General Pest vs A La Carte Services

We recently acquired our first pest control company in Colorado Springs, CO and it was messy. They were a very small mom and pop shops that had 3 technicians. Two of these technicians were great friends with the sellers and they all went to church together. As soon as we closed, they quit. The only technician that did stay on was not only bad at pest control, he was a miserable, terrible person who tried to start his own pest control and steal our newly acquired customers while he was on the clock. He has since been fired for obvious reasons.

Why tell this story? Well, right before we fired him we had a good conversation. Although he was not a great technician, he had worked for a lot of different companies and could see the difference in a good company and a bad one. He said something really interesting. “Anybody can show up and do a quarterly service and spray the outside of a house. It takes skill to solve actual issues like bed bugs and german roaches.”

That’s the truth. The company we bought was not a good company. They used old equipment and sprayed Bifen year round. When we took over one of the technicians disclosed that they had been servicing a restaurant weekly for free for the last 6 months because they couldn’t get the german roaches to go away. It took us two weeks.

I am not convinced they ever solved a bed bug issue, german roaches, or even ants.

So, how do good companies do it and how is someone in pest control supposed to make money?

All services can be profitable if priced and serviced correctly. This is easier said than done. Too many sales reps will sell any service at any price just to make their commission. Too many technicians or solo operators don’t charge enough for this services. It costs more to perform a service than a couple ounces of Demand CS. These pricing problems are magnified when the solo operator hires his first employee and realizes the $75 quarterly service isn’t profitable anymore.

Residential pest control is where the money is at. Quick, easy quarterly services are our bread and butter. We train our customer from the beginning that we only need to treat the interior if they are seeing bugs inside. A majority of the time we service the exterior of the home and head to the next. Unfortunately, this formula doesn’t work quite as well in commercial work.

For apartments, restaurants, warehouses, and office buildings, it’s usually a race to the bottom for recurring monthly, bimonthly, or quarterly services. the lowest bid wins and it doesn’t even always make money. So why offer commercial work at all?

There are benefits like keeping techs busy year round, the opportunity to offer a discount to employees on their personal homes, simply having your trucks out in public as mobile billboards, etc. However, the real money is in those a la carte services.

You might service an apartment complex for general pest once a month and make afew bucks but any good company will exclude bed bugs, german roaches, termites, and wildlife in their service contracts. When these problems arise, and they will, those are the big ticket, higher profit margin jobs.

Luckily, there is always opportunity to win these accounts. The lowest price wins the bid. That doesn’t mean the lowest bidder will do a good job. Apartment complexes will keep calling new companies until they find one that charges a reasonable rate and can actually solve the issue.

We get calls all the time from restaurants that are fed up with their last company that can’t get the roaches under control and they are happy to pay us whatever necessary to fix it. In this case, we have a hefty fee for the initial german services then offer a more reasonably priced recurring plan to continue to treat and monitor.

I guess what I’m saying is this. Not all services have the same margins. I’ll list all the services we provide in terms of greatest margin to lowest margin:

1. Bed bugs

2. One time general pest

3. Wildlife trapping (skunks, raccoons, etc)

4. German Roaches

5. Mice

6. General pest residential

7. General pest commercial

I would love to add termites to our arsenal. If you have a QS in WDO in Colorado I would love to chat! I believe they are also a great high margin service. Just something we aren’t licensed for.

How to price services

Find a home on Zillow that’s for sale. Call all the companies in your area and ask them to quote it for whatever services you want pricing on. Tell them that you are closing on the house soon but don’t own it yet. That will force them to quote over the phone rather then sending out.

You can also call in as a “property manager” and do the same things for any service you want to find the market rate for. Then you have to decide if you want to price higher, lower, at right in the middle of you competition. More on pricing and branding angles coming in a future newsletter.

To sum it up, is pest control profitable? It can be.

News in the industry: Termite Control Webinar Oct. 4th