Topic: The Most Important Ratio for High Profitability
Guest: Dan Gordon & Donnie Shelton
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
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
PCO Bookkeepers article: Want to Be More Profitable? Your Gross Margin Needs to Be 50-55%
The PCO Bookkeepers Pest Control Industry Cost Study
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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