Reader Feedback, February 1999

I have a question as to the article “Time is Money,” by Stoy Hedges in the August 1998 issue of PCT. The article discussed what to charge per account and I remember a paragraph that mentioned that most PCOs average $60 per hour. How is this possible? In my area of the country, $60 an hour would get the door shown to me. How do most of the other mid-size to large companies survive?

Most larger companies gripe about “lowball” pricing. But not all customers can afford services in the price range of the Big 4 (i.e., Terminix, Orkin, Arrow and Sears). It is my assumption that with the current rate of mergers and acquisitions of the small one- to four-man operations, the Big 4 are bound to price themselves right out of existence. And as I’ve said before, not all customers and clients can afford their prices.

Many of my recent crossover clients have left those companies for this very reason. And not just on the “lowball” principle — clients have come to realize that they can receive the same services from the “local” PCO and avoid the sometimes exaggerated cost of the “giants.” And you know what happened to them — they were defeated by the little “underdog” companies.

Shannon Jennings
Western Pest Control
Blackfoot, Idaho

Editor’s note: The following is a response from Stoy Hedges, manager of technical services for Terminix International.

Pricing is and always has been each individual company’s prerogative. The price charged per man-hour is based on the company’s fixed and variable expenses plus the desired profit margin. Most of the companies I have worked for have priced their work in the $60 or higher price range. That figure is given only as a guideline. Each company must compete as it sees fit. Certainly, many consumers do not see the value in higher prices or cannot afford these prices. But plenty do see the value of higher-priced services, otherwise, the bigger companies would not keep growing. At the same time, thousands of smaller operators, such as yourself, provide service to those consumers that want other choices. A number of smaller companies, however, do charge higher prices, sometimes even higher than the larger companies. This is the free market system at its best. Sixty dollars an hour may seem high to one person but low to another. It only serves as a guideline to illustrate the example used in the article. Good luck to you and your company.

Stoy Hedges
Manager of Technical Services
Terminix International
Memphis, Tenn.

Readers with comments are invited to write PCT Letters, 4012 Bridge Ave., Cleveland OH 44113. Letters also can be faxed to 216/961-0364, or e-mailed to jdorsch@gie.net Letters may be edited for space or clarity.