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Comment on how your contract deals with increases to the RMR

April 10, 2023
Comment on how your contract deals with increases to the RMR from article on April 6, 2023
          Your post on April 6, 2023 about price increases is spot on.  I am sure that owners read it and thought “what if I raise my rates and everyone cancels?” 
          We have over 320 alarm company clients and many of them use your agreements.  We encourage them to raise monitoring rates every 3 – 4 years.  In our experience less than 2% of customers notice and less than 1% object.  For the ones that complain the Company just resets the monitoring back to the previous amount and moves on.  In essence, a company with $30,000 of RMR can increase it to almost $32,700 instantly.  At $30 per account, that is the equivalent of adding 90 new customers, without rolling a truck.  Additionally that $2,700 of new RMR would be worth $94,500 at 35X.  Enough money to buy one of those fancy golf carts with leather seats.
Mitch Reitman 
817 698 9999 XT 101 
Reitman Consulting Group
Fort Worth, TX
          The Standard Form Agreements permit a 9% increase annually.  There are two very smart moves every alarm company should be employing:
  *  set up automatic payment, either credit card or ACH
  *  increase every year
          If you start with $30 the increase will be $2.70; $32.70.You can always rescind the increase if there is push back, or use the opportunity to visit the customer and suggest even more devices, security and RMR increase.
          Increasing your RMR by 9% annually should offset your attrition; more than offset because hopefully your attrition isn’t as high as 9%.  If it is maybe that’s something else you need to focus on. 
          This issue is not too dissimilar to buying accounts at a low multiple, say 18 times, because they have all kinds of problems [like no contracts or poor contracts or arrears or pain in the butt customers].  If you have a guarantee on the accounts you can use that guarantee time to shake out the crap accounts; get new K&K contracts signed.  By the end of the guarantee period you may have only half the accounts you started with but they will all be on K&K contracts, worth at least 36 times; you’re back a square one paying what you should have paid for those accounts.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301