How Do I Measure The ROI Of Security Cameras?
Running a business is tough. Every dollar spent needs to justify itself.
When it comes to security cameras, many business owners struggle to measure their ROI. But believe it or not, security cameras can be a wise investment with significant returns. Let's dive into how to measure the ROI of security cameras and why it's essential for your business.
How much does a commercial security camera system cost?
Every ROI conversation starts with understanding the costs behind it. In security cameras, there are typically four main costs to consider:
Hardware: Cameras, DVR/NVR, and other necessary hardware.
Software: Licenses to access camera feeds through proprietary software platforms.
Installation: Cost of hiring a reputable commercial security camera installer.
Maintenance: Ongoing costs for repairs & updates.
To give you a firmer idea, installing a 16-camera system will likely cost at least $8,000, if not significantly more.
What are the benefits of security cameras?
Security cameras come with a litany of benefits, many of which directly impact overall profitability. Here are a few examples to get you started:
Tax Deductible: Security cameras can be written off as a business expense, reducing your tax burden.
Prevent Denied Claims: Back up insurance claims with indisputable proof to reduce the likelihood they will be denied.
Lower Premiums: Installing security cameras can often lower your premiums — especially if the cameras are monitored by a 3rd party.
Deter Criminal Activity: In a recent UNC survey, ~43% of convicted burglars said they would move on from a potential target if security cameras were present.
Improved Productivity: While hard to measure, improved visibility makes it easier to identify areas to improve your business’s outputs. Here’s a case study from one of our partners.
Calculating ROI
Business owners are no strangers to calculating ROI, but just in case — here’s a step-by-step guide on how calculate ROI for security cameras:
Identify Costs: How much will it cost to properly install security cameras with the proper features to solve the problem you’ve identified?
Quantify 5-Year Benefits: How much has the current situation cost you over the last 12 months, and by what % do you think you could reduce those costs for the next 5 years (average lifespan of a security camera system)?
Compare Costs to Benefits: Compare the annual costs with the expected annual benefits to get an estimated ROI for your investment into a commercial security camera system.
Pro Tip: Don’t go it alone. Reputable security camera installers like Observa Technologies can help you with each step of this process, from estimating costs to quantifying benefits, while also providing quality installation services you can rely on.
Example: Reducing insurance claims at a car wash
Let’s say a car wash wants to reduce their losses from insurance claims.
Currently, they experience 2,000 customers per day, 5 of which them file a $300 insurance claim for damages.
Because the current security cameras don’t offer sufficient image quality to dispute those claims, the car wash ends up having to pay out on 4 of the 5 claims, costing them $1,200 per day and $438,000 per year.
Identify Costs: The car wash contacted a reliable security camera installer and received a quote for $30,000.
Quantify 5-Year Benefits: The car wash estimates the video footage from the new system will help them eliminate one $300 claim per day. In the course of a year, this means they’ll save $109,500 in claims, or $547,500
Calculate ROI: ($109,500 benefit - $30,000 investment) / $30,000 investment = 265% return on investment in Year 1, and 1,725% over the next 5 years.
Challenges and Considerations
Measuring ROI can be challenging. Here are some common issues and how to overcome them:
Rare Expenses: While rare, it’s critical not to disregard massive one-time losses such as lawsuits, injuries, fatalities, and large-scale theft, as these can cripple your business with a single stroke. Security cameras offer unique protection from these existential threats.
Intangible Benefits: Peace of mind, customer satisfaction, and other factors are hard to quantify but very valuable. Use customer feedback and employee surveys to understand the impact cameras might have. Experienced security camera professionals can also help.
Conclusion
Justifying ROI for security cameras can seem daunting, but it's crucial for making informed business decisions. By understanding the costs, quantifying the benefits, and using the right tools, you can ensure your investment is worthwhile.
BONUS: What’s the ROI for your business?
Want to learn more about measuring ROI for your security camera system? Observa Technologies is here to help. Contact us for a consultation and find out how we can assist you in optimizing your security investments.
Call us at (801) 901-0225, email info@observa.co, or book a call with us directly for a free quote. We’re excited to hear from you!
