Too Good to Be True: How to Read a Security Quote Before You Sign It
There is a specific kind of quote that should make a property manager nervous, and it is not the expensive one. It is the one that arrives within an hour of the first phone call, undercuts every other bid by a third, includes a month of free coverage, and was produced by someone who has never set foot on the property.
That quote is not a bargain. It is a forecast of how the contract will actually go.
Start With the Part Nobody Tells You
South Dakota does not license security guards at the state level. There is no state board, no guard card, no mandated training hours, and no registry you can check. Regulation, where it exists at all, happens locally — Rapid City, for instance, runs its own municipal licensing process. For most of the state, including most of the work happening around Sioux Falls, the screening function that other states hand to a regulator does not exist.
Which means it falls to you. The person signing the contract is the entire vetting apparatus. Every question you decline to ask is a question nobody asks.
This is not an argument that unlicensed states produce bad security. Plenty of firms here hold themselves to standards well above what any state board would impose. But the floor is low, and a company that wants to operate under it faces no obstacle at all. The only thing standing between a property and a guard with no background check is a buyer who thought to ask.
The Rate Is Arithmetic, Not Generosity
When a security company quotes an hourly rate, that number has to cover a specific and non-optional stack of costs. Work backward from any quote and you can see what has been left out.
The guard's wage is the visible part, and it is the smaller part. On top of it sit the employer's share of payroll taxes, workers' compensation premiums — which for security work are not cheap — general liability insurance, unemployment insurance, vehicle cost and fuel for any mobile component, uniforms and equipment, dispatch and supervision, scheduling and payroll administration, and the cost of covering a shift when someone calls in sick at 9pm on a Saturday. Then, somewhere, margin.
A quoted rate that sits close to what a guard would earn per hour at a warehouse job is not a company being generous. It is a company that has removed something from that stack. Usually one of four things:
The guard is classified as a 1099 contractor. This is the most common shortcut in the industry and the one with the sharpest edge for you. It removes payroll taxes, workers' comp, and unemployment insurance in a single stroke. It also means that if that person is injured on your property, the workers' compensation system that would normally absorb the claim may not be in play — and the question of who is responsible becomes a conversation between your insurer and a lawyer. Ask directly whether officers are W-2 employees. It is a yes-or-no question and the hesitation before the answer is informative.
The insurance is thin or absent. A certificate of insurance is a document, not a claim. Ask for it, read the coverage limits, and confirm the policy is current rather than a screenshot from two renewals ago. If a guard damages property, injures someone, or fails to act during an incident, that policy is the thing standing between the event and your balance sheet.
Nobody is being screened. Background checks cost money and slow down hiring. In a state with no licensing requirement, skipping them is invisible until it is not. Ask what the screening process is, who runs it, and whether it is repeated periodically rather than once at hire.
There is no supervision layer. Guards without a supervisor are guards operating on the honor system at 3am. Ask who checks on the officer during a shift, how often, and what the record of that check looks like.
The Site-Unseen Quote
A firm price without a site visit means one of two things, and neither is good for you.
Either the company is guessing, in which case the number will change once they discover the second building, the gate that has to be manually secured, the loading dock that faces an alley, or the fact that the property's real problem occurs between 1am and 4am rather than during the hours they quoted. Contract prices that move upward after signature are not an accident. They are the business model.
Or the company genuinely does not think the site matters, which is worse. It means the service being sold is a body in a location for a number of hours, priced by the hour like a commodity, with no relationship to what is actually happening at that property. A patrol route that has not been designed around the property's geometry and its actual incident pattern is a vehicle driving in circles.
The walk-through is where a security proposal is actually built. It is where you find out that the lighting on the north side has been out for months, that the fence has a gap behind the dumpster enclosure, that the previous vendor's officers never went past the front lot. A company that skips it is telling you what kind of attention the account will receive after the contract is signed.
There is a reasonable middle ground worth naming: a rough range over the phone is fine and honest. “Properties like yours usually run between X and Y, and I will know more after I walk it” is a legitimate answer. A firm, signable number sight-unseen is not.
Freebies Are Priced Somewhere
Free months, free guard hours, free assessments, free equipment, waived setup fees. None of these are free. They are a discount structured to look like a gift, and the discount is recovered somewhere — usually in a longer contract term, an escalation clause you skim past, a cancellation penalty, or simply in the quality of the person who shows up at 2am.
This does not make every incentive sinister. A free initial assessment is a normal way to earn a first conversation, and any competent firm should be willing to walk your property and tell you what they see before you have paid anything. The distinction is between a company investing effort to win your business and a company buying the contract at a loss it intends to make back once you have stopped paying attention.
The test is simple: ask what the price is without the incentive, and what happens to the price at renewal. A company comfortable with its own pricing will answer plainly. A company that has structured the deal to be confusing will explain why the question does not apply.
When a Low Price Is Actually Legitimate
Fairness requires saying this clearly, because the opposite framing — that cheap always means bad — is its own kind of sales pitch.
A small owner-operated firm genuinely has lower overhead than a national company carrying regional management, a corporate marketing budget, and a franchise fee. A company already patrolling three properties on your block can add yours at a real marginal cost that is lower than a first-time route. A property that needs two visits a night rather than a posted guard should cost dramatically less, and a firm that tells you so is doing you a favor rather than losing a sale.
The difference between a legitimate low price and a warning sign is whether the company can explain the arithmetic. Low because the route is efficient is a reason. Low because “we just have better rates” is not an explanation, it is a deflection.
What to Actually Ask
Before signing anything, get answers to these. Written, where it matters.
Are your officers W-2 employees or 1099 contractors? If contractors, ask specifically what happens if one is injured on your property.
Can I see your certificate of insurance and workers' compensation coverage? Read the limits. Confirm the dates.
What is your background screening process, and how often is it repeated?
Who supervises the officer during a shift, and what does that record look like?
What happens when an officer calls off? Every company has no-shows. The ones worth hiring have an answer that does not involve your property going uncovered.
What reporting do I receive, how quickly, and what does it contain? A patrol you cannot verify is a patrol you are taking on faith.
What is the contract term, the escalation, and the cancellation provision? Ask before you are emotionally committed to the deal.
Will you walk the property before quoting? The answer to this one tells you most of what the other answers will be.
The Underlying Point
Security is one of the few services where the failure mode is invisible until the day it matters. A landscaping company that does poor work leaves evidence on the lawn. A security company that does poor work leaves a property that looks exactly like a property being protected properly — right up until the night it isn't.
That asymmetry is what makes the too-good-to-be-true quote so effective as a sales tool, and so expensive as a purchase. You will not discover the difference during the first month, or the sixth. You will discover it during an incident, which is the worst possible moment to learn what you actually bought.
Ask the questions early. Make somebody walk the property. And treat a number that arrives too fast and too low as what it is — information about the company, not a deal.
Red Obsidian Security is a veteran-owned security and locksmith firm serving Sioux Falls and the surrounding communities. We walk every property before we quote it. If you want a second opinion on a bid you have received, call (605) 223-8100 — we will tell you honestly if it is a good deal.