIP, too many false alarms etc). My contract is as air tight as any
on the market, but it's term is month to month, that's all.....
This is not a fair comparison. They have a base rate and now are charging
for extra little features. Monitoring is monitoring and most companies have
a flat monthly charge. I have heard of some that will charge extra for fire,
which is understandable in some cases. Radios are easily explained as well.
Openings and closings do cost money to supervise. But I have never heard of
companies charging extra for having your chime on or receiving trouble
signals etc.
RHC: Perhaps that was not the best example to use...
With that being said, those that misuse the feature (lockout) after
there
is no further responsibility for the correct function of the system, should
be held accountable if in fact they are proven to be doing so maliciously. I
know you can relate to the fact that guns in the hands of responsible people
don't kill. In the hands of non responsible people they are a problem.
Should guns be illegal?
RHC: Hah ! You knew that one would get me....
)) The more common
abuse of the feature comes when companies who routinely use this
feature simply die or go away, or do whatever happens to alarmcos when
the run out of steam ! If they use the feature, then they must be
responsible for returning the board to normal at the end of the term.
However, lets not kid ourselves, most alarm companies run a pretty
skinny operation, with no slack to allow them to do this sort of
thing. Nor at the end of their operation, will they likely care to
"make things right" as they sell out or wind the business down. Many
may not even remember that any particular board is locked, since their
installer may have simply done that as a routine move. Sure there are
legitimate uses for the lockout feature, but as often as not, it's the
illegitimate uses that cause problems. So just like a gun owner should
be held responsible for safe use and storage of his firearm, so should
alarmco's be held responsible to free up customer owned equipment that
has no further encumberances on it. (I think that's a fair
comparison...
)
This has come up in legislation here in Florida and the month to month
agreements only and no auto renewals did not pass. At least last year
anyway. It will probably come up again since it was the bill sponsors mother
that felt she was wronged. Since government cannot tell businesses how to
run, the legislators all got heartburn over this issue when it was brought
to their attention that at the strike of midnight of the expiration date,
that a location would no longer be monitored if payment was not received. At
2:00 AM on that following morning their mother or father pushed their
medical pendant, no one responded and the person died, the son would be
looking for someone to sue. Guess what, there was no contract, it had
expired. Hence, no obligation to respond. The old "check is in the mail"
does weight. Without payment in house, the company does not know the
client's intent on whether to continue or not. Now, remember what I said
about it not being a one way street. Let's be the good guy. Old Tom will
pay, He is alway late. So the good guy continues to monitor after the
contract has expired. Unfortunately, the dispatcher makes a mistake and the
person died anyway. Your insurance company is covering you with the
understanding that there is an agreement, with the language they approved,
in force. In force, not expired. In this case, I hope you have enough room
on your credit card because you are your own. Besides, most monitoring third
monitoring companies will want to have a contract in force anyway. A month
to month would be a paperwork nightmare to control who is in and who isn't.
The other issue that the legislation looked at was that they didn't want to
pass legislation that opened the door to escalating fees. Month to month
agreements equal potential for monthly escalation of fees rather that fixed
amounts agreed to for a longer term. Talk about potential for abuse.
RHC: If a contract is unending, and is on a month to month term, it
renews automatically for another month at the end of each month.
Unless the customer advises me that he wishes to terminate, then it
goes on ad infinitum. All billing too is by automatic Pre-authorized
Payment Plan. So things roll along nicely until one of us terminates
the agreement (usually the customer). There is little to no
possibility of a billing default which puts the continuance of his
monitoring into jeopardy. It's all black and white ! He's on the
books or he's not ! I bundle service and a complete warranty in to the
monthly rate AND I give him in his contract a guarantee of no price
rise for a fixed length of time (and if the truth be known, I have no
intention of ever raising it). BUT in order to run this kind of
business this particular way, I have to be quite ruthless on a number
of points. Takeovers are checked thoroughly and only about 7 out of 10
"pass". Installations are done correctly using only the best quality
of contacts and high end motions, and with an absolute minimum of
wireless components (which generate far more trouble calls than they
are worth). I learned long ago to "cherry pick" my installations and
my customers. If I see a potential client who looks like trouble (you
know the kind; we all develop a nose for them), then there is always a
reason why I don't want to quote on the business.
I know that not every company is going to want to be this picky
towards potential business, so certainly couldn't and wouldn't operate
like I do. I often refuse DIY jobs after inspecting them and finding
them so far "overengineered" with five splices where one would do, and
I hand them over to someone else. LIkewise with several companies here
in town that do abominable work (five motions on one loop, with B's
behind the walls somewhere; with too many wires jammed together into a
screw down terminal, using cheap shit motions everywhere etc.....).
That probably makes my approach unique, and as such, it would seem to
fly in the face of conventional alarmco logic......
I can see how a small one man show can live off of the month to month
philosophy. Has monthly money coming in, does a few installs, the monthly
bills are getting covered. Great. It is called check book accounting.
However, a company with alot of overhead must have some assurrances and this
is accomplished with guarunteed contracts. In the large scope of things
those are the companies that are more apt to be here for the consumer
tomarrow, next week, next month and next year. I don't have to explain the
life expectance of the small businesses. Most people don't mind paying for
that comfort level.
RHC: Now THAT is the first intelligent reason I have ever seen
outlined for the value of long term contracts to any company. The
other is equity, but that is far overblown in this business. I would
guess that in this day and age of inflating prices, some long term
assurance their rate will remain stable for a guaranteed period of
time could be very attractive to some clients. Unfortunately, the
ADT's of the world and their "right" to raise prices due to inflation,
make a bit of a mockery of that. However, with so many small company's
coming and going in this business, that guaranteed revenue stream
would certainly allow responsible, long term alarm businesses of any
size to plan ahead, and make longer term commitments needed to keep
their company healthy.
The only downside to my type of operation is maximum size. I cannot
continue to grow much past where I am now at 1000 customers unless I
plan to hire additional staff for service. This has become my "glass
ceiling" . With growth much beyond this point, my costs rise
exponentially. My original plan was not to grow past 500 but once my
son entered the business, we can handle everything with time to spare.
But I don't want to push things by going too much higher..
BTW, thank you for your thoughtful and intelligent response. This is
the kind of discussion this newsgroup should be all about.....
