Most of you guys are good technicians. You know how to treat a home, service a yard, keep customers happy. The reason so many pest control companies are underpaid has nothing to do with skill. It’s because the pricing is wrong.
The average residential pest control customer across the United States pays $418 per year. And for a lot of companies, that number is quietly killing their business.
I’m Jonas Olson, founder of Pest Badger. I’ve been in the service industry for 17 years. Over the last five years, we’ve grown a pest control company from one location to 17 locations across five states. I use my channel to document how I think about building a service business and what actually worked for us.
Today I’m going to walk you through a simple three-step framework to price pest control so you know whether you’re profitable, breaking even, or slowly going out of business.
I travel around the country and talk to hundreds of pest control operators. This is where I see them get stuck. I ask how they figured out their pricing and the answer is almost always the same. “Well, I jumped online. I saw it on a Facebook forum. I copied my competition. I guessed.” Or they just charge what feels fair.
That can work somewhat when you’re a solo operator in a truck. But it immediately breaks the moment you try to hire your first technician, put someone else on payroll like a CSR, cover workman’s comp, insurance, payroll taxes, or just try to take a day off without the whole business blowing up.
So instead of guessing, we’re going to use a simple framework. Three steps. That’s it.
Step 1: Know Your Cost of Goods Sold (COGS)
Before we even talk dollars, step one actually starts with time. Pest control, fertilization, weed control… pricing is simply a time equation. You need to know how long it takes a technician (or yourself) to service an average size home or lawn, start to finish. That means drive time, setup time, treatment time, cleanup, notes and paperwork, and even talking to the customer.
I don’t care if you measure it by square footage of the house, square footage of the lawn, linear footage of the foundation, cracks in concrete, whatever. Just get the average service time per visit so you know how long it takes to service the job. For example, let’s say the average residential service takes 45 to 60 minutes. That’s your baseline. Now you can translate that time into cost.
For those of you using a CRM, it’s pretty simple. Go into the customer’s profile. Look at the last four to six times you serviced their jobs. Add up those times, then divide by four or six to get your average time on the job. That way you can say, “This job took me X amount of time, and it’s this many square feet.” Go into a few more properties that are similar. Do the same thing. Then get your total average time it takes to do a 3,000 square foot home, a 3,000 square foot home, a 10,000 square foot yard, a 3,000 square foot yard. Just measure it up and get the data.
For those of you that don’t have a CRM, you might have to go old school. Do the same thing. Go to a job from start to finish. (First thing you should probably do after that is get a CRM.) Take a stopwatch, start your phone, see how long it takes from start to finish on each square footage of job so you can get the average time it takes to do the service.
Once you know the time, you can calculate labor cost, vehicle cost, materials, and total service cost. That’s how you get the real cost per visit.
Across the United States, pest control companies average about 42.4% cost of goods sold. COGS includes things like technician labor, vehicles, fuel, materials, and other direct service costs. Anything boots on the ground that it takes to deliver the service is your COGS.
So let’s apply that to the same $418 per year customer. 42% of $418 is roughly $177. Before you pay any marketing, before you pay your office staff, before you pay for software, phones, or even yourself, $177 of that average customer value is already gone. That money disappears just to show up and do the work.
If you don’t know this number in your business, you’re not pricing. You’re literally just guessing.
Step 2: Account for Operating Expenses (OpEx)
After your service cost, you obviously still have a business to run. The industry average shows operating expenses around 42% of revenue. That includes selling, advertising, marketing, admin wages, office overhead, software, systems, things like that.
Let’s keep using that $418 average customer value. That means roughly $175 per year goes to just your operating expenses.
So here’s the math: $418 in revenue (average contract value), minus $177 to service the customer (COGS), minus $175 in operating expenses. That leaves you $66 per year, per customer. That’s roughly $5.50 per month.
And that’s assuming you have super efficient routes, not a lot of drive time, very few callbacks, and you run a tight operation.
Now think about this. If you’re paying a technician $20 an hour and you have to send him back out to that same customer to do one reservice a year, that $66 gets eaten up fast. At $20 an hour plus taxes and everything involved, you’re looking at about $25 per reservice. That leaves you $41 in profit per year for that customer. And if you have one or two more reservices per year, you’re obviously losing money.
One little mistake and almost all your profit disappears. This is why so many pest control companies feel super busy but always feel stressed out.
Step 3: Price for Profit
Here’s the reality. The average pest control company operates around 15% profit. Not super aggressive, but pretty healthy. I’ve seen some do way less and I’ve seen some do way more. I’ve seen 20, 30, 40, even up to 50% if they’re a solo operator. But at that $418 per year, you’re literally right on the edge.
Here’s the rule: if you want 15% profit, your pricing has to support the service cost, has to support the operating cost, and then you add your profit on top at the end. If you’re super inefficient, your price just has to be higher. If you rely on one-time jobs, your price has to be higher. And if you want to grow your company, you have to have money to grow. So your prices just need to be higher.
If you guys know me, I just like high prices.
The formula is simple: Price = COGS + Operating Expenses + Profit. Add up your COGS. Add up your operating expenses. Then add 15%, 20%, 30%, 40%, wherever you want to be. That’s how you get your pricing.
It’s not calling your competition to see what they’re doing. It’s not jumping on Facebook to see what everyone else is charging. Because every company is different. Everyone’s going to have different COGS. Everyone’s going to have different operating expenses. Some companies have a lot more route density, which means less drive time. Some have economies of scale so they’re getting their products cheaper, their bait boxes cheaper.
Every company is different. Don’t go based on what other companies are doing. A lot of the companies you’re copying prices from? Half of them don’t even know what they’re doing. You have to sit down and figure out what it actually takes to service the customer in every single scenario.
So Is $418 a Good Price?
When someone asks me that, the real answer is: it depends. That number really only works if it’s recurring, you’re super efficient, your routes are super dense, you have very few callbacks, and you run a tight operation.
If not, that price will slowly choke your business, and you’ll slowly go out of business.
Most companies don’t fail because they can’t get customers. They fail because their pricing never supports the business they’re trying to build to begin with.
