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Pest Control Operator Q & A- Raising Prices

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Pest Control Operator Q & A- Raising Prices

One of the most difficult challenges pest control operators face is meeting overhead. As labor costs, cost of pesticides, gas prices, and property taxes all increase; some pest control companies are left facing the inevitable… Raising prices to meet overhead, or closing the doors forever.

Question:

How do I tell my existing customers that I am raising my prices?

Answer:

The notion of raising prices strikes fear in pest control operators; and for good reason. Nothing will send your customers to the nearest competitor faster than raising prices. There’s a lot at stake when you decide.

Surviving a price increase means getting it right. You need to keep up the number of sales, avoid a customer exodus, and use your price increase to maintain the required margins.

There are a few pointers other pest control operators have used to help ease this price transition and avoid a mass customer exodus.

Find The Right Time

When you raise your prices, pick a time that will offer the least customer resistance. Your pest control business’s seasonality, growth stage and sales cycle all affect your choice. It’s best to raise prices when times are good rather then when they are bad. When gas hits $5.00 per gallon, everyone pays it. Raising prices when times are lean communicates to your customers that you are just passing the buck on to them.

Offer Customers A Price That Will Sustain Your Company Long-Term

Deciding on how much you should change your prices is very challenging. There are two theories out there: one large price increase, or several small ones over time and hope they go unnoticed. I find the latter strategy, “death by 1000 cuts.”

Set a price that you can sustain your pest control business for as long as possible. Customers can better deal with a price increase if they know the new price will hold steady for a while. You can even offer contracts that can lock in the new rate for a long time, so customers can rest assure the price won’t go up again in the near future.

Be Honest With Your Customers

If you have decided that conditions are such that you need to raise prices, be completely honest with your customers. Explain to them that raising prices isn’t for purposes of gouging them for bigger profits. Explain to them it’s a matter of survival. Many customers understand that your prices have to go up if you want to stay in business.

Brain science suggests that we tend to be more agreeable when there’s a reason for change. Have a reason and share it. Feel badly about raising your price? Share that too. Make sure your common sense explanation is short, straightforward, and consistent.

Changing Value By Emphasizing New Or Added Benefits

Price is supported by the value the customer perceives in the product and service in which the price is attached. Basically, your customers need some additional value of your product s or service if you are going to raise your prices. Focus on the benefits of your unique pest control method, a new and different product, or your company’s unmatched service.

Add An Incentive

Have you ever heard of the saying, “A spoonful of sugar helps the medicine go down?”
A small gift or gift card, a one time discount, or and extra free pest service can help ease this transition with customers.

Listen To Your Technicians

The pest control technicians are your front-line people. Make sure they are all on the same page with the company and that they’re all offering the same truthful explanation to the price increase.

Technicians have more face-to-face interaction with the customer then you ever will, so get some feedback from them. What are your customers saying about the price increase?

Raising Prices

Unfortunately, raising prices are a necessity for many businesses; and not just in the pest control industry. Make sure you absolutely need to raise prices before you do, and expect that you will not retain all of your customers during this transition. With a well thought out plan, you can continue to help your customers live pest free lives, and still stay in business.

Please comment below with your experiences. If you have any other pest control questions, just ask.

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About

Anthony Ball is a Content Marketing Manager with Bulwark Exterminating, an industry leader in providing high quality pest control service. Bulwark is fully operational in nine states, including thirteen major cities. While Bulwark provides pest extermination for common pests like ants, roaches, crickets and spiders; the company’s differentiating aspect is great personalized service. Bulwark uses the finest and most effective products in the world to solve common pest problems.

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7 Responses

  1. Gerry says

    Since the recession began I have almost totally abandoned any notion of a price increase. I have reserved it only for those who are at a ridiculously low and unprofitable price or for those I secretly pray will not accept the new price. Why would anyone raise prices in a market where people are struggling financially and in which the bulk of cancellations are price related?

    The advice given is very sound.

    Here is how I raise prices in a nutshell. I find add-ons. By adding services to customers, I extend the value I provide and make it harder for a customer to switch. I can attach any price variation to the new enhanced agreement. Therefore the customer does not feel that the old agreement is abridged in any way.

  2. Russ Hays says

    Iain- Glad I could help. As you can tell I really have no opinions! LOL

  3. Iain Stephen says

    Thanks Russ..very helpful. Back about 10-15 years ago here in Australia we had a huge price increase on fuel. One atleast big pest control company I remember at that time added a “fuel surcharge” and noticed nearly NIL customer resistance. Might have been say on a $100 fee a $5 increase. I hope this info might help a few smaller guys in US to manage the fuel increase?

    Iain Stephen

  4. Russ Hays says

    Kevin,

    As you know the residential market is different than the Commercial Market. If you publish a Quarterly Newsletter that goes out to your clientele base…use it as a precusor to the actual time of the increase.

    If not…have a Corporate/Owner letter sent to each client and make sure that your technicians follow up with EVERY client where possible. We would pay our technicians to stay later on a given night and make phone calls to ask if they reviewed the letter already sent to them.
    Yes it costs to do this. Those scheduled nights to make calls the owners paid for Pizza to be delivered. We all like Pizza!

    You will lose clients! They are always cost conscious and will shop you. If you lose a client…keep track of those lost and call them back in 90-180 days later to see if they are happy with the new service. We retrieved many a lost client by doing this.

    All these calls should be made as a QA call and you might get upgrades of service. Again, first ask them about the service you are providing them, where it could be improved and make upgrades to their service. Then spring the price increase on them!

    We had tried across the board raises but found that having the technicians review their routes ( All frequencies) and single out those to be raised and checked out by Supervisors or owners before raising them. Again, you have long term clients that have 10 + years with you or retired persons on limited incomes that need to be addressed.

    Always be open to reviewing the increase(s) with those that will call in to complain.

    I did not work in the Termite division but I have enough knowledge that these accounts should be handled like the Commercial accounts.

    Remember to JUSTIFY the raises in both written and Oral communications. If you have performed a valuable (subjective) service…they will take a hard look before changing. NEVER apologize for your fee of service.

    Rehearse with your technicians what they should say and how it should be said. Do not have them extend beyond the remarks approved by you. They can instruct the clientele to call the office for more clarification.

    I hope this has helped! Raises are serious and need to be addressed that way.

    Russ Hays

  5. Kevin Lewis says

    @Russ Hays
    Thanks Russ. I would really like to know more. I’m currently in the process of raising prices and more input on residential and termite would be greatly appreciated.

  6. Thomas Ballantyne says

    Great input Russ. I especially like how you focused on the relationship portion of this. Handing the letter face to face, shows that you care and are not hiding anything from them.

  7. Russ Hays says

    First-Excellent Topic! I worked 18 years for a large “Family Owned” PCO in California. As one of many Commercial Sales Representatives in the company we were faced with this challenge. I’ll speak about the Commercial side and how we viewed raises:

    My branch had/has nine Commercial routes averaging between 15 -20 K per route per month. Our Commercial Division is/was the largest in the company and as you see very successfull. A good amount of that business is Food Processing/Warehousing. Most have been with the company for an average of 5-7 years. I point this out to confirm the quality of the service we provided/provide them.

    These types of accounts we try for a 2-3 year agreement where we have no raises and they committ to our services. They EXPECT a raise at the end of the AGREEMENT (if necessary). With our non-Food Processing/Warehousing clients the technicians would approach the clientele and personally hand them our Quarterly Newsletter where the increases were explained and which month they would take affect. This way they have been alerted. Also the technicians would take the time to re-evaluate their service (Quality Control). At that time we DO NOT tell them if the raise will affect them.

    We would then evaluate our accounts with the Technicians/Commercial Supervisor and select those companies that were currently underpriced and needed to be raised. We NEVER did an across the board raise.

    One MAJOR problem we encountered were the long term Clients (many over 10 years +) who were priced at the current hourly rate then. Also the multiple location accounts. We did not try to bring them to our current rates but give them modest raises.

    With any raise given to a MAJOR client I would personally (as the Commercial Sales Rep.) hand them the price increase LETTER which showed the new amount and the effective date of the increase. As the salesperson of record I would volunteer this work as I did not want to lose one single client This gave me a chance to have an open and honest dialouge with them. My enhancement was an upgrade percentage compensation. This was small and not why I did the work.

    This was also an Excellent avenue to re-evaluate their service and make changes and UPGRADES to their existing service. Yes… I said Upgrades where the new fee would be absorped in their upgraded service!

    The casualities of lost Clients using this method was extremely low! With Food Processing/Ware Housing it just didn’t happen! The technicians (with the great work they provided) kept customers from seeking other quotes from other PCO’S. Some would check out other PC providers just to make sure our prices were in line.

    For the main line customers who are/were the bulk of our business- the technicians dropped off the letters to each client and they would answer any concerns they might have.

    There is so much more to this that I can embellish on. Send me an e-mail of inquiry and I WILL respond. I can also share how we treated other markets such as Residential, Termite Control, Bird Management Programs etc.