When I bought this company, some customers were paying less than $50 for a mosquito treatment. Today, some of those same customers are paying over $129. Here’s exactly how we rolled those price increases out without losing the business.
If you’ve been following this acquisition series, you already know the story. In Part 1, I showed you what happened after we bought the company and why every good employee ended up leaving. In Part 2, I showed you how we rebuilt the service by standardizing the program and putting every customer on the same schedule for the year.
But fixing the service is only half the battle. You have to fix the economics of the business. So today I’m going to show you exactly how we changed our pricing, how we rolled the increases out, and why it became one of the biggest drivers of growth in the entire turnaround.
I’m Jonas Olson, the founder of Pest Badger. I’ve been in the service industry for 17 years, and over the past five years we’ve grown Pest Badger from one location to 20 locations across multiple states. I use this blog to document how I think about building service businesses and what’s actually working for us. I wish my mentors had documented their journey, so I’m documenting mine for you.
Here’s the brutal truth. Underpricing doesn’t just cost you a little profit. It caps your entire business, and the cap shows up everywhere.
It all starts with low price. If you don’t charge enough, there just isn’t enough margin left over after every service. I’ve seen people charging $60, $70, $80 a quarter, and I’m sure you have too. If you’re not in the industry, trust me, that’s extremely low. Some of these operators just started and think they’ll win by being the cheapest in town. Some have been in the industry 30 or 40 years and simply never raised their prices.
Then comes the bad hire. Or is it really a bad hire? Or do you just not have enough money to pay a really good person? Rewind a little. If it’s just you out in a truck and you can pay yourself, sure, that’s fair. But the moment you make your first hire at $40 mosquito pricing, there’s no money left to pay that person well. I hear it all the time. "I tried hiring someone and it just didn’t work out. I’ve tried a bunch of times." They don’t have the margin to put someone on a pay-for-performance model where a great tech can make really good money. And when techs make really good money, they’re a lot less likely to leave.
Not enough money leads to bad service. In the video version of this I drew a little house with a sad face on the whiteboard, and honestly, that’s about right. Quality starts to slip because it’s not you doing the work anymore, it’s a technician you’re underpaying. Mistakes happen. Response times get slow. Nobody’s answering the phone because you can’t afford someone to answer it. The equipment gets old.
Look around your own market. The best companies are the ones charging the most money. They have the nicest trucks, the best technicians, marketing everywhere, happy customers, and happy employees. Set aside the billion-dollar conglomerates that can outspend everyone. Look at the strong local players. They’re charging the most, and they look the part.
And when service slips, customers leave, which means even less money coming in, and the whole cycle starts over.
The biggest mistake I see owners make is thinking they have a marketing problem or a technician problem, when the real problem is that they’re simply not charging enough. Raise your prices, and you’d be surprised how many problems start to naturally fix themselves.
The Only Two Numbers That Matter
There are only two numbers you have to get right. The initial, and the recurring.
The initial is where all the heavy lifting happens. You’re inspecting the home, finding where the activity is coming from, doing the first treatment, and getting the problem under control. It usually takes twice as long as a normal visit. Please do not discount it just to win the job. Price it based on the value you’re providing.
The recurring is different. The heavy lifting is done and the visit takes half the time. But the recurring is what builds the business. It’s the predictable revenue that lets you hire great people, invest in marketing, buy new trucks and equipment, and take real profit at the end of every year. And if you ever decide to sell your company one day, the recurring is what buyers are paying for. The recurring is where the relationship with the customer actually lives.
Price the initial for the work. Price the recurring for the relationship.
Our Actual Price Sheet
Here’s the part you probably came for.
- General pest control initial: $199 to $399
- General pest control recurring: $179 to $250
- Mosquito: $89 to $149 and up
Before anyone takes screenshots, two things. First, these aren’t flat rates. We price everything based on home square footage or lot size, because bigger homes take more time and bigger lots take more time and more product. What you’re seeing is our average pricing across our markets.
Second, don’t copy the numbers. Your labor costs are different. Your chemical costs are different. Your overhead is different. Copy the process instead. Every price starts with the cost to deliver the service. Then look at the value you’re creating for the customer. Then make sure there’s enough margin left over to build a great business, take real profit, and grow. Because if there’s no profit, there’s no room for marketing, and if there’s no room for marketing, there’s no growth.
The price sheet is honestly the easy part. Building a pricing model that holds up across different home sizes, lot sizes, labor costs, and markets is the hard part. If you need the full framework for setting prices from scratch, the COGS and overhead math, we broke that down in our pest control pricing guide.
"If I Raise My Prices, Won't Everyone Leave?"
This is the question I get every single time. And the short answer is no. Some people will leave, and that’s just part of business. But most won’t, if you’ve built a good company and you communicate the right way.
Here’s what we’ve always done. First, raise prices on new customers. They never knew your old prices, so there’s no comparison to anchor against. Then start raising prices on your existing base. And when you do, don’t apologize, and don’t make it sound like you’re asking permission. Explain what they’re getting. Maybe you’ve invested in better technicians. Maybe you upgraded your products. Maybe you’re offering faster response times. Whatever it is, explain the value confidently and tell them what the new rate is.
Every company loses a few customers when they raise prices. That’s normal. Do not let the fear of losing a few keep you from building a healthier business.
When to Raise Prices
Timing matters more than people think.
The very start of spring is the worst time, in my opinion, because it gives people the whole season to go find another provider. The off-season is bad for the same reason. The best window is the middle of the season, around the second, third, or fourth service. The customer is halfway through the year, they’re busy, and nobody is going to switch providers mid-season over an extra $5 or $10 or $20 a visit.
The Math That Makes It Obvious
Now let me show you why all of this works, using the company from this series. Some of those customers were paying as little as $50 per service. There is no way to build a great business at $50. So first we raised them to at least $89 per service. Later we raised them to $99. Today some of those same customers are paying $129.
Every time we raise prices, everyone asks the same question. What if everyone leaves? So let’s do the math on 100 customers.
- 100 customers at $50 is $5,000 per round.
- Raise to $89 and say 20 percent drop off. Now 80 customers at $89 is $7,120 per round. You’re making over $2,000 more with 20 fewer customers.
- Raise again to $99 and a few more leave. Now 72 customers at $99 is $7,128 per round. Almost 30 fewer customers than you started with, and you’re still making more per round.
- Take it to the next level. Raise to $129 and say 40 of the original customers are gone entirely. Now 60 customers at $129 is $7,740 per round. Still more money, with 40 fewer stops.
- Now backfill the gap. Bring in 40 new customers at the new $129 rate, and that’s another $5,160 per round. You’re back to the same 100 customers, and the total is $12,900 per round.
Same customer count you started with. Almost triple the revenue per round. And along the way, that’s less payroll, less fuel, less product, better service, and way higher profit. You have the money to pay your technicians properly on pay for performance, they make a lot more, and when they make a lot more, they stop leaving.
I’m not telling you to raise everyone’s prices overnight. I’m telling you not to be afraid to charge what your service is worth. If you have people who’ve been with you for years and haven’t seen an increase, it’s time to start raising those prices. And the customers who leave get replaced by people who are willing to pay more for your service.
Price Is Only the Conversation When You're Selling Price
I’ll leave you with one last thought.
If you’re always talking about being the cheapest in town, if you’re always leading with the initial discount, if you let customers price-match you against their last provider, then price is the only thing customers have to compare. You built the conversation that way.
Instead, sell them the dream. Sell them the outcome. You’re giving them a home they don’t have to think about. You’re protecting their most valuable asset. You’re protecting their family. You’re saving them from spending every weekend trying to solve the problem themselves. You’ve seen it a hundred times. The trip to the big box store for a can of Raid because there’s a wasp nest over the patio and a cookout coming up. The garden hose pointed at the eaves. The ant products stacked up in the garage.
Sell them the dream that they never have to solve those problems themselves again. When customers understand the value, price becomes a much smaller part of the conversation.
Dialing in pricing like this took me years of trial and error. The price sheet is one thing. The pricing model behind it is something completely different. Start with your costs, price the initial for the work and the recurring for the relationship, raise with confidence, and time it right.
This is Part 3 of the Mosquito Crush acquisition series. Part 1 covers what happened after the paperwork was signed. Part 2 tells the full Mosquito Crush story and the 90 days that uncovered $850K in recurring revenue.
