It’s the end of the week. All of your clients have paid you…
… but the numbers don’t add up. How come you’re not making REAL profit?
The answer is simple.
You aren’t charging enough.
This is a HUGE problem in the pest control industry.
Knowing how to properly price your pest control services can either make or break your business.
But here’s the good news: Once you know how to properly price your services, you’ll have enough profit left over to reinvest back into your business.
Here’s a step-by-step process to properly pricing your pest control services:
Step 1: Know Your Wages & Chemical Prices per Job
Tracking the amount of time it takes you to finish your jobs is really important, because you have to pay your team by the hour.
Plus, time tracking even more important if YOU’RE the guy in the field. You need to be sure you’re not taking too much (or too little) profit from your business.
In addition to knowing your payroll, you should also track time so that you can maximize your efficiency.
By maximizing your pest control business’ efficiency, you can make even more money working more jobs in the same amount of time.
Your clients will be thrilled when you finished your job on time (or even early!).
By knowing how long jobs will take, you’ll know how much you should be charging your clients.
Start tracking your time by using a stopwatch at every job. This way, you can get a baseline average for various types of jobs.
Even better, you can use a pest control software like Service Autopilot to track the time of your jobs.
It’ll tell you exactly how long each team is taking on their jobs and route. Plus, it even has GPS tracking.
Additionally, you also want to be sure you’re tracking your chemicals
Fun fact, a pest control software like Service Autopilot will easily do that online for you.
Step 2: Consider Your Operational Costs
It takes money to operate your business, and you should account for that in your pricing.
Your operational costs include things like:
- Drive time
- Equipment maintenance
- Costs of labor (even if you’re working alone, set yourself a salary)
Be sure you’re tracking all of these costs and create quarterly reports on these expenses. If you want to properly charge your clients, it’s important to know what you should charge.
And here’s a bonus tip: You can create your expense reports within Service Autopilot.
Step 3: Find Your Baseline
The ultimate goal is to make enough profit to grow your business, so that your business’ growth doesn’t stay at a standstill.
In order to grow your business, you need capital (aka the big bucks), and that means you need extra profit.
As a result, you need to charge your pest control clients enough to not only pay for your operational costs… but you also need to charge enough to actually grow your business.
You can do this by finding your baseline dollar amount. In other words, it’s the amount you need to make at each job to break-even.
Once you find out your baseline amount, you know how much you need to make per job in order to accept it.
To find this number, add your wages (don’t forget to add YOUR salary too!) and operational costs (aka overhead) to equal your baseline.
Here’s the formula:
Wages + Operational Costs (aka Overhead) = Baseline
And there you have it!
Now, you know how much you need to make at every job to break-even.
Step 4: Determine Your Profit Pt. 1 – Know Your Competitors/Market
Here’s the thing… you shouldn’t base your prices on your competition. But you also don’t want to stick your head in the clouds and ignore it either.
You should always be aware of what your local competition is charging. You don’t want to price yourself out of the market.
While you don’t want to base your prices on your competition, you should have an idea of what they charge. Consider what sets them apart – Is it their service?… Reputation?
Then, get to know the pest control clients in the area. This will help you find out the specific services they want, and what they’re willing to pay for those services.
Also, this gives you a good idea of what your profits should be.
Step 5: Determine Your Profit Pt. 2 – Reinvest in Your Business
Now, you know your wages, chemical prices per job, operational costs, and baseline.
Furthermore, you also know how much your competitors are charging and what your market is willing to pay.
After you’ve set a comfortable salary for you and your team, you can begin looking at reinvesting in your business. This is important, because it’s what allows you to grow your business.
When you properly price your services with enough profit, you’re providing yourself a cushion.
This cushion grows your pest control business by giving you the money you need to…
- Hire more of the best employees
- Buy new equipment and vehicles to handle more jobs
- Maintain the equipment and vehicles you have
- Accept more jobs and add more routes
- Provide raises and bonuses to you and your team
- Add new services with additional equipment and training
- Open new positions (for instance, an administrative assistant)
When pest control businesses properly price their services, these actions have been proven to grow thousands of businesses just like yours.
Step 6: Establish Your Final Price
You know your baseline price for breaking even, and you know how much profit you want to make.
Finally, all that’s left to do is establish your final price.
To do this, you’re simply going to add your baseline cost with your desired profit. As a result, you’ll get your final price.
Here’s the formula:
Baseline + Profit = Final Price
THIS is the new price you’re going to charge your clients.
Once you know what you’re going to charge them, it’s time to implement!
Step 7: Test!
Most of your competitors aren’t properly charging for their services.
Typically, they count their operational costs and add 5-10% based on “how they feel”.
This is how pest control businesses undercut themselves. In other words, they’re not charging as much as they could or should be.
If you’re only charging clients based on a “feeling” or a 5-10% profit, then you’re not charging enough!
By doing this, you’re not accounting for:
- Equipment maintenance
- Wear-and-tear on equipment
- New equipment
- Surprise emergencies (unexpected expenses)
- Potential hiccups during the job (it might take longer than planned)
- Business growth (you deserve more than just “scraping by”)
- Yearly raises for you and your team (if you have a team)
- Bonuses for you and your team (if you have a team)
Instead of losing money on unexpected costs, accounting for these things will allow you to grow your business.
Now that you’ve taken these factors into account, you can test your prices to see what works for you and your clients.
Most of your competitors aren’t testing their prices, which will give you a leg up ahead of your competition.
They’re too afraid to talk about prices with their clients, and they don’t track their data to discover where they can make more money.
Don’t be like them.
Test your prices. Look at the data. Get pricing feedback from your clients. Evaluate your prices on a monthly or quarterly basis. And keep value at the top of your priority list.
Pricing should be an integral part of your company culture.
You are what makes your pest control business truly unique.
When you own up to that, you can show your potential clients what makes you stand out from your competition.
Once your clients accept what makes your business unique, they’re way more willing to accept your properly priced services.
The key is to actually make sure you’re properly pricing your pest control services.
I promise that if you follow this advice, you can start growing your pest control business today.