3 Pricing Strategies for Creating Your Hourly Guard Rate

Developing strong pricing strategies is critical to success for security guard companies. Price too low and every contract erodes your margins. Price too high and you lose bids you should have won.

This guide covers three strategies for setting your hourly guard rate: cost-based, competitive and value-based pricing. Using a combination of all three gives you the best chance of landing on a price that wins contracts and still turns a profit.

Understanding Wage and Labor: What Security Companies Need to Know

Before diving into the strategies, it helps to understand the wage and labor foundation of the industry. With inflation, a tight labor market and evolving wage and hour rules, labor costs can change quickly. Knowing what good pay and bill rates look like in your market is the starting point for any pricing decision.

Overtime is one of the biggest hidden threats to your margins, so make sure you understand overtime compensation compliance before you set rates.

Strategy 1: Pricing Based on Cost

The most reliable way to price security services is to start with your costs. Determine your labor, material and overhead costs per hour so you know exactly what you need to charge to break even on each contract.

• Labor costs: The wages you pay officers who service the contract, plus labor burden. Burden includes employer payroll taxes, workers’ compensation, liability insurance and any benefits. Leaving burden out is one of the most common and expensive pricing mistakes.
• Material costs: Uniforms, equipment, vehicles and fuel for mobile patrols and anything else you spend outside of wages to service a specific contract.
• Overhead costs: Office rent, administrative and supervisor salaries, training, software and other costs of running the business, allocated across your billable hours.

How to Calculate Your Hourly Guard Rate

Once you know your fully loaded hourly cost, add your markup to arrive at the bill rate:

Hourly bill rate = (hourly wage + labor burden + materials + overhead) × (1 + markup)

If you prefer to price to a target profit margin instead, divide your cost by one minus the margin:

Hourly bill rate = fully loaded hourly cost ÷ (1 − target margin)

Here is a hypothetical example for illustration only. Your actual burden, materials and overhead will vary by state, insurance, benefits and contract.

Cost item	Per hour
Officer hourly wage	$20.00
Labor burden (payroll taxes, workers’ comp, insurance, benefits)	$5.00
Materials (uniforms, equipment, vehicle costs)	$1.00
Overhead allocation	$3.00
Fully loaded hourly cost	$29.00
Bill rate with a 15% markup ($29.00 × 1.15)	$33.35 (a 13.0% margin)
Bill rate for a 15% margin ($29.00 ÷ 0.85)	$34.12

Notice that a 15% markup produces only a 13% margin. If you confuse the two, you will consistently underprice contracts. Choose a target margin that reflects your market, contract size and risk, and review it regularly with your accountant.

Cost-based pricing works especially well for clients whose security needs stay fairly constant, such as a storefront or warehouse. Contracts with mobile patrols, variable hours or frequent schedule changes need a closer look at every cost. See how to maximize your margins in contract security for more ways to protect profit.

Strategy 2: Pricing Based on Competitive Comparisons

Looking at what competitors charge gives you a useful baseline for your own rates. Just make sure you compare similar factors, or the comparison will mislead you. Here are the most important ones to consider.

Level of Training and Experience

• Years of experience can significantly affect the rate a security company can charge for the officers on a contract.
• Valuable certifications and training increase an officer’s value to the client.
• Well-trained supervisors make your service more trustworthy and support a higher rate.

Specific Guard Services

Different types of security services have very different effects on what you can charge. If competitors charge much more than you, look at which services they offer and whether you could add them. For example:

• Armed guard services typically command a higher rate, though armed officers usually earn higher wages too.
• Incorporating technology, such as verified patrols and real-time reporting, is another way to justify higher rates.

More important than any single service is diversifying your offering. Being able to provide a wide range of security services is one of the best ways to grow.

Security Service Pricing for Specific Industries

The industries you serve can make a major difference in the rates you can charge. Knowing whether competitors work in industries with higher average price points helps inform your own rates. For example, cannabis security, from patrols at grow facilities to door security at dispensaries, often commands higher rates because of the risk involved. Diversifying the industries you serve is another great way to grow.

Competitive comparisons work well as long as you account for every factor that influences pricing. Leave one out and you could price yourself below the market rate, or out of business entirely. For smaller security companies especially, getting pricing right is critical to earning margins you can reinvest in growth.

Strategy 3: Pricing That Focuses on Value

This strategy works best when you are confident your services are among the best in your market. Value-based pricing focuses on two things:

1. The money you can save your client. If a client is losing $30,000 a month in stolen goods and your services cost $10,000, you can highlight the $20,000 they would save. A property walk is a great way to uncover the specific problems on a client’s property and show exactly how your service will address them.
2. The value of your services. If your officers have extensive training or your client list includes well-known organizations, you can price based on your reputation and results.

Detailed reporting is what proves that value month after month. Learn why every security company should provide summary reports.

Which Pricing Strategy Should You Use?

Strategy	Best for	Watch out for
Cost-based	Setting a profitable floor on every contract	Ignores what the market will pay
Competitive	Staying in range of the local market	Can lead to a race to the bottom
Value-based	Winning premium contracts on results	Requires proof of the value you deliver

Most successful security companies use all three: cost-based pricing to set the minimum, competitive research to understand the market and value-based selling to justify a rate above the floor.

Common Security Guard Pricing Mistakes

• Forgetting labor burden. Pricing off base wages alone can wipe out your margin.
• Confusing markup and margin. A given markup always produces a smaller margin percentage.
• Ignoring non-billable time. Training, holdovers, travel and unbilled overtime all raise your true cost.
• Never revisiting rates. Wages, insurance and fuel change, and your rates should too.
• Competing on price alone. The lowest bid attracts clients who will leave for someone cheaper.

How TrackTik Helps Protect Your Margins

Pricing is only half the job. Once a contract starts, you need to know whether it is actually earning the margin you planned. TrackTik, the security workforce management platform from Trackforce, connects the data you need to find out.

• Labor cost control: TrackTik business administration provides live labor-cost tracking and helps prevent unplanned overtime.
• Accurate billing: TrackTik contracts and invoicing ties billing to verified hours so every billable hour is captured.
• Contract profitability: TrackTik business intelligence shows performance by site, client and officer so you can spot underpriced contracts early.

For more ideas, see these 10 strategies for greater profitability in private security.

Pro Tips for Pricing Security Services

• Review how your pricing is performing every month to make sure your strategies are on target.
• If sales lag or clients leave for competitors, adjust your approach to meet changing market conditions. Staying flexible is key to long-term growth and profitability.
• Increase value by keeping your best officers. The Ultimate Guide to Retaining Your Security Guards shares proven strategies.

By understanding your costs, your competitive market and the value of your services, you can confidently decide what to charge. As your security company grows, so do your software needs. Book a TrackTik demo to see how connected scheduling, payroll and billing protect your margins.