What is a security company worth?

Security companies are valued primarily on their recurring monthly revenue (RMR). Commercial monitoring portfolios trade at 30-42x monthly RMR. A company with $50,000/month in RMR would be valued at $1.5M-$2.1M for the monitoring portfolio alone. Higher multiples go to portfolios with high retention rates, commercial-heavy mix, and longer average contract terms.

What is the retention rate for commercial security contracts?

Commercial security contracts retain at 88-93% annually with an average lifetime of 7.2 years, both the highest of any building-services vertical. Retention is driven by multi-year contract terms, high switching costs (new system installation), and the risk aversion of removing security systems. Only 19% of cancellations are due to a competitor winning the account.

How much does it cost to create $1 of monthly RMR?

The creation cost per RMR dollar runs $1,200-$2,000 for commercial accounts in 2026. This means generating $1/month of new recurring revenue costs $1,200-$2,000 upfront (sales, installation, equipment). At 91% retention and 7.2-year average lifetime, the payback period is 14-24 months, after which each RMR dollar generates pure margin.

What percentage of revenue should come from RMR?

The industry target is 60%+ of total revenue from recurring monthly revenue (monitoring, managed services, cloud subscriptions). Companies with higher RMR percentages achieve higher valuations (30-42x monthly RMR vs 1.2-2.5x annual revenue), more predictable cash flow, and better acquisition multiples. The industry average is 40-65%.

Updated May 2026

Commercial Security Business Benchmarks 2026: Margins, RMR, and KPIs

2026 commercial security business benchmarks: 55-75% RMR margins, 91% retention, $780K avg firm revenue, and the KPIs every security business owner should track.

55-75%

↑ Monitoring revenue

RMR margin

91%

↑ Highest in building services

Annual retention

$680/mo

Avg RMR per account

$780,000

Avg revenue per firm

How does your business compare?

These benchmarks represent the middle 60% of commercial security businesses (20th to 80th percentile). If your numbers fall outside these ranges, it signals either a competitive advantage to leverage or an area to improve.

Profitability

Gross margin (RMR/monitoring)[1]

Recurring monitoring revenue. Highest-margin revenue stream in building services.

55-75%

Gross margin (installation)[1]

System installation projects. Often discounted to win monitoring contracts.

30-45%

Net profit margin[1]

Blended across installation and monitoring. RMR-heavy operators reach the upper end.

12-22%

RMR as % of total revenue[2]

Industry shifting toward higher RMR mix. Target 60%+ for maximum valuation.

40-65%

Central station cost per account[2]

Wholesale monitoring cost. The spread between this and retail pricing is pure margin.

$8-$15/mo

Sales and growth

Proposal close rate[3]

Commercial security proposals. Higher than most building services due to risk urgency.

30-40%

Customer acquisition cost[3]

Higher upfront cost offset by high contract lifetime value. Includes sales labor and system design.

$500-$1,500

Average RMR per new account[2]

New commercial accounts. Trend toward higher RMR as systems include more cameras and access control.

$500-$900/mo

Annual revenue growth (median)[1]

Fastest-growing building-services vertical. Driven by electronic security adoption.

12-18%

Takeover account rate[3]

New accounts won by taking over monitoring from a competitor. Lower install cost, same RMR.

15-20%

Retention and churn

Annual RMR retention rate[1]

Highest in building services. Driven by multi-year contracts and high switching costs.

88-93%

Average contract lifetime[2]

Longest of any building-services vertical. 3-5 year initial terms with auto-renewal.

7.2 years

Annual price escalator[2]

Standard annual RMR increase. Most contracts include automatic escalator clauses.

3-5%

Cancellation reason #1[3]

Followed by: price/budget (24%), competitor won bid (19%), system failure (15%).

Business closure (29%)

Valuation metrics

RMR valuation multiple[2]

Acquisition price for a security company's monitoring portfolio. Higher for commercial vs residential.

30-42x monthly RMR

Revenue multiple (total)[2]

For integrated security companies. Higher multiples for higher RMR mix.

1.2-2.5x annual revenue

Attrition-adjusted RMR value[2]

RMR multiple after adjusting for historical attrition rate. The real measure.

28-38x

Creation cost per RMR dollar[3]

Total cost to generate $1/month of new RMR (sales, installation, equipment). Key efficiency metric.

$1,200-$2,000

Methodology

Benchmark ranges are compiled from IBISWorld, SIA financial surveys, and SDM Magazine top-integrators data. Ranges represent the interquartile range (25th to 75th percentile) for commercial security integrators.

Valuation multiples reflect 2025 M&A transaction data for commercial security portfolios. Multiples vary significantly based on attrition rate, contract terms, geographic concentration, and customer mix.

RMR cost-to-create figures include fully loaded costs: sales labor, marketing, system design, equipment at cost, installation labor, and warranty reserve.

Sources

IBISWorld, Security Services in the US, Industry Report 56161, 2025 Accessed 2026-05-20.
Security Industry Association (SIA), Financial Benchmarking Report 2025 Accessed 2026-05-20.
SDM Magazine, Top Systems Integrators Report 2025 Accessed 2026-05-20.

Cite this report

SCAYLED (2026). Commercial Security Business Benchmarks 2026: Margins, RMR, and KPIs. Retrieved from https://scayled.com/data/commercial-security-business-benchmarks-2026

Free to quote with attribution. Creative Commons CC BY 4.0.

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Frequently asked questions

Commercial security monitoring (RMR) generates 55-75% gross margins, the highest of any building-services revenue stream. The cost structure is favorable: wholesale central station monitoring costs $8-$15/account/month, while retail pricing runs $150-$500+/month. The spread is gross profit. Net margins for RMR-focused firms run 12-22%.

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