Rollins Pricing Spineometer: 2 of 5 Vertebrae

Rollins, a pest control company and owner of the Orkin brand, had a positive FY 2024. Revenue rose 10% to $3.4 billion, and operating profits rose 12% to $770 million over the last year.

A review of Rollins’s February 2025 annual report and subsequent earnings calls provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

During the February Q4 earnings call, Kenneth Krause, CFO of Rollins, described the company’s approach to pricing and price evolution. “When we look at pricing, we’ve always talked about CPI plus level pricing. I think we all saw the CPI print yesterday. It still remains at a relatively elevated level. I think we still have an opportunity to get above CPI level, of pricing here in 2025, probably similar to the pricing that we got in the last year or two. And so, there’s no reason for us to take our foot off the gas, when it comes to the pricing. We feel like we’re providing a very essential service to our customers. Our customers see the value of the service, and we price it slightly ahead of what CPI is coming in at.”

He reiterated and clarified this sentiment in the April Q1 earnings call. “You know, it’s not just every customer is not seeing the same price increase. It certainly is market-specific.”

As for the impact of tariffs, Jerry Gahlhoff, CEO of Rollins, stated in the April Q1 earnings call that Rollins has limited exposure to tariffs. “To give you some perspective, our greatest area of potential impact from tariffs could be in our fleet. Fleet costs in total represent just over 5% of our income statement, and it’s important to dissect that further and recognize that automobile lease costs represent roughly 3% of our income statement. We are positioned extremely well to deliver on our financial objectives despite uncertainty in the current macroeconomic environment.”

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 20,000 employees at Rollins, industry benchmarks would suggest 10 to 35 to be dedicated to addressing pricing challenges.

1. Rollins describes itself as a premium service provider. This should enable Rollins to price at a higher level than its competitors, as aligned with the remarks of Kenneth Krause.
2. Rollins most likely sells its services on an as-needed basis, where price adjustments can be made as required.
3. If Rollins does or will enter long-term contracts with customers, such as large commercial (Restaurant Chains, Hospital Networks) or government entities, Rollins would likely benefit from the use of Index-Based Pricing to manage volatility in labor, trucks, and other input markets.
4. Rollins competes in a highly fragmented market with many small businesses and local operations. Pricing service offerings in a dispersed and fragmented market would benefit from primary market research. (1) One method that has been used in similar situations is to apply a national conjoint analysis study on pricing and value differential and adjust to local price benchmarks of competitors to maintain a relatively constant price differential. (2) Others have attempted to divide the market into a hundred submarkets and conduct individual price studies on each market. (3) All serious pricing efforts would require ongoing competitor price benchmarking activities, of which there are multiple means given that, largely, pest services are a consumer product, and as such, prices are generally publicly available.
5. A 93% majority of Rollin’s revenue originates in the States. Outside of the United States, they have operations in Australia, Singapore, the United Kingdom, and Canada. With minimal business internationally, it would be reasonable for pricing to be guided from the States, with local pricing surveys and data informing decision-making.
6. Transactional price management for direct sales would benefit larger sales to commercial customers, enabling the salesforce to predict the best, worst, and expected price at the customer, segment, and product level.
7. Pest control is a seasonal activity. Promotions at the beginning of the season or for “winter maintenance” contracts are likely to be used. Calculations of not just ROI or Cost of Customer Acquisition but also Breakeven Incremental Sales per Redemption would support a more rational and controlled price promotion design.
8. Many of their services are sold on a recurring basis. Customer Lifetime Value studies and price optimization per segment should be evaluated periodically.
9. Industry and competitive changes are not suspected to be as much of a challenge for pest control as it is for other industries, such as technology or medical care. Rollins spends little of their revenue on research and development.

OBSERVED PRICING CAPABILITY

Research into the investment by Rollins in pricing yielded very underwhelming results.

1. A limited pricing team was identified within Rollins’ Orkin brand.
2. Pricing analysts and managers were identified. Neither director nor vice president roles in pricing were identified.
3. Significant pricing decision-making appears to be distributed between project managers, marketing analysts, finance, sales, and other professionals.

Given the importance and capability of pricing at Rollins as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of June 2025.

Rollins Pricing Spineometer: 2 out of 5 Vertebrae. Rollins’ management has appropriate instincts regarding pricing and price positioning, yet the organization required to ensure resiliency and well-informed pricing decision making is below expectations. There is an opportunity for immediate and long-term improvement in business performance.

ROL (Rollins Inc.) rose from 55 the day prior to their April earnings call to 56 one week later. FY 2024 revenue of $3.4 billion with a 23% operating margin and P/E ratio near 60.

For FY 2024, a 1% improvement in price would yield a 4.4% improvement in operating profits, holding all else constant at Rollins.