Have you considered having a plan where you actually pay "per alarm"? It would be appealing and you can still make easy money. I have in mind $10 per alarm or so.
A thousand times yes! Allow free signup, and send me a $3 SMS when an alarm goes off, avoiding any need for credit card billing.
Another option would be to have a purely prepaid plan, where your account gets debited based on alarms/users per-period, and per-incident. I'm definitely going to use this service while it's free, but I don't think I'd pay $120/year for it unless I had a web startup.