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Pest Control Company Profit Margins: What To Expect and Factors That Can Influence Outcomes
You started your pest control company with one simple goal: to help people protect their homes and businesses from pests.
By providing quality services at a fair price, you’ve been confident your company would be successful.
But you also know that there were a lot of factors that could influence its success.
You ask yourself if you’re charging enough or charging too much.
It's a delicate balance and you want to find the sweet spot.
In this article, you will receive some insight into the varying factors that can influence pest control companies and profit margins, as well as ways that you can increase yours.
What’s a Good Profit Margin for a Pest Control Company
While numbers will vary by a pest control company’s specialty, and location, a good goal is for a company to make $100,000 to $125,000 in profits a year or 20-30% of their revenue.
Can this profit margin be a realistic goal for most pest control companies?
Absolutely.
Ideally, pest control companies should aim to be doing tens of thousands of dollars a month in revenue and just a few thousand dollars in product.
Seeing profitability of around $2,000 to $10,000 a month and up to $200,000 in companywide revenue can be an attainable goal for any size pest control company.
Are you ready to increase your company’s revenue?
Cedar Pest software is a powerful tool for pest control companies. It’s the ultimate solution for managing your business, improving customer service, and boosting profits.
5 Factors That Can Negatively Affect a Pest Control Company’s Profit Margin
The pest control industry is a $14 billion industry in the United States alone.
However, several factors can negatively affect a company's profit margin in a booming industry.
To stay profitable, it is crucial for pest control companies to be aware of the following five potential threats and have a plan to address them.
#1: Poor Scheduling and Routing
In general, the type of services offered, the geographical areas served, and the prices charged for services will have the biggest impact on a pest control company's overall profitability.
However, poor scheduling and inefficient routing can also negatively affect a company's bottom line.
When planning their schedules and routes, companies should consider:
- The frequency and duration of service calls
- The distance between service calls
- Traffic patterns and road conditions
- The time of day when service calls are made
- Not allocating time well on calls
By taking these factors into account, pest control companies can help ensure that their schedules and routes are as efficient as possible, which can lead to increased profits.
#2: Improper Estimates
Improper and inaccurate estimates are one of the most common ways a pest control company can negatively affect its profit margin.
This occurs when the company either over- or under-estimates the amount of work that needs to be done to rid a home or business of pests.
When estimates are being considered, expenses such as …
- Product
- Cell phone; and
- Vehicles (i.e.: maintenance, gas, insurance, etc.)
… need to be factored into the costs of service.
For example, being the lowest bid may get you the job, but it can come back to bite you in the end if the cost of servicing does not bring in enough profit margin.
If a pest control company:
- Overestimates, technicians may end up doing more work than necessary, which will cut into profits; or
- Underestimates, technicians may not complete the job, which will also result in a loss of income
#3: Misuse of Products
The profit margin for a pest control company can also be affected by the misuse of products.
Pest companies purchase products that must be used properly or they could end up spending more than they save.
For example, if a pest control company uses an insecticide that is only supposed to be applied once a month but it was used twice or three times, the business could end up having to purchase more product than originally
This can be a serious problem for companies that are already struggling to make a profit of at least 15-20% profit margins.
#4: Ineffective Technician Time Management
Inefficient use of time by technicians can negatively affect the bottom line in several ways, such as:
- Missed appointments or late arrivals, which can damage customer satisfaction and result in lost business
- Spending more time than necessary on each job site, resulting in higher labor costs; and
- Damaged or missing equipment, which can add up to significant repair or replacement expenses
To maximize profit margins, pest control companies need to ensure that their technicians are using their time efficiently.
This can be accomplished through the use of:
- Effective training
- Accountability
- Appointment scheduling software
- GPS tracking devices; and
- other tools that help businesses better manage their resources
If you need help implementing these solutions, Cedar Pest Software can help.
With our modern software, made exclusively for pest control companies, you can use our digital tools to better manage your team and resources.
Improve your company’s bottom line and better compete in the marketplace with Cedar Pest Software.
#5: Decrease in Customers’ Per Capita Disposable Income
Another factor that can negatively affect a pest control company's profit margin is a decrease in customers' disposable income.
When consumers have less money to spend, they are often forced to cut back on discretionary items like professional pest control services and use general home and garden pest control products.
This can lead to a decline in revenue for the company, leading to a decrease in profitability.
7 Factors That Can Positively Affect a Pest Control Company’s Profit Margin
Many pest control companies are looking for ways to improve their margin to stand out from the competition and increase profits.
While the industry has been growing steadily for years, there’s always room for improvement—especially regarding profit margins.
With that awareness, let’s discuss seven factors that can positively affect a pest control company’s profit margin.
#1: Increase in New Construction
As the number of new homes being built increases, so does the demand for pest control services.
An increase in new construction can signal a promising season for a pest control company because:
- An increase in the number of homes and businesses that will need pest control services in the future; and
- Companies in the industry provide fumigation and other pest extermination services for new construction builds that are put on the market
This, in turn, can lead to increased profits and higher profit margins for pest control companies.
#2: Increase in Remodels
When the economy is booming, people are generally more inclined to spend money on their homes. This could be anything from a simple home improvement project to a full-blown remodel.
Interestingly enough, an increase in remodels can have a positive effect on a pest control company's profit margin because pest issues are discovered as walls are removed during remodeling jobs.
When the structure of the building is changed, pests are exposed or presented with new areas to live and breed.
Once the problem has been identified, project owners will need to hire a professional to take care of the problem — and this is where your company comes in.
#3: Demand From Hotels and Motels
Hotels and motels require frequent pest control services due to health and hospitality industry regulations.
The last thing a hotel manager wants to deal with is a bed bug infestation or other pests. This could result in a negative reputation for the hotel or motel, which will lose business and revenue.
As such, hotels and motels require regular intervals of:
- Inspections
- Maintenance; and
- Extermination services
High demand like this can be an excellent opportunity for your pest control company to see an increase in your profit margins.
#4: Average Annual Precipitation
Another factor that can positively affect profit margins is the average annual precipitation in the region where the pest control company operates.
Companies in regions with high average annual precipitation tend to have higher revenue, as they can provide their services to more customers.
When it rains more, pests are more likely to find their way into buildings and homes.
More breeding grounds mean more potential customers, leading to increased profits.
Companies working in these areas may even have the luxury of having lower marketing and advertising expenses, as word-of-mouth referrals are more common in regions with higher humidity levels.
#5: Marketing
Marketing can positively affect a pest control company's profit margin in two specific ways:
- Effective marketing can help attract new customers and grow the business. This leads to increased revenue, which can help offset some costs associated with running the business and improve the bottom line.
- Effective marketing can help build brand awareness and create customer loyalty. This can lead to repeat business and referrals from satisfied customers — both of which translate into increased revenue and profits.
To maximize profitability, it is important for pest control companies to create an integrated marketing plan that considers the unique needs of their business and their target market.
Doing so can maximize their chances of achieving their desired profit margins.
#6: Services Offered
According to Peak Business Valuation, 26,966 pest control companies are operating in the United States today.
In addition, the average profit for a business in this industry is 7% to 20%.
To see maximized profits, pest control companies must carefully consider the services they offer.
Some services are more profitable than others, and some may even result in a loss.
Factors that can positively affect a pest control company’s profit margin include:
- Type of pest control services offered
- Number of services offered
- Quality of the services offered
- Pricing of the services offered
- Location of the company
The main objective of a pest control company should be to offer services that are both profitable and in high demand.
#7: Repeat Business
One of the major ways that a pest control company can increase its profit margin is by increasing the amount of repeat business it gets from customers — including annual contracts.
What are some factors that can contribute to increased repeat business for pest control companies?
Some of the most important include:
- Providing high-quality service
- Maintaining good communication with customers; and
- Offering competitive pricing
Repeat customers often bring in more revenue over time because they are:
- More comfortable with using their chosen company’s services; and
- More likely to recommend their company’s services to others
What’s the Projected Profit Margin Outlook for the Pest Control Industry?
The U.S. pest control industry is expected to experience an overall annualized rate of $19 billion (or 2.4%) through 2026, according to data projections made by IBIS World.
Several factors indicate that the pest control services industry is expected to grow over the next five years, including increasing construction activity and the resulting rise in commercial pest management services.
With the expansion in the coming years of the pest control industry, several businesses are expected to see higher profits through strategic mergers and acquisitions.
Cedar Pest Software Can Help You Manage Your Pest Control Business — and Boost Your Profits
If you’re looking for ways to increase your pest control company’s profit margin, consider using Cedar Pest software.
What does Cedar Pest software do?
Using Cedar software can effectively improve your pest control company’s profit margin by helping you manage your business more efficiently, which can increase your bottom line.
Created by a team of experienced exterminators, Cedar Pest Software is designed specifically for pest control companies.
It includes features such as:
- Scheduling and routing
- Customer management
- Sales and invoicing tools; and
- So much more
Best of all, it’s easy to use.
Try out our pest control software for yourself and experience how it can help you save time and money — two key factors that can positively affect your company’s profit margin.
Take your business to the next level of success with Cedar Pest Software.
