Opinion | PPC107 June 2022

If you’ve looked at your energy bills or recently fueled the van, you’ll be uncomfortably aware of how much the basic costs of doing business are going up.

BPCA Marketing and Communications Manager Scott Johnstone looks at the cost of living crisis and how it’s likely to affect pest management this year. Spoiler – you probably want to reconsider your pricing structure. 

t’s not often we talk about pricing in PPC or at BPCA. Pricing is a personal thing, and it’s not the role of a trade association to suggest pricing.

But given the extraordinary cost-of-everything crisis that’ll affect all our businesses – we didn’t want to bury our heads in the sand. 

In short – is BPCA telling you to put up your prices? No – that’d be wrong. Are we saying you should seriously review your overheads and consider adjusting your pricing - definitely yes! 

What’s happening?

After 15 years of relatively low inflation, soaring costs aren’t something we’re used to in western Europe. Between Covid-19, Brexit and the war in Ukraine, we have the perfect storm for high inflation.

In the 12 months to February, prices rose by 6.2% on average, and they only look to be going in one direction: up.

You may have noticed that many suppliers have avoided putting prices in their print catalogues this year. Frustrating as that may be, it’s a very prudent approach, given your suppliers will undoubtedly have rising costs that they cannot predict.

Wheat and oil are vital components in many rodent baits. Ukraine produces 10% of the world’s wheat and 80% of the world’s supply of sunflower oil. Much of the fertiliser used to grow wheat comes from Russia and Belarus, so the cost of your baits may fluctuate this year.

The UK relies on goods moving quickly into the country. Some of the products you use on a daily basis are produced in the UK, but many aren’t.

Even products made in the UK rely on international trade for raw materials. Brexit bureaucracy is certainly affecting almost all imports. 

Manufacturers and distributors have reported that materials and products are moving slower and costing more to move.

For example, a single storage container costs nearly three times as much to get into a UK port.

Between Covid-19, Brexit and the war in Ukraine, we have the perfect storm for high inflation.

Scott Johnstone, BPCA Marketing and Communications Manager

Reports suggest UK businesses and consumers have paid 42% more in customs duties since 1 January 2021. Pest management companies are likely to share some of those cost burdens.

One soaring cost that isn’t in the news is the cost of plastic polymers. PVC, PP and HDPE pipe grade prices have hit all-time highs. Supply shortages, rising feedstock, energy costs and logistics bottlenecks are the main price drivers, meaning £100-170/tonne price rises.

Everything from packaging to monitoring stations requires these plastics, which means another spike in your suppliers’ costs.

Aside from this, your direct costs for electricity, gas, fuel, etc are high and likely to rise again this year.

The Chancellor is facing increasing pressure to tackle these massive rises but, as of yet, the Government’s response to the cost of living crisis hasn’t yielded many savings for individuals or businesses.

What can you do?

How do you sell pest control in high inflation times? 

In short, you might have to raise some of your prices on contracts and job work. By all means, use this article to explain the changes to your clients. They’ll be hearing it from many other businesses they rely on, so don’t sell yourself short because you’re too nice. 

Many companies have traditionally fixed prices on their contracts for 12 months as a selling tool. While this is a fair business decision in times of low inflation, it might not be so sensible going forward. 

Finally, check your terms and conditions paperwork and make sure it has a ‘force majeure’ clause to build in some flexibility.

A ‘force majeure’ event is unexpected circumstances outside a contracting party’s reasonable control that prevents you from performing your contractual obligations.

By all means, use this article to explain the changes to your clients. They’ll be hearing it from many other businesses they rely on, so don’t sell yourself short because you’re too nice. 

Scott Johnstone, BPCA Marketing and Communications Manager

Remember, professional pest management costs money. We already have some of the lowest prices in Europe for pest services (see page 36). Maybe it’s time the industry shook up its pricing structure (or perhaps we’re already late to the party)?

Whether or not you decide to change your prices, keep track of your income and expenditure this year. Prudent financial management has never been more crucial.

Client template

BPCA has drafted a template client letter for members, to help explain a price rise to contract clients. You can download it now from the BPCA Member Library.

bpca.org.uk/library

Source: PPC107