Most pest control owners know how to chase revenue. Fewer know how to grow in a way that builds a business worth something to future buyers.
The difference comes down to three things: growth, profitability, and the predictability of your revenue. Nail all three, and you have a valuable business. Hit just one or two, and you may be working hard but not building value.
The Growth vs. Profit Trade-Off
Growth costs money. When you pour more budget into marketing and operations to drive new customer acquisition, your margins get squeezed. Conversely, if you shut off all your marketing tomorrow, your profitability would spike — but you'd be sacrificing your future. Neither extreme is sustainable.
The pest control industry has long used a benchmark called the Rule of 23 to capture this trade-off. The concept — credited to Orkin — says that the sum of your revenue growth rate and your net profit margin should be at or above 23. So, if you're growing at 15 percent, you should be running at least 8 percent net profit. If you're growing at 23 percent, zero profit is acceptable. The software industry has a similar concept called the Rule of 40.
Some pest companies shoot for a composite of 30. The point isn't the specific number — it's the principle: Growth and profitability are in tension, and a healthy business manages both simultaneously.
What Is the Competitive Index?
The Competitive Index is a proprietary metric developed by PCOB to give a more complete picture of pest control company performance than any single number can.
Here's the formula:
Competitive Index = (Revenue Growth % + Net Profit %) × Recurring Revenue %
It takes the Rule of 23 framework — the composite of growth and profitability — and multiplies it by the percentage of your recurring revenue.
Why does recurring revenue matter so much? Because recurring revenue is predictable. It shows up on a schedule. It doesn't require you to re-sell the same customer every month. When you have a high percentage of recurring revenue, your business is more stable, easier to manage, and more valuable.
Industry data show that most pest control companies cluster between 19 and the low 20s on the basic Rule of 23 composite (with some regional variation). The Competitive Index takes that baseline and rewards businesses that pair their growth and profitability with a durable, recurring revenue base.
How to Calculate Your Score & Use the Competitive Index
Think of the Competitive Index as a health check you run on your business — ideally quarterly. To calculate your Competitive Index score, follow these steps or use the free calculator on PCOB’s website: https://pcobookkeepers.com/resources/competitive-index/.
Step 1: Calculate your Rule of 23 composite.
Add your revenue growth rate (year-over-year) to your net profit margin. If you're at 12 percent growth and 9 percent net profit, your composite is 21.
Step 2: Calculate your recurring revenue percentage.
Divide your recurring revenue (contract-based, scheduled services) by your total revenue. If $1.8 million of your $2 million in revenue is recurring, that's 90 percent.
Step 3: Multiply.
21 × 0.90 = 18.9
The higher the index, the better positioned your business is — not just financially, but strategically. The goal is to be over 20.
What to do with your number:
The Bottom Line
Revenue growth alone doesn't make a pest control business valuable. Growth fueled by spending that kills your margins isn't sustainable. And a profitable, growing business built on one-time work is still fragile.
The businesses that command the best outcomes are the ones that grow profitably and build a predictable, recurring revenue base. The Competitive Index is a way to measure exactly that, all in one number.
Run it on your business. Then ask yourself which of the three levers — growth, profitability, or recurring revenue mix — has the most room to improve. Start there.