Comment on compensation packages



    Compensation programs are a frequent topic among alarm company owners and management. Every alarm-security company seems to have a different way to compensate its sales force. About 70% of the smaller companies, the owner does the sales, and he or she does not always add the cost of sales into their pricing consideration.  On an over- all basis, most of the larger Alarm-Security Businesses pay out about 10% of the Sale &/ or Installation charge to the sales people. Sometimes part of this 10% goes to the person who creates the lead, sometimes referred to as a “Finder’s fee”.  My companies have always had many “Finders”, they are usually finding me Alarm Accounts that produce R.M.R. and I give them $50 when we sell a monitored system from their lead.

    AN EXPERIENCED ALARM – INTEGRATION SALES PERSON.  Boy do these sales People come with many different abilities and production levels.  I have never found 2 that are alike.  I do put them quickly into 2 different groups.  The regular smaller Alarm-Security Businesses need a Person who can produce that $400,000 to $600,000 of sales per year.  I like to pay a lower salary and higher commissions, I pay a $25,000 to $35,000 base, and that is based on them proving what they have been able to sell at previous employment.  I want to see Sales reports or pay stubs.  I then show them how and why they can double their income from the Bonuses & Commission we pay, which will still fall into the 10% total compensation.  They must earn their “Draw”, before they can earn additional income.  In many compensation programs, I will add one times the R.M.R. of their sale, but to get that extra income, their total sales must be above the monthly goal.  When they go well over their goal, let say 20%, I will give them 10% of all the gross profit from the jobs they sell for that month.  I do not work with Alarm-Security Businesses that do give-a-way business; we do not sell $49 systems. My sales people are trained and motivated to create Profits.

    THE 2ND GROUP OF SPECIAL ALARM SALES PEOPLE is the high end “TOP Producers”.  They sell $1 Million to $1.4 million or higher each year, they are looking for those largest sales that produce collectively over $100,000 each month. They will earn about $100,000 to $140,000 annually.  These People have a base of $50,000 to $70,000 with the above type of Bonuses. In most cases you only find these people in the largest and best managed Businesses.  One of the keys is the Sr. Management of that business who knows how to motivate and direct these capable people.  I am always looking at my best producers in the lower level and showing them how they can earn those much higher incomes. You can send me an e-mail if you wish greater details.

    MY SALES DEPARTMENT THAT I LOVE THE BEST If I have heard in once, I have heard it over 100 times, “People tell me that they will hire a new sales person & pay them a draw of $3 or $4,000 per month and after three months and investing $12,000 or more in this person, the person not even close to covering their Salary, and three or 4 months later they show the person the door. Most get tired of this red ink from trying to grow, and stop trying to build a sales department.  That is when you should hire me as your “Coach”.  So what do I do to get around this problem? I have about 6 programs that have worked for me. The following is my favorite program that works for me and about 8% of the Alarm-Security Businesses in the United States.

    THE FIRE EXTINGUISHER SALES & SERVICE BUSINESS provides me with the best possible sales department. Today I have 5 Service and Sales trucks on the road selling, servicing, inspection, recharging and “Tagging” Fire Extinguishers.  I call these People my “Route Sales Partners”.  When I put a New Route Sales Person in a New Truck, in 90 days they are in the Black. This is one of my “Great” Profit Centers, and they provide my Alarm Sales people most of their quality leads.  Every Business must have their Fire Extinguishers Inspected and service every year.  Are drivers going into every single business they can find? They give out our Company brochures, they get paid the above Finder Fees, and they talk about our products and services. This year we will have 5 new trucks added to give us, 10 sale lead developers who also produce a 16% net to this fantastic addition to any Alarm-Security Business.  You should let me help you do this for your company.  We pay these Route Sales People $11 to $17 per hour as a draw against their Commissions.  They earn $35,000 to $70, 000 per year, and we net $20,000 to $35,000 per truck per year. I Drivers get about 40% of labor charge to customer and about 40% of the Gross Profit of Extinguisher & other product sales.  We get about 100% mark-up on product sales.

Dennis Riley




Cell  240-462-8220




Thanks Coach.  BTY, don't forget that employees need Employment Contracts, and this is particularly important for commissioned sales help.  


subscriber changes to contract



    What do we do when a client who is an attorney draws up counter proposals to our alarm contract changing almost every paragraph?   I want the job; we get along nicely, but do not know how to continue at this point. 


Knoxville, TN




    Carefully.  With caution;  He had so much time to rewrite the contract mayby you can drop off the equipment and he  can install it himself - monitor it too - that reduces your exposure and the need for most of the contract provisions.

    It doesn't matter what you think your relationship with your subscriber is now, that will change if there is a loss, and there are others who may look to you if there is a loss who have not signed your contract and don't even know you, like guests in a house or neighbors.  The contract terms have been drafted to protect you and the more changes you agree to the more you lessen the protection available in the contracts.

    The exposure in the alarm industry is not in proportion to the cost of service and with limitations in subscriber budget, technology and human error, you can't afford to be without the contractual protection. BTY, I really can't respond to "changes" when I don't know what they are.  Hopefully you will be smart and careful enough not to agree to guarantee no loss and reimburse the subscriber for all losses.  


TO SUBMIT QUESTIONS OR COMMENTS REPLY TO THIS EMAIL OR EMAIL Ken@Kirschenbaumesq.com.  Most comments and questions get circulated.




Topic:  Analysis of the Commerical Fire All in One and the Fire Suppression All in One.   This will be a comprehensive review and comparison of the Fire Alarm and Fire Suppression contract forms. 

 When:   Thursday, February 27, 2014 at 12 noon to 1 PM EST.  This webinar will not be recorded

 Register here: https://attendee.gotowebinar.com/register/8188883684086152194

 Presenter:  Ken Kirschenbaum, Esq.

 Who should attend:  alarm company owners, office managers and license compliance officers 



Speaking Engagements


Sonitrol Verified Electronic Security.  Annual convention March 22, 2014 at The Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas.


Alabama Alarm Association.  AAA's Fall Meeting and Trade Show - October 21, 2014 from 3 to 5 PM at DoubleTree Hotel 808 South 20th Street Birmingham, AL 35205  contact Shelly  (205) 933-9000 for more info