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Raising customers’ prices for RMR
December 20, 2022
Raising customers’ prices for RMR
          We have customers who have signed the ALL IN ONE COMMERCIAL SECURITY SALE AGMT. Do we need to let them know in writing that we are increasing the price or we can just start to collect more money ?
          Do they need to sign a new agreement?
          If we raise prices without letting the customer know, do we break the original agreement?
  Please let me know.  Thank You 
          The All in One agreements are very clear on this issue and you can rely on the provision, as long as you haven’t changed it.  You are authorized to increase the RMR [this is the monthly charge, no matter how it’s invoiced, i.e., quarterly, semi or annually.  You are authorized to raise the RMR by up to 9% per year.  This authorization does not require notice or approval, and certainly doesn’t require a new contract or written confirmation.  Just as important is that acceptance of the increase is not optional, it’s required. 
          Be sure not to exceed the 9% per year increase because if you do, you have breached the agreement.  Amounts inadvertently paid by the customer will be recoverable as an overpayment, and your breach of the contract, if intentional as it surely must have been, will be grounds for termination of the contract by the customer.  So, word to the wise to those who aren’t so wise and not using the Standard All in One agreements; you’re on your own and you better check your contract if you have one. 
          Raising your RMR is of course the “name of the game” and it can only be done two ways, new accounts with RMR or raising the RMR for existing customers.  Raising the RMR is probably something you should do as a regular course of business.  A customer who got billed $30 a month throughout 2022 would be raised to $32.70 if you use the full 9%.  That kind of increase is not likely to ruffle too many feathers, but if you have enough RMR it could end up being significant.  If your aggregate RMR is $30,000 the collective increase would be $2,700.00; a good chunk of your central station charges.  Without attrition over 5 years you would increase RMR by $13,500.00.  That will add approximately $500,000.00 to your company’s value. 
          I’ll end with a story I’ve told before.  I’m practicing law year or two and alarm client turns over a collection case.  So I sue.  The RMR is $900 a month; I forget what was left on the contract.  Customer calls when he gets the summons and complaint and starts with “do you know who I am and I’ve never been sued before?”  I did recognize the name once he told me; it was the publisher of the official newspaper for New York lawyers.  Probably the first of many famous people I’ve had the honor of suing.  Anyway, he tells me that he wants to just settle.  I ask about the alarm, asking if it’s the alarm for his publishing business building.  No he tells me, it’s his apartment where he’s resided for over 40 years which the same alarm company [it was Holmes Protection in NYC] and the monthly charge started at a buck or two and over the 40 years just kept increasing to over $900 a month.  I settled for a one year free subscription.  But the obvious effect of the increase policy was apparent. 

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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