Profit by the Numbers

Running a pest control company has always been about balancing service quality with tight margins — but inflation, labor shortages and shifting customer expectations have made that balancing act even harder since the COVID-19 pandemic. The new 2025 Pest Control Industry Cost Study aims to help operators make sense of their own numbers and how they fit in with the larger industry today.

Produced by PCO Bookkeepers in partnership with National Pest Management Association (NPMA), this report expands on the one they released in 2019 by providing updated financial benchmarks and performance metrics designed to show pest management professionals exactly how their businesses compare with industry peers.

“Over the past six years, we’ve added a couple hundred clients, which gave us enough data points to produce meaningful, regional comparisons for the first time,” said PCO Bookkeepers founder Dan Gordon.

What’s interesting is how consistent the business model is across regions, Gordon said. Whether you’re operating in Arizona or Maine, the fundamentals look similar.

“Local pest pressure varies, from roof rats in Florida vs. Norway rats in New Jersey, for example, but the financial structure of a pest control company remains remarkably stable,” Gordon said. “This reinforces that labor is labor, materials are materials and general pest is general pest, no matter the geography, aside from the exceptions like termite work or commercial rodent stations, which are costlier.”

And though there were no major gaps between the 2019 and 2025 studies, gross margins increased slightly.

“Many raised prices over the past few years in response to inflation, particularly labor inflation, which was significantly higher than the overall CPI,” said Gordon. “Those who raised prices and worked on efficiency tended to see improved gross margins.”

BENCHMARKING PERFORMANCE. NPMA Chief Executive Officer Dominique Stumpf looks to this study as a comprehensive tool that fits within the core pillars of education and professional development that are part of NPMA’s mission. It’s meant to benefit both startup and long-term established companies in a variety of ways.

For startups, Stumpf said, it provides a roadmap: New operators can build business plans around proven benchmarks rather than pivoting as-needed and guessing for years on end.

“For established companies, it’s a diagnostic tool,” said Stumpf. “If you’ve been in business for 20 years, you might think you know your numbers, but comparing yourself to industry averages can reveal blind spots. Maybe your material costs are running higher than they should, or perhaps you’re underinvesting in marketing compared to your competitors. The study helps you identify those opportunities for improvement.”

Plus, the Cost Study is designed to work hand-in-hand with NPMA’s workforce development program and sustainability initiatives. Data shows that direct labor typically represents 26% of revenue. But what it doesn’t show is the hidden costs of turnover.

WORKFORCE REALITY. When you lose a technician, you’re not just replacing a salary, said Stumpf. “You’re losing productivity during the vacancy, spending time and money on recruitment, investing in training for the replacement and often seeing service quality dip during the transition. Some estimates put the cost of replacing a technician at 50-150% of their annual salary,” she said.

The Workforce Development Program provides a solution by helping members attract, train and retain quality technicians more effectively. Members can build stronger recruitment pipelines through partnerships with technical schools and community programs.

In response to an industry-wide increase in adopting sustainable practices within pest management firms, NPMA has developed a comprehensive checklist of sustainable practices that can be evaluated, adopted and tracked specific to a company’s needs.

“The beauty is these aren’t competing priorities,” said Stumpf. “They’re reinforcing.”

RULE OF 23. New to the study is this year’s PCOB Competitive Index, a composite performance metric inspired in part by Rollins’ long-standing “Rule of 23.” It measures performance by combining profit margin and growth rate to reach a score of 23 or more.

“The logic is that growth and profit are interdependent,” said Gordon. “If you’re investing heavily in marketing to grow, profit naturally comes down.”

The Competitive Index adapts this concept but focuses specifically on recurring revenue — what COVID-19 proved to be the lifeblood of any pest control company. “Recurring revenue stabilizes the business,” said Gordon. “Companies overly dependent on one-time services saw revenue dry up instantly, while recurring programs held steady.”

Following this ideology, the Rule of 23 model helps operators judge whether their performance metrics are enough to “win” the game, with best-in-class companies typically scoring 19 to 20 under the formula.

“Whether evaluating labor costs, assessing gross margins, exploring new service lines or considering expansion, NPMA members now have industry-specific benchmarks to guide those decisions,” said Stumpf. “It’s about moving from gut feeling to data-driven strategy, which ultimately strengthens the entire industry.”

EMERGING TRENDS. Even as costs continue to rise, other trends continue to emerge, highlighting the importance for companies to understand what works for their business model. For example, more than half of PCO Bookkeepers’ clients now use a monthly billing model, even when service is performed quarterly or on another cadence.

“As for customer expectations, one trend we’ve seen, though it’s not directly reflected in a P&L, is increased bundling of services, like pairing general pest with termite monitoring,” said Gordon. “It makes customers ‘stickier.’”

NPMA is already looking ahead at how they can expand the Industry Cost Study even more as the financial landscape continues to evolve and adapt. Technology adoption continues to accelerate and Stumpf is seeing increased investment in route optimization software, customer relationship management systems and even AI-powered solutions.

“These tools require upfront investment but can dramatically improve efficiency,” said Stumpf. “Future studies might track technology spending as a distinct category and correlate it with performance metrics like revenue per technician.”

The author is editor of PCT.