Leasing Video SurveillanceBy Brian Rhodes, Published Apr 23, 2012, 08:00pm EDT
Many argue leasing is a great way to sell more systems. Customers buy a big ticket item for a modest monthly cost. Plus, sellers get to move products that customers might not otherwise afford.
But well how does this work in video surveillance? Do customers like to buy surveillance systems using leases? Do integrators sell many systems using leases? In this note, we examine integrator survey results examining how often and why customer use leases to purchase surveillance systems.
'10% or less' is the predominant response, selected by nearly 90% of respondents. We asked integrators to clarify their responses:
- "We have offered leases but customers are not interested."
- "We haven't received any inquiry like this nor we offer"
- "Customers don't seem interested in leasing."
- "I selected the first answer only because there was not a NEVER choice. We dont do leases"
- "we always have that option for the client, but most elect to purchase outright."
- "It's not a very popular way of buying security system in my area, because of the extra percentage that you have to include (interest rate) for a lease period. If you ask us, of course that we don't prefer leases, but never say, never."
- "Most of our customers seem to be "cash and carry" type of people."
- "Leases were generally only used for low-end systems. We sold small intrusion detection/CCTV systems semi-regularly on a lease. Owners of those types of facilities loved it because they didn't need the capital budget they normally would"
- "We do not offer leasing."
Small Systems Didn't Matter
Small systems may seem to be a natural fit for lease agreements, with smaller operations having less cash flow to buy a system outright. However, when we examined the responses for integrators typically installing 32 cameras or less, 87% of respondents answered '10% or less', making the point that smaller systems are not more commonly leased than larger systems.
- "Although we have had some limited inquiries throughout the years, it has been few and far between. And the customers we do encounter with leased systems have been universally unhappy with them."
- "We have proposed leasing and very few customers take it. It has been our experience that customers who want to lease usually have no money and don't qualify for credit from the leasing company. Those in good financial shape almost always know that the total cost of the system will be lower if they purchase it and they typically have the means to do so. This is especially true in our typical customer profile (SMB, 16 cameras or less)."
- "We have small projects mainly, 4 or 8 cameras so the global price is low, costumers rarely talk about a lease, and even if they do, its done with another company not us."
- "Never done one."
- "Our customers seem to be very prudent with their money and understand the added cost in leasing and would prefer to wait until they have sufficient funds to complete the project"
- The cost of leasing versus standard bank loans does not appear to be favorable for many customers:
- "Generally, private customers who have decent credit prefer to use bank lines vs leases, due to interest savings."
- "They can generally get money cheaper than they can lease"
- "We used to do lease systems, but the market seems very complicated and often didn't actually benefit the customer all that much."
- "Leasing is not popular in our market since financial outlay is not interesting them. High interest is probably affects the financial outlay."
Up Front Cost Not a Major Factor
Interestingly, the cost of most surveillance systems do not appear to be so costly that customers have difficulty buying surveillance with 'lump sum' purchasing. While certain 'major' equipment purchases may be leased, surveillance systems do not appear to typically fall into that category.
- "Generally our customers (mainly local government) find it easier to get funding for capital expenditure than for recurring costs."
- "most elect to purchase outright."
- "they want to own the equipment"
- "My customers pay me cash or 30 days which suits me fine."
- "Though our leasing program is competitive, many of our customers do their own financing"
- "We have not leased CCTV yet. Most customers have the cash."
- "Most customers in the Dallas area cringe at a lease price when compared to the $700 install."
Niche for Customers Used to Paying Monthly Fees
Finally, the few responses reflecting success extending lease terms made it clear that it while not commonly accepted, leasing made sense for customers already used to paying a monthly fee:
- "It´s 50/50, customers who uses all our security services are used to having a monthly fee for security."
- "Customers have been reticent to go with what they view as a "car" lease type configuration. That is changing and I would prefer a lease model so that we can also build in a service level contract with the customers."
- "We prefer leases and only market to customers who are open to or require leases."
- "In the past year we have been doing a lot more leasing. I foresee the percentage of customers that choose leasing to increase even more for us in the near future. Leasing is a good way for the customer to spread out their payments and hold onto their money as they pay off the job."
- "We are pushing this more often now. [Leases] are effective in allowing us to sell more expensive systems."
Response from PSA
In the video below, PSA Security discusses why they think these results are disappointing and why more integrators should offer leasing:
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