News reports throughout 2025 raised concerns about large price increases for the software and equipment that fire departments and emergency professionals in the United States need. The New York Times (NYT) reported late last year about the sharp price increases for the software packages that departments require for tracking incidents and managing their work.
The market for emergency services software – like many sectors that serve fire departments – underwent significant consolidation in recent years as private equity investors acquired smaller firms that developed popular solutions. Some of those developers were former firefighters who intentionally tried to keep prices for their products affordable.
After reading the preceding paragraphs, it is easy to draw a simplistic conclusion: that price increases are a byproduct of greed in a concentrated market. But in this newsletter, my colleague John P. and I draw a different conclusion and suggest alternative pricing approaches that neither attack nor diminish the profit motive of suppliers.
These approaches rest on two premises. First, many of the suppliers have moved into a new pricing game, but have not yet adjusted their pricing approaches accordingly. Second, as our extensive research has revealed, the fairest price – not the highest price – is what optimizes a firm’s profits. The approaches we suggest are not only financially advantageous for vendors, but also pose less risk to public safety and to the reputations of the private equity firms and their companies.
The starting point: affordability
Many fire departments, especially volunteer ones, face price increases for a wide range of tools. Here is a sample of price increases reported throughout 2025:
- Software: The NYT story late last year said that one department would see its price for incident tracking software rise from $795 per year to more than $5,000 after the supplier shut down the version the department used. Another department said that replacing a package called Emergency Reporting alone would triple its costs to $12,000 a year, though the new package has more capabilities.
- Fire trucks: The price for a ladder truck has risen from around $1.3 million to $2.3 million within the last few years at a time when manufacturers face supply and production bottlenecks, according to a report in February 2025. Firefighters testified before the US Congress in September about high prices and long wait times for delivery.
- Radios: The list price for radios has risen by around 50% over the last decade to as much as $12,000 per unit.
We will focus on software pricing in this newsletter, but we called attention to the other price increases to show that fire departments will need to make difficult tradeoffs as they allocate their limited resources to keep their departments going.
Alternative 1: Succeed in the Value Game
As industry leaders emerge and consolidate through M&A, the number of vendors comes declines. As new standards emerge, incumbents invest in fewer platforms. The net result is fewer choices for uniquely valuable solutions with fragmented customer bases. This is what we call the Value Game within the Pricing Hexagon.
However, we contend that the magnitude of the price increases would have turned out differently – and benefitted both the vendors and their customers – if the vendors had followed the approaches that make players of the Value Game successful.
We also believe that the market would benefit from a different perspective on the fairness of prices. The extensive global research by the BCG Henderson Institute (BHI) a couple of years ago led to several insights into how firms should share value profitably with customers and what premiums are optimal for them to charge.
Software vendors have an opportunity to meet their objectives of profitable growth without fire departments juggling uncomfortable tradeoffs that may make it harder for them to respond to emergencies.
Based on our own benchmarks in other software markets and in markets where leading firms play the Value Game, we see two missed opportunities. First, the vendors have room for improvement in how they explain the benefits of the new software so that departments understand the full spectrum of the benefits they receive. Our assessment, based on the available reports, is that the vendors could build a clearer case around the time savings or additional safety their software provides. They may have made the points, but the customers aren’t playing those messages back.
Second, vendors may have overshot on their price increases. Significant price increases are common in high-margin industries like software and data when firms reset historically low prices, but these are typically reset in the range of 10%-25% for market leaders and up to 50% in exceptional cases. Tripling a subscription price is unusual.
When players of the Value Game overshoot on price increases, they introduce several risks as customers and competitors find ways to respond:
- Customers turn away: If a firm extracts all the value it can, customers will avoid it anywhere else where they have a choice
- Customers unite: They band together to create more leverage on their side and find ways to replace firms on the margin
- Customers start gaming the system: Think of the sharing of licenses across shifts or people on a shift
- Disruptors emerge: Full extraction of value invites disruptors, such as AI startups, to attack the firm’s profit pools
- Governments intervene: Government regulations were one reason firms in these sectors began playing the Value Game, so when officials hear complaints, they may decide to intervene
Alternative 2: Stay in the Choice Game
One consequence of playing the Value Game is that vendors will need to accept losing some smaller customers with lower willingness or ability to pay unless they can define fenced programs for them. In the short term, losing those kinds of customers is usually more profitable and likely more attractive to investors with short-term horizons.
The alternative to the Value Game is the Choice Game. When a vendor plays the Choice Game, they help their customers self-select from a well-structured lineup of offerings and often use insights from behavioral economics to guide customers to the right choices. How prices compare to each other within the lineup matters far more than the individual prices themselves.
In this sector, players in the Choice Game would create new fenced choices to serve customers like the volunteer fire departments. That may be less profitable in the short term, but in long-term, the retention and fairness perception pay off, especially if there is a roadmap to upsell other solutions from the base platform.
The fairest price – not the highest price – optimizes profits
Fairness in the case of software for firefighters comes down to value sharing. What is the most equitable way for a vendor to share value with customers? We often phrase this with the provocative question: how much money should you leave on the table?
BHI’s global research into B2C transactions showed that the margin‐optimizing share of the seller’s value is around 50%, but it varies under certain conditions and is more around 30% in B2B. It goes down even further to 10% for the seller and below when the solution loses its uniqueness because of competition.
What’s next for the software vendors?
We can boil our suggested next steps down to three simple sentences. 1) Play the Value Game better. 2) Adjust prices with fairness in mind, because fair prices are the most profitable. 3) Play the long game.
The need for fire departments to manage their equipment, personnel, activities, and responses will never go away and may even become more acute. There are opportunities to build longer term relationships, leverage field intelligence to optimize versions for different segments, and keep society safer.
Original article can be found here.