At some point, every growing property or business asks the same question: should we hire our own security officers, or bring in a security company? The answer is rarely obvious, because the comparison most people start with, the hourly rate, leaves out most of what actually drives the cost.
An in-house officer paid $22 an hour does not cost $22 an hour. A contract officer billed at $40 an hour is not necessarily the more expensive option. The real difference shows up in coverage gaps, management time, liability, and flexibility, none of which appear on a rate sheet.
What Each Model Means
In-house security means the officers are your employees. You recruit, hire, train, schedule, supervise, and pay them directly, and you carry the employer responsibilities that come with that.
Contract security means you hire a licensed security company that supplies the officers. The company recruits, trains, schedules, pays, insures, and supervises them, and bills you a rate for the service.
There is also a hybrid approach, covered below, that combines the two.
The True Cost of In-House Security
The wage is only the starting point. Employing officers directly adds a layer of costs that is easy to underestimate.
Employer taxes and insurance. Payroll taxes and workers' compensation are unavoidable. Cost worksheets commonly used to compare security options estimate payroll taxes at around 12% of labor cost and workers' compensation at around 6%, though your actual figures depend on your state and claims history. Security work carries real injury risk, so workers' comp is often a significant line item.
Benefits and paid time off. Health coverage, vacation, sick days, and holiday pay all add to the cost per hour actually worked. A common rule of thumb is that employer costs add 25% to 40% on top of base wages.
Recruiting and training. Hiring, background screening, onboarding, uniforms, equipment, and ongoing training all cost money and time, and they repeat every time someone leaves.
Coverage math. This is the cost most people miss. A single post staffed 24 hours a day, 7 days a week, needs 168 hours of coverage. One full-time employee works around 40 hours. That is roughly 4.2 full-time employees to cover one post, before accounting for vacations, sick days, and turnover.
Management and administration. Someone has to build schedules, find replacements when an officer calls out, handle performance issues, and manage payroll. That time has a price, even when it is absorbed into someone's existing job.
Liability. As the employer, you carry the risk of employment claims, workplace injuries, and incidents involving your officers. For a business whose core work is something other than security, that is a distraction it may not want.
Regulation. In California, in-house officers are generally still subject to state registration requirements through the Bureau of Security and Investigative Services, so confirm what applies to your setup before hiring.
The True Cost of Contract Security
A contract security rate is built from three parts: the officer's pay rate, the company's overhead, and its profit margin. The overhead covers the things you would otherwise carry yourself, including payroll taxes, workers' compensation, general liability insurance, training, uniforms, supervision, and administration.
Because of that, the bill rate looks higher than a wage, but you are not paying separately for most of those costs. Industry sources generally find that contract services are more cost-effective than in-house programs once all employer costs are counted, particularly for smaller deployments.
Costs to watch on the contract side include:
The markup itself. Ask for a breakdown of how the rate is built, not only the final number.
Minimums and add-ons. Some contracts include minimum hours, setup fees, or charges for equipment and extra services.
Holiday and overtime billing. Rates often change on holidays and for extra hours.
Replacement coverage. Confirm the company covers absences at no extra charge.
Wages vary by market. Bureau of Labor Statistics data from 2023 put the mean hourly wage for security guards in California at roughly $21.61, with higher figures in major metro areas, so check current local rates when you budget.
Pros and Cons Side by Side
In-House Security
Advantages
Direct control over hiring, training, and day-to-day instructions
Officers who know the property and its people well
Loyalty and culture fit, especially with low turnover
Easy customization of duties
Drawbacks
Full employment cost, plus hidden costs such as turnover and administration
Difficulty covering absences and building 24/7 schedules
Management burden and liability sit with you
Harder to scale up quickly for events, construction phases, or seasonal peaks
Contract Security
Advantages
Coverage continuity, since the company supplies replacements
Flexibility to scale up or down as needs change
Trained, licensed officers and supervisory structure provided
Employment, insurance, and administrative burden handled by the provider
Access to specialized services your own team could not staff
Drawbacks
Less direct control over who is assigned to your site
Quality varies widely between providers
Officer turnover at some companies can undermine site familiarity
You pay a margin on top of costs
When In-House Makes Sense
In-house security tends to work best when:
You need a large, stable, permanent team on one site
The role requires deep knowledge of internal operations, such as sensitive facilities or complex campuses
You have the HR and management capacity to run it well
Your security needs are consistent year-round, with little variation
When Contract Security Makes Sense
Contract security usually fits when:
You need coverage quickly, or need to scale up and down
You want a defined, predictable monthly cost
You do not want to manage scheduling, hiring, and discipline
You need specialized coverage such as unarmed officers at a lobby, patrols, event staffing, or fire watch
Security is not your core business
The Hybrid Option
Many properties get the best of both by combining the two. A common setup is an in-house security manager or director who sets policy, owns the relationship with leadership, and supervises contracted officers. Another is in-house staff for the main lobby or core post, with contracted patrol services covering overnight hours, parking areas, and gaps.
This approach keeps institutional knowledge and control where they matter most, while using a provider for coverage depth and flexibility.
How to Get Good Results From a Contract Provider
The main concern with contract security is quality and control. You can address much of it up front:
Write clear post orders specific to your property
Ask for consistent officers on your site rather than a rotating cast
Require site-specific training before an officer starts
Set regular reviews, with reports you actually read
Agree on response times and escalation procedures
Check licensing and insurance before signing
A provider that welcomes these requirements is usually one worth hiring.
How to Decide
Run a simple cost comparison before choosing. For the in-house side, add up wages, taxes, workers' comp, benefits, recruiting, training, equipment, supervision, and replacement coverage for the full number of hours you need. For the contract side, ask for a detailed quote that shows the hourly rate and any minimums or add-ons. Then weigh the numbers against the non-financial factors: control, flexibility, risk, and how much management you are willing to take on.
For many small and mid-size properties, the contract model comes out ahead on both cost and convenience. For large, permanent operations with strong internal management, in-house can make sense. If you are unsure, a short-term contract or a hybrid arrangement lets you test the approach before committing.
Final Thoughts
The best model is the one that matches your property, your budget, and your tolerance for management work. Compare the full cost rather than the hourly rate, be honest about how much supervision you can provide, and make sure whichever route you choose comes with clear expectations and regular reporting.