Last January, Chicago was hit with a nasty snowstorm. No surprise there. I slipped on some ice and fell pretty hard. After a few days of burning pain in my neck and back, I finally gave in and set up an appointment with my awesome chiropractor. Dr. Dan took one look at my neck and asked me whether I had been in a car accident. He said I had a severe case of whiplash and made me promise to visit him a few more times to correct my spine. I’ve recovered (sort of) but a year later, my neck is hurting me again. This time, it’s for a different reason: I am emotionally and physically stressed out because I’m raising my clients’ rates.
I know a lot of pest control companies automatically raise their client’s prices every year. I truly believe that is a solid business practice. At Schopen Pest Solutions, I’ve rewarded my clients’ loyalty by not raising their rates. But that doesn’t mean we have stood still. Since our inception in 2006, I’ve been pretty consistent on raising our prices on add-on services and initial visits. For example:
- Exterior power sprays = 15.39% bump since 2006
- Rodent initials = 53.33% ^
- Exterior ant treatments = 25% ^
- Bed bug services = 66.67% ^
- Exterior rodent baiting (with landscape rock-shaped stations) = 25% ^
At Schopen Pest Solutions, our end game is to sign up clients for indoor/outdoor quarterly services. When I first started 15 years ago, my basic quarterlies were $90 per quarter. Now they are $100 per quarter for new clients. We left our previous customers, our very loyal customers, alone. Then two significant events occurred at Schopen Pest Solutions that changed my philosophy.
First, as many of you know, we bought a building in 2017. I had saved up quite a bit of money for it, but I blew through it quicker than Pete Rose signing baseballs at PestWorld. We made hundreds of thousands of dollars’ worth of renovations to our facility.
Second, I began paying for healthcare for my workers.
Those two purchases drained my accounts. I had no choice but to increase all of my clients’ rates across the board. So, in January 2019, we informed our customers their rates were going up $5 — a 5.55 percent increase for most clients.
I’m not trying to be melodramatic, but I had some sleepless nights, pondering how many customers were going to cancel. Yet as January moved into February, I was shocked at how little pushback we received from our clients. Between Jan. 1, 2019, and March 31, 2019, we only had two customers cancel because we raised our rates.
In 2020, we were preparing for a second round of increases when an ugly little virus reared up and caused us to pause. 2021 was much of the same. Now we’re in 2022, with two new situations:
- Our suppliers are substantially raising their prices because of supply chain issues.
- I bought another building on Nov. 29, 2021. This structure, which will house my corporate people, needs some tender loving care.
Because of this, we began raising our current customers’ prices by 5.3 percent on Jan. 3, 2022. In the upcoming year, that should bring in nearly $40,000. This will not cover all of our added costs for 2022, but it will help.
As Schopen Pest Solutions continues to grow, we probably will go to an annual or, at the very least, an every-other-year price increase. There are just too many ancillary items that spring up when you are expanding your company. And, unfortunately, most of these things don’t go toward increasing the bottom line but rather, adding to it:
- Human resources person
- Accounts payable
- Employee retirement fund
- Parking lot improvements (now for two buildings)
- Second building improvements
- Payroll company (I currently do payroll with my accountant)
- IT/social media person
Once again, I realize many colleagues raise their rates annually — and do so with little or no fanfare. We are doing our price increase with a more direct approach: I typed up a short letter, explaining the need for the 2022 rate adjustment. As I write this, our techs are hand-delivering the letters to our clients as they provide regular quarterly maintenance.
A big piece of advice to other start-up businesses is make sure you have a budget, make sure you understand your cash flow, and make sure you don’t stay static with your price increases. Obviously, it takes 30, 60 or even 90 days for price increases to take effect. Ninety days might be too late if a company needs a quick infusion of cash.
I’m hoping our second-ever price increase goes smoothly. I’ll anxiously wait to see whether we have a big pushback from our clients this time. If we do, at least I’ve got my chiropractor on speed dial.
Schopen’s Open Book
Start-up: Schopen Pest Solutions Inc.
Headquarters: McHenry, Ill.
Founder: Peter F. Schopen Jr.
Start-up Date: April 11, 2006
NUMBER OF EMPLOYEES: 33 (32 full-time, 1 part-time)
2006 REVENUE: $97,235
2007 REVENUE: $172,495
2008 REVENUE: $203,732
2009 REVENUE: $243,427
2010 REVENUE: $325,960
2011 REVENUE: $425,847
2012 REVENUE: $489,887
2013 REVENUE: $572,772
2014 REVENUE: $687,326
2015 REVENUE: $858,180
2016 REVENUE: $1,079,068
2017 REVENUE: $1,478,600
2018 REVENUE: $1,877,496
2019 REVENUE: $2,095,118
2020 REVENUE: $2,398,367
2021 REVENUE TO-DATE: $3,024,144*
NOVEMBER REVENUE: $489,451**
2021 GOAL: $3,219,839