Special Report: Hosted Services- 10 Steps to Hosted Profits

Managed video services will have RMR falling from the clouds

5. Decide on Service. Will you offer hosting for all streamed video or are you streaming only event-based video? Both options are getting cheaper, although the former is obviously more costly than the latter. Typically, there is no question involved with the client having the bandwidth or connectivity — it’s all there. In most cases, event-based video will suffice. Buying “by the glass” is easier for the client’s budget and simple to sell; however, don’t run away from a client that requires continuous video.


6. Choose Vendor Partners. You will need a relationship with a third-party hosting provider. When choosing a vendor, ask all the typical questions one would ask any provider who is selling hosted accounting or billing services — check security, backup, SLAs. ASG, which has partnered with Axis and Secure-i, benefitted from their partners’ good advice: “There were no surprises,” Ryan said. “They held our hands really well and we didn’t have to re-invent the wheel.”


7. Educate your Team. As a leader, you must do the work of educating your team. “The worst thing your people can do is make it look like a traditional alarm sale,” Folsom said. One of the most critical steps is getting buy-in across all business segments, Lohse added, including from ownership/finance, sales/marketing and operations. “All three groups have a lot of work to do in order to write and execute a successful business plan for hosted video. If only one or two are on board it will be difficult to get moving,” Lohse said.


8. Set the Price. A security provider can easily charge $75 to $95 a month for an indoor-hosted, event-based offering and a system for an outdoor fence line might run $125 to $175 per month. An $88 RMR bill from the client may be typical for an indoor system. The figures break out like this: $48 for traditional security monitoring with radio backup; $40 for video verification. Of that $40, $10 to $15 goes to the central station as revenue.

Keep your offering simple. “Pick a single market segment to target, a single price point/service level to offer and only a few camera models to make up the initial offering,” Lohse advised. “You can always add to the model later.”

Ryan warned against under-commissioning hosted video services. “Don’t make hosted video second fiddle to your intrusion business,” he said. “Put it front and center.”


9. Shoot for the Clouds. No longer should your sales horizon be limited to a retailer with seven cameras and two shops. It is just as easy and quick to add a 1,000-camera client to your hosted video offering as it is to add a seven-camera client. Since service is in the network cloud, a dealer can turn up bandwidth and storage almost instantly.

Lohse said he finds customers make use of the hosted video system for operational purposes on a daily or even hourly basis and become addicted to having eyes and ears on all parts of their business no matter where they may be. “Business owners often find that employees act differently when the boss is standing over their shoulder than when he/she is nowhere to be found,” he said. This technology enables owners to be ‘over the shoulder’ from their phone/tablet all the time. Daily management purposes far outweigh the rare major forensic loss-prevention incidents they used their old DVR for; thus, the overall value of the system is higher.


10. Cash Those Monthly Checks! Typically, margins range from 60 to 70 percent and an average RMR of $20/month/channel with a 12 to 15 month creation multiple.

A typical four-camera install with equipment, labor and commission included may cost the service provider $2,000 out of pocket. If they charge $20/channel/month for the hosted service ($80 for four cameras) using a 12-month creation multiple, they invest $960. Charge the customer about $1,000 for the system up front and $80 monthly for the service on a minimum three-year agreement. Cha-ching!

Ryan compared his similar marketing model to the model that brought intrusion detection to the masses: semi-sponsored equipment, multi-year contracts and solid RMR. “Understand, that if you don’t get involved right now, you will be left behind,” Ryan said.



Curt Harler is a technology writer and regular contributor to SD&I magazine. Reach him at curt@curtharler.com.