Q: My question is about recurring revenue. Can you tell me, based on a percentage of revenue, what the typical NSCA member earns in maintenance contracts, service agreements, etc. that they consider recurring?
A: Yes, we can. This number always disappoints me as it hasn’t grown even with sales revenues decreasing. Sadly, this tough economy has been rough on keeping service contracts intact. The numbers reported are 7.5% in service contracts, 3% in planned maintenance (basically the same thing) and 1.5% in monitoring fees (not including the companies that have central station monitoring). So, altogether, the average company would show about 12% of its annual revenue in fixed rate contracts. However, more and more I hear of block labor sales. I’m a huge fan of this as it’s the next best thing to a service contract. Let me know if you want more info on the sales strategy for this type of business. –CW