business-modelSo I’ve been working a lot on my business model and wonder what are the best options for monetizing it. It’s an armed security company.
Traditionally, clients want to pay bottom dollar for security. They only really care about their security when things getting bad or have already occurred. Thus, most companies hire the lowest costs solution for their business and end up with a Barney Fife, who has no real interest towards increasing the safety and security of the organization.
My company wants to deliver a premium product, not a Barney Fife or mall cop. One which is an actual deterrent and reactive towards hazards. What is the best way to monetize that effort with mindset of “pay as little as you can for security”. The service is pretty much all or nothing. You either have an officer on your primes or not. Events either happen on your property or not. Sometimes its even impossible to classify such events.
Security services are a form of insurance. To put it simply, the cost of insurance should be less than the loss from damage or other incident offset by the risk of the loss actually happening. For a nuclear power plant the damage could be enormous and though the probability of an incident is relatively low they would be willing to pay a lot for security. For a corner store the probability of damage (shoplifting) is very high, but the loss is negligible, so they won’t pay anything.
To sell your service you will need to convince your customers that the cost of your service is less than their potential losses (which you are going to prevent) times the probability of them actually happening. In other words, when offering premium services look for customers with 1) high risk of loss, 2) high probability of loss and 3) enough money to pay you for preventing that loss.
My mentor once went on a CEO level job interview even though his minimum acceptable salary was considerably higher than the job was offering. At the end of the interview, having marketed his talents effectively, it came time to discuss money. The employer asked what he was needed to make and as expected was shocked by the honest reply. The interview was over and no common ground had been found. As they were parting ways, my mentor offered the card he had been holding until just that moment.
“How about this? I will work for you for one month at the rate you’ve offered. Then, if you don’t choose to raise my pay to the level I require, I will quit. If you can afford to let me go at that time, then I don’t deserve what I’m asking.”
For almost a decade following that interview, my mentor ran that company.
A parallel approach in your industry would involve your offering a trial month at a price competitive with the Barney Fife’s. That gives you a month to get your foot in the door and prove to the owners that your service is worth the premium you charge.
– edit to respond to the OP’s comment –
That the advantage of your higher quality service is practically invisible to your potential customer is a major concern. Although I see your concern with this as a monetization challenge, it may also be seen as a marketing challenge.
How do you differentiate your company from Barney Fife’s Inc.?
The only thing that comes immediately to mind is incident reporting. I can imagine that a premium rate security company would provide the owner with daily and weekly reports of every security incident, leveraging the higher IQ’s of their guards to produce better documentation.
I know that my original answer didn’t help you and that I have now strayed quite far from your original question, but I’m out of ideas.
How do you successfully charge higher rates when your product or service has no customer-visible advantage over the cheaper competition? You don’t.
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