And then it goes all the way up to a more advanced pack that actually includes a full system plus cameras, multiple sensors and everything else. So it’s got a wide offering range, and it’s starting at a very aggressive price point and offer at least in the DIY space is very unique. One of the reasons we’re excited about it is it presents the solution very much in a similar fashion and a very competitive fashion against some of the more traditional security vendors that are out there. And there’s roughly 20 million to 25 million households that have old traditional security at much higher monthly payments and here’s a solution that says, we can not only lower your monthly payment, but there’s no outlay for hardware. So the transition over is actually very easy for the end user.
So that’s the thought behind it. And it’s great. We’ve already got people signing up, which is great even though we just launched a couple of hours ago. And so we’re excited by that. We’ll see how it goes and then we’re hoping to lean in even further next year into that type of offering in the market.
Kurt Binder: Yes. And then Adam, in terms of its — the overall operating model and the financial profile, it’s actually very attractive for us. I mean, Matt, I think, talked about it in the last quarter that we’re offering 24/7 monitoring type service, but it gives us the ability in our overall portfolio of service plans to uplift our subscribers into a higher plan. And typically, that higher plan is almost 60%, greater than our overall blended average. So we see it as a — an operating model that is very healthy that allows us to expand ARPU and expand ARPU over time. The great thing is, right now, the total security solution we’re providing this through our direct-to-consumer channel. And therefore, our profitability is much higher.
Now we might experiment in getting into other channels with a similar type offering. But right now, it’s a very healthy, profitable channel for us, and we look to allow that to help us drive ARPU expansion over time, while we’re selling it through our direct-to-consumer channel.
Adam Tindle: Okay. Perfect. Just a quick clarification, Kurt. I just hear a lot of the financing component behind this. Could you just double quick on how you — when about looking to protect ARLO, is there a recourse to you for?
Kurt Binder: Great question, great question. And the answer is no. That’s what was so important about building this partnership with the firm. When we started working on this several months ago, we wanted to make sure that, first, the model would resonate with consumers and be over a nice 36-month period. But the great thing about this type of arrangement is we ARLO get paid upfront for the total package, and then they service and take the risk associated with the credit over that 36 months. So in our case, we have very little to no recourse around credit liability, and we get cash upfront, so it improves our overall free cash flow. What we want to focus on though is as we get to the 36-month term is what can we do to not only extend that contract with the customer, but also potentially get more services, more hardware bundled for the next phase of that relationship. So, all good in terms of balance sheet and credit risk standpoint.
Adam Tindle: Sounds great. Thank you, guys.
Matthew McRae: Sure. Thank you, Adam.
Operator: Your next question comes from the line of Hamed Khorsand with BWS Financial. Your line is open.
Hamed Khorsand: Hi. Could you elaborate on your holiday sales plans? Are you — specifically about inventory, are you over expressing on the essential side or it’s going to be low price point items? Or is it a balanced mix?
