Pricing security contracts is one of the most consequential decisions you will make as a security company owner or operations director. Get it wrong in one direction and you win contracts you cannot deliver profitably. Get it wrong in the other and you lose bids to competitors who are cutting corners you would not cut.
This guide covers the main cost components you need to account for, the margin structures used by established UK security companies, and the common mistakes that erode profitability even on contracts that look healthy on paper.
Start with Your True Labour Cost
Labour is typically 65–75% of a security contract’s cost. Getting this number right is foundational; everything else is built on top of it.
Your true labour cost per hour is not your guard’s hourly pay rate. It includes:
- Basic pay. Use the appropriate rate for the role — door supervisor rates differ from static guarding rates.
- Employer National Insurance contributions. Currently 15% on earnings above the secondary threshold (increased from 13.8% in April 2025 Budget).
- Employer pension contributions. The minimum auto-enrolment contribution is 3% of qualifying earnings, but many contracts require higher.
- Holiday pay. UK workers are entitled to 5.6 weeks’ statutory leave per year. For hourly workers on variable hours, holiday pay is calculated at 12.07% of hours worked. This must be included in your cost model — it is not optional, and failing to account for it will erode your margin every year.
- Apprenticeship Levy. If your payroll exceeds £3 million per year, you pay 0.5% into the levy. Factor this in if applicable.
- Recruitment and onboarding costs. Vetting (BS 7858), SIA licence verification, uniform, training, and induction all have costs that are typically spread across a guard’s expected tenure.
- Sickness and absence cover. Budget for the cost of covering shifts when guards are absent. An industry rule of thumb is 8–12% on top of basic pay for cover provision.
Once you have a fully-loaded hourly cost per guard, you can build upward to a contract price.
Non-Labour Costs You Cannot Ignore
Beyond labour, a security contract has a range of costs that are easy to overlook when pricing competitively:
- Management overhead. Operations managers, schedulers, HR, and finance functions all need to be covered. Larger contracts absorb overhead more efficiently; smaller contracts may require a proportionally higher management loading.
- Technology and software. Your workforce management platform, incident reporting system, and compliance tools all have a cost. Per-guard pricing models (like TacDesk’s) make this straightforward to allocate: the cost per guard per month can be added directly to your per-guard cost base.
- Insurance. Public liability, employers’ liability, and professional indemnity all need to be factored in. Allocate them per guard-hour or as a percentage of contract value.
- Uniforms and equipment. Annualise the cost of uniforms, torches, radios, and other equipment over the expected contract term.
- Transport and travel. For mobile patrols or multi-site contracts, vehicle costs (fuel, maintenance, insurance, depreciation) must be included.
- Mobilisation costs. Setting up a new contract — inductions, site surveys, key handovers — has a cost that should either be charged directly or amortised across the contract term.
Understanding Margin in Security Contracts
The security industry operates on thin margins. A gross margin of 15–25% on a contract is typical for a well-run company. Net margins (after central overheads) of 5–10% are considered healthy.
When pricing, be clear about what you are targeting: gross margin (revenue minus direct costs) or net margin (revenue minus all costs including overhead allocation). Many companies mistake gross margin for profit and are surprised when the numbers don’t translate to the bottom line.
A useful formula:
Hourly charge rate = (fully-loaded hourly labour cost) ÷ (1 – target gross margin)
So if your fully-loaded hourly cost is £16.50 and you want a 20% gross margin: £16.50 ÷ 0.80 = £20.63 per hour.
Then add your non-labour cost allocation on top, and you have a floor price. Any bid below that number loses money.
Pricing for Different Contract Types
Not all security contracts are priced the same way. The main variables are:
- Static guarding vs mobile patrols. Mobile contracts require vehicle costs but typically carry a higher rate. Static contracts at single sites are simpler to manage and price.
- Permanent vs relief guards. Relief cover (filling in for absent guards) commands a premium — typically 15–25% above the standard rate — to reflect the unpredictability and higher coordination cost.
- Day shifts vs nights. Night rates typically attract a premium of 10–20%. Some clients try to negotiate a flat rate across all hours; be cautious about accepting this unless it is genuinely reflected in the blended average.
- Short-term vs long-term contracts. Shorter contracts require a higher mobilisation cost spread. Long-term contracts (2+ years) justify investment in the relationship and may support a slightly lower rate in exchange for volume and stability.
- SIA licence grade. Door supervisors command higher rates than CCTV operators or static guards. Make sure your pricing reflects the grade required for each position.
Common Pricing Mistakes
The most common mistakes in security contract pricing:
- Forgetting holiday pay. It is a statutory cost. If you price as though your guards don’t accrue holidays, you will pay for it later — literally.
- Underestimating absence cover. Every shift that needs covering costs you more than you budgeted. Build in the buffer.
- Not accounting for wage uplifts. National Living Wage increases every April — the National Living Wage rose to £12.21/hr from April 2025. If you sign a two-year contract at today’s rates and NLW rises again, that increase comes straight out of your margin unless the contract includes a provision for wage uplifts.
- Ignoring overhead creep. As your business grows, overhead costs grow with it. If your overhead allocation hasn’t been reviewed in the past year, it is probably out of date.
- Winning contracts you cannot staff. Pricing aggressively is pointless if you cannot recruit the guards to fulfil the contract. Factor in your current recruitment capacity before committing to new work.
Presenting Your Price to a Client
Clients who buy purely on price are rarely the best clients. The security companies that win and retain the best contracts are those that can articulate what they are paying for — not just quote a cheaper hourly rate.
When submitting a proposal, consider including:
- A breakdown of your compliance credentials (ACS accreditation, SIA licence management process)
- Your incident reporting capability and how clients receive visibility into what happens on their sites
- Your guard vetting process and what standard you screen to
- Your management response times and escalation process
- Evidence from comparable contracts (case studies, references)
A client who understands what differentiates your service is far less likely to churn when a competitor comes in 50p per hour cheaper.
The Role of Technology in Contract Profitability
One of the clearest improvements security companies can make to contract profitability is reducing the management overhead that eats into margin. Guard management software that handles scheduling, compliance tracking, incident reporting, and invoicing in one place cuts the administrative cost per guard significantly. Guard management software that handles scheduling, compliance tracking, incident reporting, and invoicing in one place cuts the administrative cost per guard significantly.
At TacDesk’s pricing of £1–2.50 per guard per month (with a lifetime price lock), the cost of the platform is a fraction of the management savings it generates. For a 150-guard company, that’s a maximum of £375 per month — less than the cost of two hours of a manager’s time per week.
If you would like to discuss how TacDesk supports contract pricing and profitability, get in touch with our team. You may also find our guide on how to win security contracts useful.