Last week, we conducted a webinar in collaboration with Security Magazine to provide an in-depth analysis on Security Officer Data regarding Pay and Bill Rates. Presented by Jeff DiDomenico and Marc Bognar, the duo teamed up on how Pay impacts costs and how it impacts a client. Here are a few of our findings:
- The COVID-19 Outbreak Has Changed the Game
The security industry has definitely changed with the COVID-19 outbreak. While it’s important to understand the Pay Rates and Bill Rates over time, the whole market has been thrown into upheaval; some guard firms are seeing a boost in activity and others are forced to close their operations until this is over. It all depends on a security guard firm’s clients. Guard Firms that service school, churches, stadiums are seeing challenges in operations as almost all of these venues are now closed. In contrast, firms that service healthcare, supermarkets, or pharmacies, are beginning to charge premium rates to cover with more resources. While Marc and Jeff agree that when this is over the market will normalize, the challenges today loom over every business, including security.
- The Data Sampled Provided a Good Snapshot of the Industry
The webinar focused on physical security industry data from shifts held on December 2019. This timeframe provided a good baseline for analysis and combined both normal volumes as well as increased volumes to provide a nice snapshot of peaks and valleys. In doing so, our team analyzed roughly 200 guard firms across 500 divisions, managing 12,000 unique clients. From that group, we looked over 83,000 security officers working over 2 million shifts, enabling us to review and analyze the pay and bill rate data.
- We Proved That Pay Rates Are Fairly Consistent with Industry Benchmarks
In reviewing pay rates on a Bell Curve, we were able to show where the majority of companies place their pay scales. The median in the data set was $15/hour, which sits well in line with other industry benchmarks, such as BLS, salary.com and others. However, there is variability that a company needs to consider with respect to pay. Industry sectors, such as Cannabis, Technology, or Retail have differences in pay scales as does certain states or major metro areas. This also includes both Union and Non-Union rates, which creates variability.
- Bill Rates Are More Variability Due to Having Indirect Costs
Pay Rates are the first component of the equation security firms determine to bill a client. In truth, pay rates become the majority of a security firm’s expense, at about 67-75% of costs. Adding to that final bill rate is the more variable, Indirect costs. This includes items such as taxes and Workers Compensation, uniforms, equipment, vacation pay and PTO, as well as medical insurance and benefits.On average, bill rates are about 50-60% higher than pay rates. Remember, pay rates are but one component of the expenses that fall into the bill rate, so it doesn’t indicate a profit margin, only the markup. Security firms still need to look at indirect costs to determine the total expense.
Stay Tuned: More to Come on the Data
Jeff and Marc provided our viewers a different perspective on the concept of pay and bill rates. Our team was able to make a few assumptions based on the quantitative data we obtained from the industry. For one, Pay Rates, when compared to the market trends, are fairly consistent across the board. Variability begins when examining how companies bill clients. It is a truly variable exercise which takes into account not only the pay scales, but those indirect costs that security firms have to determine on their own. It will be interesting to see if these bill rates change over time.
If you missed the event, you could watch it OnDemand. The data gained from watching this webinar can serve as another point of reference within an overall larger analysis that companies need to complete to determine their own pay and bill rates. To do so will aid security firms in making better operational decisions, in building a competitive advantage, and in planning for business growth.