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ONE PROBLEM, IN DETAIL

SECURITY SYSTEM: RMR IS A BALANCE-SHEET ASSET

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Recurring monthly revenue now comprises 38.5 percent of security industry revenue, up from 33 percent two years prior, and the M&A market prices the two revenue types on different planets: project-only installers trade around 4x to 5x EBITDA while recurring-mix operators clear 6x to 9x, and pure monitoring books transact at roughly 28x to 60x monthly RMR depending on attrition and contract quality.

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This page covers one problem. The other places this trade loses margin are on the security system operating system page.

BY JOSH LUEBKERPublished 2026-08-06Updated 2026-11-02
WHAT BREAKS

WHERE THE MONEY GOES.

RMR is a balance-sheet asset (the valuation math most integrators never calculate)

Recurring monthly revenue now comprises 38.5 percent of security industry revenue, up from 33 percent two years prior, and the M&A market prices the two revenue types on different planets: project-only installers trade around 4x to 5x EBITDA while recurring-mix operators clear 6x to 9x, and pure monitoring books transact at roughly 28x to 60x monthly RMR depending on attrition and contract quality. The published example: a $2M-EBITDA project shop clears $8M to $10M while the same EBITDA at 40-percent-plus RMR clears $14M to $18M. Every monitoring contract you sign adds enterprise value as well as revenue. Most owners have never priced the difference.

WHAT THE NUMBERS SAY

THE COST, SOURCED.

Sourced anchors

38.5 percent RMR share (Security Sales & Integration, 2026); multiple frameworks and the $2M-EBITDA contrast (security M&A market guides, 2026); attrition as "the dominant valuation lever."

WHAT THIS TRADE SHOULD EARN

THE NUMBER TO MEASURE IT AGAINST.

Security System contractors have about 6% net profit at $1M to $5M, rising to roughly 9% at $5M to $10M. The CFOS net profit target is 10% before taxes at $1M to $5M, the trade's average plus 3.5 points, never below 10%. You find a problem like this in the distance between those two figures. One bad job won't tell you.

Gross margin over the same bands is 22% to 24%,against CFOS targets of 25% and 26.5%.

Full security system benchmark bands by revenue

WHAT CONTROLS IT

THE SYSTEM THAT FIXES THIS.

Trade Benchmarking System

What this trade should earn at this revenue.

How the Trade Benchmarking System works

COMMON QUESTIONS

FREQUENTLY ASKED.

Because the market prices it as an asset. Monitoring books trade at roughly 28x to 60x monthly recurring revenue. Recurring-mix integrators sell for 6x to 9x EBITDA, and project-only shops for 4x to 5x. RMR now makes up 38.5 percent of industry revenue. Every monitoring contract you sign adds to what your company is worth, as long as the contract is profitable and the customer stays.

Licensing, certifications, monitoring platforms, central-station costs, 24/7 service obligations and fleet put overhead at 16 percent at the small end. That's above the 15.1 percent average across all 48 trades. The gross margin pays for it, but only when you apply recovery rates to both revenue types on purpose. If you recover overhead only on installs, the monitoring book pays for the building.

A bookkeeper records history. RMR-mix tracking, profit by contract, attrition reporting, divisional P&Ls and growth decisions made with valuation in mind are CFO work. SPM does that CFO work for security system contractors.

Three tiers, and which one you are in depends on how much of the work you want off your desk. On Core we build your plan every month and your team does the work: job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a monthly meeting that ends in decisions, while your bookkeeper keeps doing the books. On Strategic we build the plan, track it and adjust it every month: our team does the bookkeeping and the bank reconciliations, and the job costing and WIP software is set up and managed for you, on your own online software or ours. On Platinum we manage the money side for you every week: our team handles your bills and receivables the way an in-house controller would, and you approve every payment. We don't do payroll.

Sixty days. We migrate your books back to the start of your last taxable year and build your job costing structure from scratch, and on Strategic and Platinum we set up the job costing and WIP software too. You're fully up and working in two months. The onboarding fee is one time, the same for every tier, and set by your revenue band.
RELATED RESOURCES
Trade Service
CFO for Security System Contractors
Where the money goes in this trade, what we change first, and the price table.
WHAT THIS TIES INTO
THIS TRADE
CFO for Security System Contractors
CFOS SPINE
Run On CFOS, Full System IndexTrade Benchmarking System
DECIDE
Pricing by Revenue BandBook a 20 minute call
Josh Luebker, SPM The Construction CFO
Josh Luebker
FRACTIONAL CFO · SPM THE CONSTRUCTION CFO

Josh Luebker is a master electrician turned construction CFO, president of SPM The Construction CFO and author of CONTROL: C.F.O.S. Construction Financial Operating System.

About Josh  | LinkedIn

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