[2006 State of the Industry] To Raise or Not To Raise?

Americans consume a lot of gas. According to HowStuffWorks:

• We drive more than 2.5 trillion miles a year — almost double the number of miles driven in 1980.

• We consume 65 billion gallons of gas in our personal vehicles alone — an amount which increases about 2.6 percent annually.

• We use 20 million barrels of oil per day, 45 percent of which goes to motor fuel.

• Though gas prices are higher than ever before in the United States, those in the "global know" are quick to point out the low cost of our fuel in comparison to other countries. Prices are in the $5- to $6-per-gallon range for much of Europe and soar upwards of $7 in some areas.

• Even when gas prices rise, Americans do not significantly change their driving habits, in part because of limited options, i.e., accessible bus lines, etc.

This last fact is particularly true in the pest management industry, where driving is as much a part of the job as is the actual pest service and options to single driving are not only limited but are virtually non-existent. But pest management companies across the country are seeking ways to reduce the number of miles driven, reduce the costs of driving, and, in some cases, increase income to pay the difference.

SPLIT DECISION. While the ever-rising cost of gas is a significant issue for almost all pest management professionals, the decision on whether or not to raise prices to compensate is fairly evenly split.

"Gas prices are killer!" says Larry Holmes, president, BugMasters, La Habra, Calif. "Gas prices do affect us. It is an issue, and in this industry most people are probably having to increase prices to compensate for that."

Terry Menth, general manager of Monarch Pest Control, Minneapolis, Minn., is in agreement and says that her company has raised prices by about $5 a month — an amount that is not a large increase to the customer, but adds up for Monarch to help cover the rising costs.

Action WDI Specialist, Manistee, Mich., has not raised its general pricing, but the company has added an inspection fee that is credited back if service is contracted. "We are in a rural area and due to drive cost we implemented an inspection fee. If we get the job, we credit the cost of the inspection and it becomes free. If the customer goes somewhere else, I’ve covered some of the expenses," says President Jim Rutherford on PCT’s online message board. Rutherford told PCT that because Action is the only company in the state of Michigan with termite-detection canines, homeowners sometime request inspections simply to determine if they have termites, or to confirm another pest control company’s findings, then contract with another company for the service.

With the fee, even if the consumer decides not to contract with Action, the costs of gas and canine handling are still covered, he says.

Mike Werner, owner, Pest Management Solutions, Milwaukee, Wis., doesn’t intend to raise his prices, because, he says, "I haven’t made price changes, because then you have to go down if the price of gas goes down." However, he has passed on jobs because of their distance from his office. "In wildlife jobs, you have to be there every single day," he says, "so I have turned down jobs that were an hour and a half away because with time, distance, travel and gas, I’d be so far out of the ballpark (on price)." Instead Werner recommends that the homeowner call a local company that can service the traps in a more time-efficient manner.

A glass-full kind of guy, Rutherford has actually seen some upside to the rising costs of gas. "In some ways, the situation helped us in that we’ve tightened our routes so much, the guys aren’t putting so many miles on their vehicles." Therefore, he says, it has worked out to be the same dollars spent for gas, but route efficiency has been increased.

Rutherford also has equipped the company’s service vehicles with GPS systems, which helps to monitor mileage and discourage technicians from making extra unauthorized or personal trips in their vehicles.

In some areas, gas prices are affecting business not only because of internal driving, but also because of reduced customer travel, Menth says. In Minnesota and other northern states where "going up North" to the cabin is standard summer fare, the tradition brings along with it a demand for pest services in housing that sat empty during the cold season. But with gas prices and other increasing costs for consumers, many are just not going to their cabins, she says, which in turn reduces the calls for pest service.