Jun 18, 2012 – Price For Profit

QUESTION:

I have been in the industry for 5 years and about 6 months ago I started my own company in general pest. I only have about 12 clients residential and one commercial restaurant. Today I had a fire dept call and ask me to make a bid. I don't want to come in too high or too low, so any suggestions?

ANSWER:

You really can't have a cookie cutter approach to pricing your work, meaning there should never be one set price for flea control, roach control, ant control, etc. There are just too many variables that can affect whether or not you are able to make a profit on a particular job, and in this case I see at least 3 important  variables to consider. These would be the kind of pest problem they are having, whether this is a "one shot' service or a potential regular account, and the fact that it is a fire station. I know that in some or most states fire stations can NOT close, and this will definitely be a factor when you select the product to use within or outside that facility. Since you should not allow people to be present while you are applying pesticides you may need to alter how you do any applications so that the people there can continue to be present and on call. 

This is an important factor that determines how much time you are going to have to spend at this account, and time is money and how you price this job depends on how much YOU have determined you need to make per hour in order to run your business and make a profit. Some kinds of accounts simply take longer to do because of the circumstances. For example, doing cockroach control in a private home is going to be a lot easier than doing it in a prison, where getting from place to place becomes time consuming and difficult, and any time you have to spend standing around means lost money on your part. So, determine from your initial interview with this customer exactly what the problem pests are and how you are going to be able to work within that structure to get the job done successfully. 

The second question is WHAT is the pest problem? You know that ant management is going to be a lot easier than bed bug eradication, or roaches versus rats. By determining what the pests are you can decide exactly how long you will need to get the problem down to the acceptable level, and this can vary wildly. Since you need to base your bid on an hourly rate knowing how many hours you expect to spend there is important. That hourly rate you charge is dependent on what you have decided you need for your business, and the word "profit" is not a dirty word. I suspect that at this time many businesses feel that around $100 per HOUR is an acceptable fee to charge. This must take into account your travel time, your equipment and other product costs, your office costs of rent, employee wages, etc., your vehicle costs, your insurance, and all the other fixed costs that you will have to pay. Add all of these up and come up with how much per hour it costs you to run your business, and then charge appropriately so you can be profitable with this account. 

If you price too high you may not get the job, and that's okay. Because, if you price too low you either will lose money each time you go there or you will resent the price and start doing sloppy work just to get in and out quickly. While you need to be aware of what competitors are charging in your area you cannot base your bid entirely on the other guys. There will always be those low bidders who clearly are either not making money or are not doing good work, so bid based on what you need to stay in business profitably. 


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