Let me just preface this article by pointing out the fact that Professional Grade Security Equipment is not inexpensive. Never has been, probably never will be.

It can cost a lot of money to properly secure a home or business. It is not at all unusual for homeowners to invest thousands of dollars in their Security Systems. So just how do companies afford to give them away? I can tell you how it happened in my little slice of the world.

Many years ago, some associates and I were on the forefront of a new and emerging business model in the Security Industry. We discovered that there were companies willing to pay really good money for alarm system monitoring contracts.

At that point in time, we were in the business of selling Security Alarm Systems to homeowners and small businesses. We were charging about $ 1,000.00 for equipment and installation for the average sized home.

Without giving away my age, we are speaking in 1990 dollars, so you might need to adjust for inflation to get the real picture. I will say it again, Security Systems are not cheap.

In addition to the cost of the installation, our customers were required to sign a 3-year contract for our alarm monitoring service. At that time, we were offering the monitoring service at $ 19.95 a month.

A now defunct company out of Texas approached us with a proposition. If we sent our monitored accounts to their central station and had our customers sign their 36-month monitoring contract, they were willing to pay us 30 times the monthly fee.

The proverbial light went off! We were in a highly competitive market in which about a dozen companies struggled for market share. All of our competitors were charging fees that were pretty close to the same, which made it difficult to gain a competitive advantage.

We reasoned that with our new found Texas connection, we could offer our basic Security System Package at $ 299.00 for installation and $ 24.95 a month for monitoring and still earn the same amount of money on each system. Affordable Security!

Suddenly we were 1/3 the price of our competition and of course being young, assertive and totally oblivious to the future, we immediately embarked on an aggressive new marketing strategy. Radio and television ads, mass marketing campaigns, bulk mailers, boiler rooms and door knockers replaced our phone book advertising.

We go from 6 or 7 installations a week to well over 40. The money was great and the closing ratio was phenomenal. Orders were rolling in as quickly as we could set appointments.

Our competitors catch on quickly and get their own Texas connection. They call us out and drop their price to $ 199.00; we fire back and drop ours to $ 99.00. The war is on.

We rent a display booth at the local Parade of Homes. A giant sign coaxes visitors to sign up for a drawing for a “free home security system”. Hard candy and cold water to close the deal and we received over a thousand entry forms in a little over a week.

Well let me tell you, that was one heck of a drawing. All the winner had to do to claim their prize was commit to a 3-year monitoring agreement at $ 29.95 per month.

Over the next few weeks, we discovered that we could give away a free “basic” security system to everyone who entered our drawing and still make money.

The rest as they say, Is History.