Reviewed against SDM Magazine annual industry survey (RMR multiple, attrition, and gross-margin benchmarks)

Alarm Monitoring MRR & Portfolio Valuation Calculator

Compute a monitored-alarm portfolio's account-level economics — monthly gross profit per account, implied gross margin on RMR, average account life from annual churn, lifetime value per account, LTV-to-CAC ratio, and new-account payback months — and surface the industry-standard 35×, 50×, and 60× RMR portfolio valuation triplet (SDM Magazine annual survey, Barnes Associates, Davis M&A Group benchmarks). Tool, not advice — for a binding portfolio valuation or sale, engage Barnes Associates, Davis M&A Group, or another alarm-industry specialty advisor.

Calculator

Adjust the inputs below; the result updates instantly.

Portfolio

Monitored accounts

Average monthly RMR per account ($)

Annual portfolio churn / attrition rate (%)

Acquisition

Customer acquisition cost per account ($)

Cost

Monitoring center cost per account per month ($)

Portfolio valuation at 50× RMR (industry midpoint)

11,250,000.00

Total portfolio monthly RMR: $225,000.00
Total portfolio annual RMR: $2,700,000.00
Portfolio valuation at 35× RMR (low end of typical band): $7,875,000.00
Portfolio valuation at 60× RMR (commercial / fire / managed-access top end): $13,500,000.00
Monthly gross profit per account: $41.00
Implied gross margin on RMR: 91.1%
Average account life (months): 114.4
Lifetime value per account: $4,690.00
LTV-to-CAC ratio (× CAC): 3.91
New-account payback (months): 29.3
Summary: Portfolio: 5,000 accounts at $45.00 average RMR per account = $225,000 monthly RMR ($2,700,000 annualized). Account-level economics: $41.00 monthly gross profit per account at 91.1% implied gross margin; average account life of 114 months (9.5 years) at 10.0% annual attrition; LTV per account $4,690. LTV-to-CAC ratio: 3.91× at $1,200 CAC (industry benchmark is 3-5× for sustainable channel economics; below 3× the portfolio reinvestment math compounds slowly). New-account payback: 29.3 months at the gross-profit rate. Portfolio valuation at industry-standard RMR multiples — SDM / Barnes / Davis 2024 benchmarks: $7,875,000 at 35× (low end of typical residential band); $11,250,000 at 50× (industry midpoint for a mixed portfolio); $13,500,000 at 60× (top of commercial / fire / managed-access band). Total portfolio LTV at observed cash economics: $23,451,055. Multiple-of-RMR is NOT a disguised profit multiple — it is a portfolio-value convention that bakes in expected churn, gross margin, contract structure, and buyer reinvestment economics. A 35× multiple at the industry-typical 70% gross margin corresponds roughly to a 4.5-year cash payback for the acquirer; 50× corresponds to roughly 6.5 years. This is a portfolio-economics model, not a substitute for a binding valuation. For a sale or acquisition, engage Barnes Associates, Davis M&A Group, or another alarm-industry specialty advisor; for tax treatment of a transaction under 26 USC § 197 (goodwill amortization), Section 1060 (asset allocation), and depreciation recapture rules on installed equipment, consult a CPA familiar with alarm-industry asset structure.

Tools to go with this

Buying, selling, or refinancing a monitored-alarm portfolio? Pin down the RMR-multiple basis before the LOI.

Fennec Press's alarm-portfolio bundle includes the SDM / Barnes / Davis multiple-of-RMR valuation worksheet, the residential-versus-commercial portfolio segmentation model, the attrition waterfall by account vintage, the monitoring-center cost build-up for in-house versus wholesale (Rapid Response, COPS, AvantGuard, Stages, Affiliated, NMC), the broker-channel acquisition-multiple comparison, the LTV-to-CAC channel rollup, the POTS-phaseout migration cost model under FCC Part 68, and the IRC § 197 goodwill amortization and Section 1060 asset-allocation transaction-tax worksheets.

Open Fennec Press alarm-portfolio bundle→

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Published by

The Fennec Lab Editorial Team

Statute-cited · Unit-tested

Reviewed against: SDM Magazine annual industry survey (RMR multiple, attrition, and gross-margin benchmarks); Barnes Associates alarm-industry M&A research and published transaction multiple bands; Davis Mergers & Acquisitions Group transaction databases; Security Industry Association (SIA) and Electronic Security Association (ESA) industry surveys; Underwriters Laboratories standards UL 827 (Central-Station Alarm Services), UL 1610 (Central-Station Burglar-Alarm Units), UL 1981 (Central-Station Automation Software); FCC Part 68 (telecommunications wiring rules underlying the 2022-2025 POTS phaseout migration to cellular and IP signaling); 26 USC § 197 (goodwill amortization framework for alarm-industry transactions); IRC Section 1060 (asset-allocation framework for asset-sale alarm transactions)

Last reviewed: 2026-05-17

How this calculator works

This calculator models a monitored-alarm portfolio's account-level economics and surfaces the industry-standard 35×, 50×, and 60× RMR portfolio valuation triplet. Inputs: number of monitored accounts, average monthly RMR per account, annual portfolio churn / attrition rate, customer acquisition cost per new account, and monitoring center cost per account per month. Outputs: total portfolio monthly RMR and annualized revenue, monthly gross profit per account, implied gross margin on RMR, average account life in months, lifetime value per account and total portfolio LTV, LTV-to-CAC ratio, new-account payback months, and the 35×, 50×, 60× RMR valuation reference.

The calculator anchors the output against the dominant alarm-industry M&A benchmarks — the SDM Magazine annual industry survey, Barnes Associates published transaction multiples, and Davis Mergers & Acquisitions Group's multi-decade transaction databases — so the operator can sanity-check portfolio economics against typical residential, commercial, and managed-access bands. The output is a portfolio model, not a substitute for a binding valuation by an alarm-industry specialty advisor.

The framework — multiple of RMR

Multiple-of-RMR is the dominant alarm-industry valuation convention because the monitored-account portfolio is the durable economic asset. Equipment depreciates, sales staff is variable, but the contracted recurring revenue stream is the cash-flow generator. The SDM, Barnes, and Davis surveys publish a 35-60× RMR range across portfolio segments. The choice within the range reflects gross margin on RMR, churn rate, contract structure, portfolio quality, and the acquirer's reinvestment economics.

Typical bands:

Residential portfolios trade at 25-38× RMR. Higher churn (8-15% annual), shorter accounts, and broader competitive substitutability push the multiple down.
Light commercial trades at 32-45× RMR. Lower churn (4-8% annual), longer accounts, and stickier customer relationships push the multiple up.
Commercial / wholesale / managed access trades at 40-60× RMR. Low churn (2-5% annual on commercial fire and managed access), long accounts, and difficult-to-substitute services push the multiple toward the top.
Industry-wide midpoint sits at roughly 35-50× RMR for a typical mix.

The multiple is not a disguised profit multiple. A 35× multiple at industry-typical 70% gross margin on RMR corresponds roughly to a 4.5-year cash payback period for the acquirer; a 50× multiple at the same margin is roughly a 6.5-year payback; a 60× multiple is roughly an 8-year payback. The acquirer's reinvestment economics — central station consolidation, billing system consolidation, dispatch and back-office cost reduction — produce a post-acquisition gross-margin uplift that justifies the headline multiple.

Account life from annual churn

Annual churn rates compound geometrically across the year. The conversion to monthly attrition:

monthly attrition = 1 minus (1 minus annual churn) raised to the power 1 divided by 12

At a 10% annual rate, monthly attrition is 1 minus 0.9 raised to the (1/12) power = 0.00874 or about 0.874% per month. Average account life is approximately 1 divided by monthly attrition = 114 months or 9.5 years. The linear approximation (10% annual divided by 12 = 0.833% monthly, or 10-year life) is close but systematically overstates account life by about 5%.

Commercial portfolios at 5% annual churn have monthly attrition of 0.427% and average account life of 234 months or 19.5 years. High-value commercial fire portfolios at 2-3% annual churn have account lives of 33-50 years; the buyer math treats these as effectively-perpetual annuities and prices them at the top of the 50-60× band accordingly.

The dominant attrition drivers are move / sell-the-home (residential), account-takeover by a competitor (residential and commercial), equipment failure or end-of-life replacement decisions (all segments), and non-payment / disconnect-for-cause (residential primarily). Portfolio attrition by account vintage typically shows a higher first-12-month churn rate (sales-driven mismatches, buyer's remorse on subsidized installs) and a stable run-rate after 18-24 months; mature-portfolio attrition is the relevant figure for buyer underwriting.

Inputs explained

Monitored accounts. Each account is one premises under contract receiving central-station signaling. Bundled multi-premises accounts count as one account per premises receiving distinct signaling. Excludes inactive, suspended, or non-paying accounts pending disconnect.

Average monthly RMR per account. Customer-facing recurring monthly revenue. Includes monitoring fee, video monitoring add-ons, managed access fees, and any other recurring billing. Excludes one-time installation and service revenue. Typical residential $30-$60; light commercial $40-$120; commercial fire and managed access $80-$300.

Annual portfolio churn / attrition rate. Percentage of the portfolio that disconnects each year. Best computed as the trailing 12-month disconnect count divided by the trailing 12-month average account count. SDM and Barnes report 8-15% for typical residential; 4-8% for commercial; 2-5% for high-value commercial fire and managed access.

Customer acquisition cost. All-in cost to acquire one new account. Door-to-door subsidized $1,500-$3,500; broker-channel acquisitions effectively 18-28× RMR upfront; organic referral $400-$1,200; digital lead $800-$2,000. Excludes the capitalized equipment subsidy on installed accounts (typically tracked separately on the balance sheet).

Monitoring center cost per account per month. Direct cost of monitoring per account. Wholesale monitoring contract cost (Rapid Response, COPS Monitoring, AvantGuard, Stages, Affiliated, NMC) typically $1.50-$5.00 residential, $5.00-$25.00 commercial. In-house central station carries higher unit cost on small portfolios. Excludes corporate G&A, sales cost, and bad-debt reserve — those belong in the gross-margin-to-net bridge, not in monitoring center cost.

Industry benchmarks

SDM Magazine annual survey, Barnes Associates research, Davis M&A Group transaction databases, and Security Industry Association (SIA) / Electronic Security Association (ESA) industry surveys converge on the following typical figures:

RMR multiple. 35-60× across segments. 35× is the low end of residential; 50× is the industry midpoint; 60× is the commercial-fire / managed-access top end.
Gross margin on RMR. 65-80% industry-typical. 70% is the most commonly cited single value. Below 50% suggests monitoring-center cost is overstated or includes G&A that belongs elsewhere.
Annual attrition. 8-15% residential; 4-8% commercial; 2-5% commercial fire / managed access.
LTV-to-CAC. 3.0× is the standard sustainability threshold. Below 3.0× the operation cannot reinvest in acquisition fast enough to outpace attrition. Strong operations target 4-5× LTV-to-CAC blended across channels.
Payback months. Under 24 months is strong; 24-36 months is typical; above 36 months merits channel-economics examination.
Cellular communication migration cost. $200-$450 per account capital cost plus a small recurring cellular line fee, driven by the FCC Part 68 POTS phaseout.

What this calculator does NOT model

Portfolio vintage analysis. Account-life distribution by year of acquisition; the calculator uses a single-point churn input that should reflect the trailing 12-month portfolio-wide rate.
Cohort-level acquisition channel mix. Door-to-door, broker, organic, and digital channels typically have different attrition curves and different LTVs; the calculator handles a single blended channel.
Contract enforceability and renewal rate. Multi-year auto-renewal contracts trade at the top of the segment band; month-to-month at the bottom. The calculator does not surface contract structure as a separate input.
POTS-to-cellular migration capital event. The 2022-2025 phaseout under FCC Part 68 is a substantive capital event ($200-$450 per account); the calculator handles the steady-state run rate, not the migration capex.
Buy-side reinvestment economics. Post-acquisition central station consolidation, billing system consolidation, and dispatch / back-office cost reduction; the calculator computes seller-side cash economics, not buyer-side synergy.
Transaction tax structure. IRC Section 1060 asset allocation and 26 USC § 197 goodwill amortization on the buyer's tax return; the calculator does not compute the tax shield or the seller's depreciation recapture exposure.
Specialty segments. Pure video-only monitoring (the central-station-supervised segment, distinct from consumer self-monitored Ring / Nest), managed access control per door, and elevator-and-emergency-phone-only accounts may merit segment-specific modeling.

Sources

SDM Magazine annual industry survey. Dominant industry publication for the monitored-alarm sector; publisher of the annual survey that anchors the RMR multiple, attrition, and gross-margin benchmarks.
Barnes Associates. Largest alarm-industry M&A advisor; published research and transaction databases anchor the residential, commercial, and wholesale RMR multiple bands.
Davis Mergers & Acquisitions Group. Alarm-industry M&A advisor with multi-decade transaction history and published multiple bands.
Security Industry Association (SIA) and Electronic Security Association (ESA). Trade associations publishing complementary annual market-index and compensation surveys.
Underwriters Laboratories — UL 827, UL 1610, UL 1981. Certification standards for central-station construction (UL 827), mercantile burglar-alarm units (UL 1610), and central-station automation software (UL 1981) — the operating framework for monitored-alarm operations.
FCC Part 68. Telecommunications wiring rules; the 2022-2025 POTS phaseout is a major capital event for the industry as legacy POTS-signaled accounts migrate to cellular and IP-based central station communication paths.
26 USC § 197. 15-year goodwill amortization framework for Section 197 intangibles — the dominant tax structure for alarm-industry acquisitions of monitored-account portfolios.
IRC Section 1060. Asset-allocation framework for asset-sale alarm transactions.

Last reviewed: 2026-05-17 against the sources above. The SDM, Barnes, and Davis benchmark publications are refreshed annually; UL standards on the alarm-industry cycle as filed; FCC Part 68 POTS-phaseout guidance has been substantially completed as of the 2026 filing cycle.

Multiple-of-RMR is the dominant alarm-industry valuation convention because (1) the monitored-account portfolio is the durable economic asset — equipment is depreciated, sales staff are variable, but the contracted recurring revenue stream is the cash-flow generator; (2) churn is the dominant value driver, and churn is observable as a portfolio-level statistic rather than as an EBITDA component; (3) acquirers buy portfolios at scale and reinvest savings on the central-station, billing, and dispatch consolidation, so the post-acquisition EBITDA is meaningfully different from the seller's standalone EBITDA. The SDM, Barnes, and Davis surveys publish a 35-60× range across portfolio segments; the choice within the range reflects gross margin on RMR, churn rate, contract structure (multi-year auto-renewal versus month-to-month), portfolio quality (commercial fire commands the top of the range; residential month-to-month commands the bottom), and the acquirer's reinvestment economics. A 35× multiple at 70% gross margin corresponds roughly to a 4.5-year cash payback; 50× corresponds to roughly 6.5 years.

Annual churn rates compound geometrically across the year, not linearly. The conversion is monthly attrition = 1 − (1 − annual churn) ^ (1/12). At a 10% annual rate, monthly attrition is 1 − 0.9 ^ (1/12) = 0.00874 or 0.874% per month. Average account life is approximately 1 / monthly attrition = 114 months or 9.5 years. The linear approximation (10% annual ÷ 12 = 0.833% monthly, or 10-year life) is close but systematically overstates account life by ~5% at the residential band. Commercial portfolios at 5% annual churn have monthly attrition of 0.427% and average account life of 234 months or 19.5 years. High-value commercial fire portfolios at 2-3% annual churn have account lives of 33-50 years; the buyer math treats these as effectively-perpetual annuities and prices them at the top of the 50-60× band accordingly.

The 3.0× LTV-to-CAC threshold is the standard subscription-business benchmark above which channel economics support reinvestment-funded compounding growth; below 3.0× the operation cannot reinvest in acquisition fast enough to outpace attrition. In the alarm industry, 3.0× corresponds roughly to a 36-month payback at the typical 70-80% gross-margin band — within the duration the typical residential account spends in the portfolio at 8-10% attrition. Operations with LTV-to-CAC below 3.0× typically rely on broker-channel acquisitions (paying upfront at a multiple-of-RMR that effectively converts CAC into a portfolio asset on the balance sheet), or operate in a high-end commercial segment where individual-account LTV is high enough to absorb premium CAC. Multi-channel acquisition strategies typically target a blended 3-5× LTV-to-CAC with door-to-door and broker channels at the lower end and organic / referral at the higher end.

Wholesale monitoring (Rapid Response, COPS Monitoring, AvantGuard, Stages, Affiliated, NMC) is the dominant arrangement for sub-50,000-account portfolios; in-house central station construction only makes economic sense above the ~10,000-account scale where the unit-cost crossover sits. From a buyer's perspective, a portfolio on wholesale monitoring carries lower acquisition risk (the monitoring relationship is contractually portable) but lower upside (the buyer cannot consolidate the monitoring center into their own UL 827 facility). Portfolios on in-house monitoring at sub-scale carry higher acquisition risk (the central station may be UL-compliant but operationally fragile) and higher upside (consolidation into the buyer's existing facility eliminates the seller's monitoring-cost line). Buyer math typically pays a slight premium for wholesale-monitored portfolios at sub-10,000-account scale and pays a discount for sub-scale in-house operations.

The 2022-2025 Plain Old Telephone Service phaseout (FCC Part 68 framework) is a major capital event for the alarm industry. Legacy alarm systems signaled the central station over POTS lines; AT&T, Verizon, CenturyLink, and other ILECs have been progressively retiring copper infrastructure and migrating customers to fiber or fixed-wireless services that don't carry legacy alarm signaling. Operations have been retrofitting their portfolios with cellular communicators (AlarmNet, Honeywell Lyric, Telguard, DSC Alexor, Resideo) at a typical $200-$450 capital cost per account plus a small recurring cellular line fee. Sellers who completed the POTS-to-cellular migration command a premium at sale because the buyer doesn't inherit the capital event; sellers with substantial POTS exposure remaining at the LOI date typically take a discount or a holdback against the migration cost. The calculator does not model the POTS migration cost directly; portfolio condition due-diligence is a separate workstream on any binding transaction.

Alarm-portfolio acquisitions are typically structured as asset purchases under IRC Section 1060 with the bulk of the purchase price allocated to Section 197 intangible assets — customer contracts, customer-based intangibles, going-concern value, and goodwill. 26 USC § 197 requires straight-line amortization of these intangibles over 15 years. A 50× RMR portfolio acquired for $50 million amortizes at $3.33 million per year on the buyer's tax return for 15 years, providing a substantial tax shield against the acquired portfolio's gross profit. The seller's side recognizes capital gain on the goodwill component (taxed at long-term capital gains rates if the seller has held the business 1+ year) and ordinary income on the depreciation-recapture component on installed equipment. The Section 1060 asset-allocation negotiation between buyer and seller is a substantive transaction-tax workstream and should be modeled with a CPA familiar with the alarm-industry asset structure.

The calculator handles either as a single-segment input. Residential portfolios typically run $30-$60 RMR per account, 8-15% annual attrition, 65-75% gross margin on RMR, and trade at 25-38× RMR. Commercial portfolios run $50-$250 RMR per account, 4-8% attrition, 70-80% gross margin, and trade at 32-45× RMR. Commercial fire / video / managed access portfolios run $80-$300 RMR, 2-5% attrition, 75-85% gross margin, and trade at 40-60× RMR. Mixed portfolios should be modeled either as a weighted-average blended input on the calculator or as multiple separate runs with the segment totals summed. The 35×-50×-60× valuation triplet on the calculator output corresponds roughly to the low / midpoint / commercial-premium reference points across the industry mix.

Long-term auto-renewal contract structure (typical 36-60 month initial term with year-to-year auto-renewal afterward) materially increases the multiple a buyer will pay because (1) the contracted revenue stream is more defensible against competitive account-takeover; (2) the renewal economics are more predictable; (3) the lender financing the acquisition (typically a specialty alarm-industry lender like CapitalSource or a regional bank's specialty program) prices debt against the contracted stream. Month-to-month residential portfolios typically trade at the bottom of the residential 25-38× band; multi-year auto-renewal portfolios with strong enforceability trade at the top. The calculator does not model the contract-structure premium directly; the SDM and Barnes published multiple ranges reflect the contract-structure distribution in the market and the calculator's 35-50-60× triplet should be read as a typical-mix anchor, with portfolio-specific adjustments applied separately at the LOI / binding-bid stage.

New-account payback above 36 months at the gross-profit rate indicates one of three conditions. First, CAC is too high for the segment — typical of door-to-door subsidized sales without aggressive equipment-cost amortization, or of digital channels with poor lead-quality screening. Second, RMR is too low relative to channel cost — typical of low-end residential plans that price below the $30-35 floor at which residential economics work. Third, gross margin is depressed by underpriced monitoring-cost recovery — typical of dealers operating at retail-rate wholesale monitoring contracts without volume discounting. Payback above 36 months does not preclude profitable operation if the average account life exceeds the payback by a sufficient margin (residential 8-10% attrition produces 114-month account life, so a 36-month payback still produces a 3.2× LTV-to-CAC ratio at break-even gross profit); but the channel economics merit examination and the operation typically benefits from re-pricing CAC, RMR floor, or wholesale monitoring contract.

Yes — the inputs are segment-agnostic. A fire-only commercial portfolio typically runs $50-$200 RMR per account, 3-6% annual attrition, 75-85% gross margin (low monitoring-center cost relative to RMR), and trades at 40-55× RMR. Video monitoring (the central-station-supervised video segment, distinct from the consumer self-monitored Ring / Nest segment) runs $40-$150 RMR, 8-12% attrition, 60-75% gross margin (higher monitoring-center cost from video operator labor), and trades at 30-45× RMR. Managed access control (commercial-only) runs $25-$80 per door per month, 4-7% attrition, 65-80% gross margin, and trades at 35-50× RMR. The calculator's 35×-50×-60× triplet remains the standard anchoring grid across these sub-segments; specific portfolios should be benchmarked against the segment-relevant SDM / Barnes / Davis published bands.

Resources

Links marked sponsoredmay earn The Fennec Lab a commission. They do not affect the calculator's output. See disclosures.

SDM Magazine — Industry Surveys — SDM Magazine — the dominant industry publication for the monitored-alarm sector; publisher of the annual industry survey that anchors the RMR multiple, attrition, and gross-margin benchmarks cited in the calculator.
Barnes Associates — Alarm Industry M&A — Barnes Associates — the largest alarm-industry M&A advisor; published research and transaction databases anchor the residential, commercial, and wholesale RMR multiple bands.
Davis Mergers & Acquisitions Group — Davis M&A Group — alarm-industry M&A advisor with multi-decade transaction history and published multiple bands.
Electronic Security Association (ESA) — Electronic Security Association — trade association for the monitored-alarm industry; member resources include the ESA-NTS National Training School, the Alarm-Industry Communications Committee, and member-only benchmarking data.
Underwriters Laboratories — UL 827 / UL 1610 / UL 1981 — Underwriters Laboratories certification standards for central-station construction (UL 827), mercantile burglar-alarm units (UL 1610), and central-station automation software (UL 1981) — the operating framework for monitored-alarm operations.
IRS — Section 197 Intangibles (26 USC § 197) — IRS guide to the 15-year goodwill amortization framework under 26 USC § 197 — the dominant tax structure for alarm-industry acquisitions of monitored-account portfolios.
FCC — Public Notice on POTS Phaseout — FCC notices on the 2022-2025 Plain Old Telephone Service (POTS) phaseout — a major capital event for the alarm industry as legacy POTS-signaled accounts migrate to cellular and IP-based central station communication paths.