Episode 90

7/27/22

Topic: The Most Important Ratio for High Profitability

Guest: Dan Gordon & Donnie Shelton

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In this episode we discuss:

  • Why gross margin is the most important key performance indicator (KPI) in a pest control company and why it should be 50%-55%

  • How the beauty of pest control is the ability to get your margins in line quickly in the event of a downtown

  • An overview of gross margin in the pest control industry — what's included ("anything that happens on the road") and what's not

  • How to improve your gross margin: cut costs, raise prices or increase route efficiency

  • The role of breakeven analysis in pest control

  • Why Donnie says a penny saved is not the same as a penny earned when it comes to General and Administrative (G&A) expenses

  • How Donnie overcomes the emotional side of price increases

  • Dan's and Donnie's recommendations for ways to take action

Resources mentioned:

Notable: "(Gross margin) is why pest control and/or service businesses are so wildly profitable. Because if you double your sales, you don't double your net income. Your net income goes up exponentially because you've already covered your fixed costs." —Dan Gordon


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