Access Control Markups / Profits Revealed

By: Brian Rhodes, Published on Jul 23, 2014

How much profits do integrators typically make on access control projects? Is access one of the last havens for fat paydays, or are profits being eroded by increased competition and low-cost equipment?

Unique IPVM integrator survey results reveal key trends.

Response Breakdowns

We asked integrators:

"What is your average markup on access control equipment? Has this markup changed, for better or worse, in the past 3 years?"

Here is the breakdown of markups:

The average access markup our integrators offered was 34%.

A 'markup' is the percentage over cost (see Markups / Margins Tutorial):

  • Markup Percentage = (Price Sold - Price Paid) / Price Paid

A practical example, if the raw cost of installing access on a single door is ~$1000, adding a ~30% markup results in a sell price of ~$1300.

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Most resellers and integrators closely manage this percentage because profits are generally taken from job markups.

Getting Thinner

A majority of integrators reported their access markups are trending downward over the last three years. Here are representative comments:

  • "Average is declining sharply, used to be 50% or more now some even only 15%. Less than that we won't accept the job."
  • "Average markup was about 35%. Markup has been going down because of increased competition. There are a lot of electricals and other companies that have and continue to try their hand in the market and they have existing relationships with a lot of people and businesses."
  • "25-35%, but it is going worse in past 3 years."
  • "35% is about the average. It hasn't changed much in many years, but is slipping recently."
  • "We are at 20% now. Three years ago (with a large company then) I had to go on an international phone call if the margin slipped below 27%... I remember my first days in the late 90's early 2000's in sales with a large security company where the starting point in the system was 58%."
  • "20% - reduced in the last 3 years."
  • "25 to 30%; markup has gone down due to have to compete with cable companies"
  • "It has generally been declining as some locksmiths have been offering online cheap options for single door control."

Adjustments are Common

However, several responses noted they vary markups by job, adjusting goals based on the total amount of work. In general, bigger jobs result in lower markup expectations:

  • "Markup varies depending on the job. This practice has remained unchanged for years. It has always fallen in the same range."
  • "Ranges greatly 15-25% margin is typical depending if it is a competitive bid or existing customer."
  • "In special cases for huge volumes we may lower it."
  • "Our average markup is 20-40% depending on volume by Client."

As such, some integrators reported significant markups, especially for niche or highly customized work:

  • "Our average markup on access control equipment is 75%."
  • "100% - 300% depending on competition."
  • "100%. If we buy for $1, we sell for $2."
  • "We have approximate 100% markup, but we sometimes change it to get maintenance contracts."

Compared to Video Surveillance

Many of the same pressures affecting access markups are valid for access control as well.  When we last polled integrators on average markups for cameras, the reported essentially a similar ~35% percentage:

More Competitors

We expect to see prices continue to drop for access in the years ahead, as many integrators adjust profit expectations in a market segment facing growing competition:

  • "Markups are down in 3 years. [Now there are] More options , More competitors , More companies in a saturated market."
  • "Due to competition / internet on-line prices availability for end-users this markup declined."
  • "Markup has gone down due to have to compete with cable companies"
  • "It has been pushed lower by networking companies trying to get into security." 

 

1 report cite this report:

Access Control Markups 2016 on Nov 09, 2016
  Access control markups have remained solid, according to new IPVM...
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