This article provides an in-depth analysis of the average contract value for private security companies, offering clear insights for individuals starting their own security firm. It addresses the most common contract types, pricing models, and key factors influencing contract values, along with regional variations and industry trends.
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Private security contracts are crucial for businesses looking to safeguard their property, personnel, and assets. Understanding the most common types of contracts, their pricing models, and what drives contract values will help new entrepreneurs make informed decisions.
Below is a table summarizing key aspects of private security contracts, including common pricing models, average rates, and factors that influence contract values.
| Contract Type | Common Clients | Average Contract Value |
|---|---|---|
| Hourly | Event-based, small business | $2,000–$30,000 per event |
| Fixed-Term | Residential, commercial | $30,000–$500,000 per year |
| Retainer-Based | Government, large corporation | $500,000–$5,000,000+ per year |
| Per Guard/Per Hour | Commercial, government | $30–$70 per hour |
| Per Site/Per Month | Large corporation, multi-site clients | $6,000–$9,000 per guard/month |
| 24/7 Coverage | High-risk areas, VIP protection | $30,000+/month per guard |
| Technology-Enabled | Corporate, high-net-worth individuals | Variable, depending on tech integration |
What types of contracts are most common in the private security industry?
The private security industry commonly offers hourly, fixed-term, and retainer-based contracts.
Hourly contracts are often used for short-term events, such as weddings or conferences. Fixed-term contracts are preferred by residential and commercial clients for ongoing protection, while retainer-based agreements are most common among government agencies and large corporations seeking continuous security coverage.
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What is the average duration of a private security contract?
Contract durations vary depending on the type of client and service required.
For commercial and government clients, contracts typically last 1–3 years, ensuring continuity. Event-based contracts are short-term, ranging from several hours to a few days. Residential contracts often align with community or annual cycles.
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What is the typical pricing structure or rate model used by private security companies?
Security companies commonly use several pricing structures.
These include per guard per hour, per site per month, and blended pricing for larger clients. Per guard per hour is common for event-based contracts, while retainer or fixed monthly rates are often used for long-term contracts with corporate or governmental clients.
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What is the average hourly or monthly rate charged by private security firms?
Hourly and monthly rates depend on the type of security service provided.
Unarmed guards typically charge $30–$50 per hour, while armed guards charge $40–$70 per hour. Monthly rates for full-time coverage start at $6,000–$9,000 per guard for standard hours, and 24/7 coverage can exceed $30,000 per month per guard.
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How many guards or staff are typically included in a standard private security contract?
The number of guards depends on the client's needs.
Small businesses may only require 1–2 guards, while large corporations or government agencies may require 10 or more. Event contracts typically require fewer guards, based on the size and risk level of the event.
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What is the average total contract value by client segment?
Contract values vary widely based on the client segment.
Small businesses typically spend between $30,000–$80,000 per year, while large corporations may invest $200,000–$500,000 annually. Government agencies and multi-year contracts can exceed $5 million, depending on the scale of the security services required.
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What factors most influence contract value?
Several factors influence the value of security contracts.
- Number of personnel required for coverage
- Technology integration, such as surveillance or remote monitoring
- Risk level of the environment (e.g., high-net-worth individuals, high-crime areas)
- Geographic location of the client
- Duration of the contract (long-term contracts typically offer better rates)
What are the average margins or profit percentages for private security contracts?
Private security companies typically operate with a profit margin of 10–15%.
Firms operating in highly competitive or high-risk areas may experience lower margins. However, larger companies with long-term contracts or bundled services can achieve higher profitability.
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How do contract values vary by region or country?
Contract values can differ significantly by region.
In developed markets like the US or Western Europe, the cost of security services is typically higher due to labor, compliance, and insurance costs. Emerging markets may see rates 30–60% lower, though these markets face increased competition and regulatory constraints.
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What are the typical renewal or retention rates for private security contracts?
Security companies generally have a 70% renewal rate for contracts.
Long-term relationships are often maintained through flexibility and consistent service. This retention is especially important for large contracts and government clients.
What is the average upfront cost or deposit required when signing a private security contract?
The upfront cost for security contracts generally ranges between 10–20% of the total contract value.
This deposit is commonly required for new or event-driven contracts to ensure the company’s commitment and the client's serious interest in securing services.
What trends are currently shaping contract values in the private security industry?
Several trends are influencing contract values in the private security industry.
- Increased automation, including AI-powered surveillance and monitoring
- Stricter regulations on licensing and vetting
- Growing demand for armed guards in high-risk scenarios
- Corporate outsourcing of security services to reduce costs
- Bundled service offerings that combine physical guards with electronic surveillance
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.
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