The profit leak calculator: what walked out of your business last year

What this measures

Most operators can quote their new sales number to the dollar and could not put a number on the leak if you paid them. This tool prices the three leaks every recurring pest control book has:

• Cancellations. Every canceled account takes its full annual value with it. The book only grows when sales outrun this number, and most shops have never totaled it.
• Reservices. A free callback is a tech, a truck, and a route slot spent on work you already billed once and will not bill again.
• Aging receivables. A balance that crosses 60 days past due is not revenue having a slow week. A real slice of it is already gone.

Everything is stated per year on purpose. Monthly framing is how leaks hide. A 1.5 percent monthly cancel rate sounds like a rounding error and compounds to roughly 17 percent of the book gone in a year, which does not.

The formulas, in the open

A number you cannot see the math behind is a number you cannot argue with or trust. Here is all of it:

• Cancel leak = active customers x annual cancel rate x average annual value per customer. If you enter a monthly rate, it compounds properly instead of just multiplying by twelve.
• Reservice leak = free visits per year x your average revenue per completed service. A free visit occupies a slot a paying visit could have filled, so it is priced at what a slot is worth on your book.
• AR leak = balances 60 or more days past due x 30 percent. Collection industry aging tables put expected recovery near 70 cents on the dollar once a receivable passes 90 days, so 30 percent is the conservative read for a 60-plus bucket.

A worked example

A five-truck shop: 1,200 active customers at $52 a month, cancels running 1.5 percent monthly, a 6 percent reservice rate on 950 services a month, and $18,000 sitting past 60 days.

That shop would need roughly $174,000 of new sales next year just to stand still. Nobody in that building is talking about it, because no report they look at adds it up.

Why most of the cancel leak is optional

The cancel line is the big one, and the published research on it is blunt. Kemp Anderson of Kemp Anderson Consulting, writing in PCT Magazine, finds 91 percent of cancellations can be controlled and prevented, and the top reason customers leave, at 62 percent, is feeling the company no longer views them as a priority. Not price. Not bugs.

So when the calculator shows your controllable slice, read it as a to-do list with a dollar figure on it: expectations set at the sale, visits the customer can actually see, quality problems fixed fast, and at-risk accounts called before they call you. The cancel rate guide walks through each one.

Where to find your inputs

Every input lives in FieldRoutes, formerly PestRoutes, in three different reports that were never designed to be added together. Active customers and average recurring charge come off your subscription reports. Cancels come from the cancellation report, dated to when the customer actually left. Reservices are your zero-dollar completed appointments. The 60-plus balance is on your AR aging.

If gathering six numbers for a free calculator feels like work, notice that. It is the same work standing between you and watching these leaks weekly.

Common questions