Understanding The Billing Rate For Your Contract Security Force

billing-rate-contract-securityWelcome to the first article in a 4 part series on improving the service that you receive from your contract security provider.  In this series I will outline 4 critical areas that every buyer or contract manager for security services needs to evaluate before, during, and after choosing a security guard provider.  In this first article we will discuss one of the most important aspects of selecting a contract security guard vendor “Understanding the Billing Rate”.

The billing rate that your bidders provide is the result of adding up all the costs associated with staffing your property, plus some number that represents what the bidder wants to make from the contract. The largest portion of that billing rate is usually the guards’ wage rate.

Determining Contract Security Guard Wage Rate

The most important component of building and maintaining a successful contract security force is ensuring that your guards are being provided adequate compensation. In order to do so, you as the contract manager must determine how much other businesses are paying for security guards within your area for similar scopes of work.  This amount should be the benchmark by which contract managers judge contractor bids and in no case should the contractors proposed starting wage be lower.  As part of the bid evaluation you should request a wage rate analysis for your area from any potential bidders.  By ensuring adequate compensation for the contract staff at your facility you will be able to help reduce the amount of turnover that you see at your facility.  In addition to providing the wage rate analysis, each bidder should be required to state what wage that they are proposing in their bids.

Tip: If you have a high rate of guard turnover 9 times out of 10 the wage rate at your site is probably too low.

Security Guard Benefits

Secondly, in addition to wage rate the contract manager has to ensure that the security guards are also given benefits that will help retain top talent at your location.  Some of these benefits can  include:

  • Company supplied uniforms
  • Vacation days
  • Sick days
  • Medical benefits

The best way to ensure that you are receiving the type of officers that you need is to ensure that these benefits are outlined in your bidders’ proposals.  The most economical way to pay for these benefits is to provide your contractor the ability to bill you directly for benefits given on behalf of the contractor. When direct billed, these costs which are typically  hidden in a comprehensive billing rate, are billed by the contractor only when they occur.  This is more advantageous to you as the contract manager because you will only pay for benefits that your security officers receive.  By using direct billing, costs associated with temporary and part time employees are also reduced.  A greater level of benefits can then be given to officers who are employed longer.

Your Billing Rate Breakdown

Although wages and benefits are two of the best indicators of the quality of your guard force, they are not the only indicators.  To understand the security programs that your bidders are providing you must look at the program in its entirety.  The best way to do that is by requesting a line item breakdown of your billing rate with each bid.  That billing rate should include at a minimum:

  1. Wages
  2. Payroll Taxes
  3. Risk/Insurance
  4. Expenses
  5. Gross Margin or Markup

Most security guard contractors use pricing tools similar to the one below that will generate billing rates based upon the resources that they will allocate for your location.

contract-security-billing-rate-example

As you can see from this sample pricing page, it would be relatively easy for two bidders to come up with the same billing rate but propose radically different services.

Ethical and credible contractors should embrace this approach to billing rate review with open arms. This allows for an apples-to-apples comparison of their pricing models and protects them from incurring costs that are uncompensated.  However, the most profound impact of evaluating your billing rate is on the behavior of the security guards themselves. When security officers feel like they are being treated fairly they are much more likely to exhibit the positive behaviors that you desire: Attention to detail, professionalism, and alertness.

 


Series: Improving Your Security Guard Service

Article 2: Understanding Contract Security Guard Training

Article 3: 3 Tools for Managing Your Contract Security Force

Article 4: 6 Helpful Tips To Improve Your Security Guard Service


 

billing-rate

 

By Courtney Sparkman

133 thoughts on “Understanding The Billing Rate For Your Contract Security Force

    1. ORCadmin Post author

      Hi Denise I will get a copy to you. I have to say that it is not really user-friendly, but I will be more than happy to forward you a copy.

      Reply
      1. Greg West

        I know the article regarding billing rates was posted 2 years, however, I would love to get a workable copy of the pricing page.

        Thank you in advance.

        Greg

        Reply
  1. Tom Conley

    I do not have an issue with sharing security officer wage and benefit info with a potential client. However, our markup and profit is none of their business. The issue should be either the potential security company does or does not provide the best value and the best fit for the client.
    Tom Conley

    Reply
    1. ORCadmin Post author

      Hi Tom I completely understand your position, I once felt the same way. But unfortunately in the competitive world of security guard service I think that this is becoming a necessity. Client’s need to understand how various security companies differ. Besides, if you are willing to detail officer wages, training, equipment, and benefits it’s not a far stab for the clients to be able to estimate what your margins are…

      Reply
      1. ORCadmin Post author

        Hello Clinton it is available. I’ll send you a copy via email. If you have questions once you receive it, please feel free to contact me.

        Reply
  2. Pingback: Understanding Contract Security Guard Training | The Soapbox

  3. Pingback: 3 Tools For Managing Your Contract Security Force | The Soapbox

  4. Pingback: 6 Helpful Tips To Improve Your Security Guard Service | The Soapbox

  5. Matt

    I would love to get a working copy of the pricing spreadsheet as well.

    Any help would be much appreciated.

    Thanks in advance,

    Matt

    Reply
    1. ORCadmin Post author

      Hi Matt, I’ll be glad to send you a copy. If you have questions, please feel free to contact us.

      Reply
  6. Clinton Daley

    I would like to get a working copy of the pricing page in a spreadsheet document if it is available to share.
    Any help would be much appreciated.

    Thanks in advance,

    Clinton

    Reply
  7. Sandy Dominguez

    I would like to get a working copy of the pricing sheet. I’m trying to figure out the calculations.

    Thank you.

    Reply
    1. ORCadmin Post author

      Hi Sandy,

      I will send you a copy shortly. Once you have the workbook the formulas within the cells will guide you through the calculations. If you have questions, please feel free to contact us.

      Reply
  8. Judy

    Do you know the AVERAGE or approximate markup that most of the large security service providers (Securitas, Allied, G4S) are charging? I know there are a lot of variables but I was wondering if there is an industry average.

    Thanks in advance.

    Reply
    1. ORCadmin Post author

      Hi Judy, great question! Unfortunately I don’t have an average on what the large providers would charge. That number really varies by the strategic value of the site. For extremely small sites that they aren’t that concerned about it might be 10-12%. For large clients that they want because of brand recognition I’ve heard that they will do it for cost or even at a loss. Sorry I can’t be anymore specific. 🙁

      Reply
      1. Rocky

        Is it true that security guard companies can take half of your wages. If a site is $16 can the company take $8 put of $16. Is it still possible to get a working copy of the pricing sheet? Thank you

        Reply
        1. ORCadmin Post author

          Hi Rocky,

          Possible, but not probable. Most of a security company’s billing rate goes toward wages, SUTA, FUTA, workers compensation insurance, and general liability insurance. On most contracts, security guard companies are typically only making a dollar or two “profit” per hour. Security guard companies make their money based on large volume.

          I hope that makes sense…

          Reply
    1. ORCadmin Post author

      Hi Josh,

      I will be sending you the workbook shortly. Thanks for taking the time to read the article!

      Reply
  9. Micheal Evans

    Can I please get a working copy of the worksheet. I am starting a security company and this is extremely helpful.

    Reply
  10. Keith Langskov

    I would love a copy of the spreadsheet.

    I also do not think it is a bad thing for your clients to know your profits. As long as you are giving them a great service and they are a happy client they are not going to leave you for someone who can do the contract for for a few dollars less per hour. Show value and explain to the client that you are different.

    The oldest security company in the United States has a armed rate of 75hr in California. California it is hard to get 35hr. They are able to have a high rate because they have a great reputation and training programs. There also is a very low turnover rate which is a benefit to the client.

    Reply
    1. ORCadmin Post author

      Hi Keith, we’ll get a copy sent to you. I think you hit the nail on the head, a good billing rate is about providing great service. You can’t have one without the other.

      Reply
  11. Manuelis Cherry

    I just started my own security company using my trademarked DBA is there any help you can give? were can I go for equipment? uniforms? and what should I charge for my services.

    Reply
    1. Keith Langskov

      Equipment and uniforms can be found online by doing google searches. http://www.uniformswarehouse.com/ is a great place to start for uniforms and equipment. As you shop around you will find out what is best for your company and price budget. Big 5 is a great place to buy boots for about 30 dollars.

      What should you charge for your services? Depends on your focus are you planning on being a elite company? Mid-Range? or The lowest bidder?

      It also depends are you unarmed, armed, or mixed. The best way to find this out is talk to potential clients. Call and say I am John Doe from ABC Security do you have time to answer a few questions today. We are new to the security market in your area…… ask your questions. You might get a few people not comfortable with questions and they will decline. But since you have them on the phone ask them about if they are happy with their security company. Do they have a bidding process, can you be a preferred vendor.

      Good Luck.

      Reply
    1. ORCadmin Post author

      Hi Manuelis, I think I can help you with that. Be looking for an email from officerreports.com… 🙂

      Reply
  12. Devon

    Could I please get a copy of that spreadsheet as well. I’m looking into starting a security company in my community where there is no security option aside from police and all this info gives me a great starting point on which to base my rates and services.
    Thanks

    Reply
  13. Brandon

    I think this is a great article for anyone that is putting together a proposal for the first time, like myself 🙂

    Like the many others before me, would I be able to get a working copy of the pricing tool. Thanks so much in advance.

    Reply
  14. jose hernandez

    I really enjoyed your article. Can I get a copy of the pricing spreadsheet? Also, I am interested in opening my own security buisness soon. Any advice? I have read articles that say your first clients should be billed less because you are trying to beat the competitors. Is that true? Or should I keep a certain formula for all my clients?

    Reply
  15. Don

    Good afternoon,
    If not too much trouble, I too would like to get a working copy of the pricing spreadsheet.

    Thank you ,
    Don

    Reply
  16. Jeremy Unruh

    I’m also interested in getting a copy of your pricing spreadsheet. Would you mind sending it to me?

    thanks,

    Reply
  17. Oscar

    Can I also get a copy of the pricing spreadsheet. . Also one quick question: does a security company need to get a tax id number since your providing a service and not selling an item? I do understand that you need to get a federal id number.

    Reply
    1. ORCadmin Post author

      Hi Oscar, we are sending you the pricing workbook. In terms of the Tax ID number that probably varies by state and the answer would probably be best handled by your accountant. 😉

      Reply
  18. Marshall

    Greetings Courtney. Great article! I believe this will help me greatly. Can you please provide me with a working copy of the pricing sheet you used as the example?

    Thanks in advance!

    Reply
  19. Lloyd

    This information can help me greatly. Can you provide me with a working copy of the pricing sheet as well.

    Thank you very much.

    Reply
    1. ORCadmin Post author

      Hi Vance, thanks for taking the time to read the article. Don’t forget to subscribe…but in the meantime I’ll send you the pricing workbook via email.

      Reply
  20. Mel Catholic

    Simply a outstanding read. Are you available to speak further? I would love a copy of you worksheet if possible.
    Thanks in advance,

    Reply
  21. Pingback: 20 Things To Remember For Your Security Guard Proposal

    1. ORCadmin Post author

      Hi Patrick, thanks for taking the time to read the article. I will forward a copy of the pricing sheet to you.

      Reply
    1. ORCadmin Post author

      Hi Anthony, I’m glad you enjoyed it. I’ll send you a copy of the pricing page, which I didn’t create. It was a tool that I inherited and used very successfully!

      Reply
    1. ORCadmin Post author

      Hi Tom, great question. The reason that I would opt for this method is that no two security contracts are the same. Because of that, every post will require a different type of officer with a different skill set. Depending on that skill set you will have to pay more or less to attract the right type of candidate. Each site will also probably have its own training requirements which will affect the billing rate, as well as equipment and/or uniform requirements. In my opinion the complex nature of staffing a post precludes the use of a rate card. Although most security guard buyers think that security guard service is a homogenous product, we practitioners know otherwise. Thoughts?

      Reply
  22. Pingback: Security Guard Tips I'd Share With A New Security Guard

Leave a Reply

Your email address will not be published. Required fields are marked *