Using technology to change growth and profitability models


August 11, 2023

Photo: ipopba/iStock / Getty Images Plus/Getty Images

Photo: ipopba/iStock / Getty Images Plus/Getty Images

As the world becomes more technology-enabled and advanced, there always seem to be business owners who can figure out a way to use technology to lower costs and therefore cut pricing.

My inspiration for this column stems from speaking to a potential client who needed low-cost chief financial officer (CFO) services. He told me he works with a network of property managers, providing them with facility services around the country. By using technology, he said, he can receive requests for pest control services; assign each request to a subcontractor; and deliver pest control for less than $20 per service. Call me old-fashioned, but this business model seems to qualify him for a one-way ticket to bankruptcy court.

Unique business model

I am not against technology by any stretch of the imagination. In fact, our firm, PCO Bookkeepers, would be in big trouble without it. What I am against is people who do not understand the very business model they are in. They believe they can bring costs way down, and in turn lowball potential competitors by using technology and passing the savings on to the customer, while still providing a quality service.

You see, if we sold software as a service (SaaS) or were in a product manufacturing business that uses robotics where there is very little labor involved, technology could be used to reduce costs significantly. As the cost of components are reduced, we may be able to hold some profit margin, even as we discount the price of our product.

Paying for people

So why is pest management different, and why should you think long and hard before discounting? The reason is we are a people-based business. If you add up wages, benefits and the labor burden of all the functions in our businesses, you will approach a 50 percent cost. And what have we learned over the past couple of years about wages? Wages are going up and not going down.

Image courtesy of Dan Gordon

Dan Gordon, CPA

While technology may help with route efficiency and target marketing, it will never allow us to slash our prices by half or more. It won’t be like what happened with big screen TVs over the years, for example. I think at best, the increase in efficiency may allow us to hold the line for short periods of time and reallocate those savings from the efficiency gained to the wages we must pay to get and keep quality workers.

So, is it likely that by using technology you can get your price down to less than $20 per stop? Heck no! It is impossible.

Technology has its place

Now that I’ve made all the tech-savvy readers think I am anti-technology and not seeing the vision, let me clear the air. Using technology in a pest control business is paramount to growth and profitability. Technology, if used properly, will increase customer satisfaction and improve the customer experience. Using technology to communicate with customers for such things as the materials used, the pests eliminated, texts that confirm the time and dates of appointments, and instant feedback through email surveys or Google reviews build happy and loyal customers. Happy and loyal customers refer their friends, neighbors and business colleagues, which builds a bigger business with higher profit margins.

On the other hand, discounting attracts bargain hunters who are disloyal, devalue your brand and attack your profit margins.

So, use technology to increase the customer experience, the efficiency of your services and the size and profitability of your company. Do not use it to discount or lower your prices.

About the Author

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Dan Gordon, CPA, owns PCO Bookkeepers & M&A Specialists, an accounting and exit planning firm that caters to pest management professionals throughout the United States. He can be reached at

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