What Should Be Included in Your Hourly Guard Rate?

Trackforce

September 2, 2022 · 14 min read

Hourly security guard rate broken down into costs and profit margin

The most important thing you will ever do as a security guard company owner will be setting the hourly guard rates for your services. If your prices are too low, you will drive yourself right out of business. If they are too high, the competition will be able to win more business at a lower rate.

Knowing how much to charge for your security services starts by knowing your operating costs and using those as a baseline for building your rates upon.

So, we’re sharing some of the costs you will want to build directly into your pricing strategy while protecting your bottom line.

Key takeaways

Build the rate up from your own costs, not down from a competitor’s quote. Any figure you copy from the market carries somebody else’s wage structure, burden and overhead inside it.
Apply margin to the fully burdened cost, not to the wage. Marking up the wage alone is the most common way firms end up working a contract for nothing.
Price the hours you cannot bill. Induction, recurring training, licence renewals and callout cover are real hours. If they are not in the rate, they come out of margin.
Most margin is lost after the contract is signed, not during pricing. Non-billable overtime, absorbed no-show cover and quiet scope creep do more damage than a slightly low bid.
A defensible rate needs evidence behind it. Firms running TrackTik can show verified patrols, incident records and SLA performance against the hours billed, which is what turns a rate conversation into a value conversation.

The Bill Rate Build-Up

Before working through the individual cost categories below, it helps to see the whole structure at once. A bill rate is a stack, and every layer has to be derived from your own numbers rather than borrowed. Rates vary far too much by market, post type and state for any published figure to be safely copied, so what follows is the method rather than the amounts.

Layer	What it covers	How to derive it
Base wage	What the officer is actually paid per hour for that post	The market rate for the post type in that county, rather than the lowest rate you have historically paid
Payroll burden	Employer taxes, workers compensation, benefits and paid leave	A percentage on top of wage, taken from your own payroll and carrier figures. It varies by state and by claims history, so a rule of thumb will mislead you
Training and licensing	Induction, recurring modules, licence renewals and the training hours you cannot bill	Annual cost per officer divided by the billable hours that officer actually delivers in a year
Equipment and uniform	Uniform, phone, torch, duty belt, tour app licence, and PPE where the post requires it	Replacement cycle cost per officer spread across billable hours, not the first-issue cost alone
Vehicle, where the post uses one	Purchase or lease, fuel, maintenance, insurance, fit-out and depreciation	Full life-cycle cost divided by patrol hours. Calculating patrol vehicle life-cycle cost walks through it properly
Overhead allocation	Office, admin salaries, software, business insurance, recruitment and supervision	Total annual overhead divided by total billable hours across the business, then applied per hour
Target margin	The profit the contract has to return to be worth servicing	Applied to the fully burdened cost of every layer above. Applying it to the wage alone is the single most common pricing error in the industry
Bill rate	What the client pays per hour	The sum of every layer above, recalculated per post type rather than set once for the whole book

Understanding the Rate by State

First, you will need to understand what the going rate for a security guard is in your state.

Use a security guard pricing approach to learn the cost per county to get a general idea of what a guard’s salary expectations will be. By fairly compensating your guards, you will attract talent and improve guard retention.

Personnel Expenses

To calculate your personnel expenses, start by determining the average hourly rate to pay your guards. Next, add in the cost of taxes, insurance, training classes, guard equipment, etc. This will show you the average hourly cost of your security team.

Keep in mind that these numbers will change depending on the type of service you are providing. Security guard service rates vary widely.

For example, armed guard services should always be charged at a higher rate to account for the additional costs of firearms, insurance, and the ongoing training armed security officers require. Personal security should also be charged at a higher rate because you will pay the guard more for a higher level of attention.

Once you have the security guard costs calculated for each service you provide, add in the percentage of profit you want to make to determine your security guard service rates and maximize your margins.

Patrol Expenses

If a client has a vast expanse of properties to patrol, this can require the purchase of a mobile patrol vehicle. Depending on the size of the property, or the distance between them, a Segway, golf cart, truck, or another slightly-used light vehicle should work for most companies.

When it comes to mobile patrols, it is crucial to remember that maintenance and upkeep expenses should be factored into your hourly pricing.

So how much do security patrol services cost?

When calculating the cost of a mobile patrol, be sure to include the purchase price, maintenance costs, insurance costs, hourly operating costs, and vehicle equipment depreciation into the equation. This will show you the approximate hourly cost of providing a vehicle(s) for the client’s needs.

Hazard Pay

Some locations are more dangerous to protect than others.

These could include:

Bad neighborhoods
Businesses with high-risk inventory (such as guns, money, or chemicals)
Businesses with a history of break-ins
High-profile clients with enemies (for personal security)

Any request that puts your guards in the path of danger should increase your security guard service rates.

Increased threats may require increased protective measures, armed guards, and higher insurance premiums. Keep this in consideration when quoting a contract and in the hourly rate of officers working in these higher threat environments.

Equipment Costs

Determine the cost of outfitting your guards with the proper security equipment they need to do the job.

At minimum, most unarmed security officer jobs will still require:

Company provided uniforms
Radios or Two-Ways
Mobile Phones / Tablets
Guard Tour Software
Flashlights

If the customer wants your security teams to utilize specialized equipment or custom guard uniforms, add this to the cost of providing services. Also, personal protective equipment (PPE) like bulletproof vests and tactical gear is necessary to ensure that armed guards are kept safe on the job.

Also, don’t forget to factor in the costs of equipment installation and maintenance, including security surveillance cameras and other protective features that you recommend the client install.

Administrative Costs

Your guards earn their money by protecting people, property, and lives. Your administrative team is there to make sure that sites and events are properly staffed with the necessary personnel.

Factor in all your administrative expenses when calculating your hourly guard rate. Your administrative costs must include all costs related to running the office including:

Rent
Insurance
Utilities
Gear
Software

Once you have this figure, break it down to an hourly cost to determine how much you should add to your hourly guard rate.

Performance Bonuses

You and your team should be rewarded if you are protecting a client’s property and demonstrate a clear record of keeping it safe where others have failed. Including a provision for a performance bonus is a great way to challenge your team to do the best job possible.

Using the data from your guard management software is an easy way to show clients your true value and even increase your bill rates.

If you are able to give your guards performance bonuses, you will improve retention and word of mouth recruitment. This makes showing appreciation to your guard team through bonuses and pay increases well worth the cost.

Where Margin Quietly Leaks After You Win the Contract

A correctly built rate can still deliver a disappointing year, because most margin is lost in delivery rather than in pricing. These are the leaks that show up on contracts that looked healthy on the spreadsheet.

Non-billable overtime, which is usually the largest single leak and the hardest to see without reporting. The hidden cost of non-billable overtime sets out how to quantify it
Induction and recurring training hours that were priced once at contract start and then quietly grew with turnover
Callout and no-show cover absorbed rather than billed, often because nobody recorded that it happened at all
Equipment replacing faster than the cycle you priced, which tends to happen on high-turnover sites
Scope creep: an extra patrol, an extra report, an extra escort that became routine and was never repriced
Invoices assembled by hand from timesheets that disagree with the schedule actually worked. Generating them from clocked hours through contracts and invoicing closes this one entirely

Defending Your Rate When a Client Pushes Back

Every correctly priced rate eventually meets a cheaper quote. The firms that hold their pricing are rarely the ones with the best argument. They are the ones who can show what the client has actually been getting.

Separate the rate from the scope before you discuss either. Most rate objections are really scope objections. Establish what is being delivered for the current number first, or you will end up discounting work the client did not intend to give up.
Show the delivery record, not the intention. Verified patrols, time-stamped incident reports and response times against the hours billed turn an abstract rate into a concrete quantity of work.
Put your number next to what it buys. A per-hour comparison flatters the cheaper bid. A comparison of coverage, verification and reporting per dollar usually does not. Business intelligence reporting is where that evidence comes from.
If you have to move, move the scope rather than the margin. Reducing patrol frequency or hours is recoverable. Holding the scope at a cut rate funds the discount from wages and supervision, and you will see it as turnover within two quarters. Customers only care about price is worth reading before that meeting.

Five checks before you send the quote

Is the margin applied to the burdened cost? Check it is not sitting on the wage alone.
Are unbilled hours in the rate? Induction, recurring training and licence renewal time for the officers who will actually staff this site.
Does the overtime assumption match reality? Use your actual overtime percentage on comparable sites, not the one you hope to achieve.
Is the post priced, or the contract? An overnight lone post and a staffed daytime lobby should not carry the same number.
Is there an escalator in the agreement? A multi-year contract with no wage or CPI adjustment mechanism is a margin decline you have agreed to in advance.

Balance Fair Wages with Business Cost

When it comes to setting your security guard service rates, you have to include all of the costs that you take on as a business. By including those costs into your rates and then establishing a healthy profit margin, your security business will be on its way to profitability in no time.

Effectively manage your guards and keep your business profitable with TrackTik, our security workforce management platform. You can review transparent TrackTik pricing, or book a demo and run the build-up above against your own contracts.

Frequently Asked Questions

Seven layers: the officer’s base wage, payroll burden, training and licensing, equipment and uniform, vehicle cost where the post uses one, an allocation of overhead, and your target margin. Miss any of the middle five and the rate looks competitive while quietly funding the contract out of profit. The build-up table above sets out how to derive each layer from your own figures.

There is no safe national figure, and any article that gives you one is guessing. Rates move with your county wage market, the post type, whether the officer is armed, the hours covered and your own burden and overhead. Build up from your costs rather than down from a competitor’s quote, then sanity-check against local rates for that post type. Good pay and bill rates covers how owners benchmark without copying.

This is the wrong question, and asking it is how firms get into trouble. Markup on the wage ignores burden, training, equipment and overhead, which is where most of the real cost sits. Work out the fully burdened hourly cost of delivering the post, then apply your target margin to that total. A firm marking up wages by what sounds like a healthy percentage can still be losing money on a site with high turnover and heavy overtime.

As two different products, built up separately. Armed posts carry a higher wage, materially higher liability insurance, firearms qualification and requalification costs, and more frequent recurring training. Those differences belong in the cost layers rather than being handled with a flat uplift on the unarmed rate, because the gap between them varies by state and by carrier. Price the post, not the job title.

Build it into the rate for that specific post rather than adding it as a line the client can negotiate away. A post that warrants hazard pay usually also carries higher insurance, higher turnover and more supervision, so a separate small uplift rarely covers the true difference. Where the risk is genuinely intermittent, an agreed trigger written into the contract is cleaner than an invoice surprise.

Take the officer cost as normal, then add the vehicle as its own layer using full life-cycle cost rather than fuel and insurance alone. That means purchase or lease, maintenance, tyres, insurance, fit-out, downtime and depreciation, divided by the patrol hours the vehicle will actually deliver. If the vehicle serves several clients, allocate by hours per client. Mobile patrol software gives you the route and hour data to make that allocation defensible.

Measure it per site first, because firms consistently underestimate it. Then attack the causes: publish rosters further ahead, widen the pool qualified for each post so cover does not always fall to someone already at forty hours, and set alerts before an officer crosses into overtime rather than after. Cutting non-billable overtime goes through the operational levers.

With the delivery record rather than the sales pitch. Verified patrols, incidents filed on scene with photos and time stamps, response times and SLA performance give the client something to compare against a cheaper quote that offers none of it. TrackTik produces that evidence as a by-product of officers doing their jobs, which is why firms running it tend to compete on value rather than on rate. Vendors get fired, partners get paid makes the same point from the client side.