Are you leaving thousands of dollars at the bottom of the deep end without even realizing it? As the sun begins to bake the pavement this May, every pool owner in the country is looking toward their backyard oasis. But as a business owner, are you looking at your billing structure with the same clarity?
When we talk to route owners at Sealey Business Brokers, one of the most common debates we hear is whether "All-Inclusive" billing is a service-level gold standard or a silent profit killer. If you’ve ever wondered why some routes sell for a premium while others struggle to find a buyer, the answer often lies in how you handle your chemical costs.
Today, we’re diving deep into the shimmering waters of pool route valuations. We’re going to pull back the curtain on why "plus-chems" or "pass-through" billing models are the resilient linchpins of a high-value business, and why your "all-inclusive" model might be anchoring your enterprise to a lower valuation than you deserve.
The All-Inclusive Allure: A Dangerous Mirage?
It’s easy to see why many technicians start with all-inclusive billing. It’s simple, right? You tell the customer, "It’s $160 a month, and I handle everything." No extra invoices, no awkward conversations about the rising price of Trichlor, and no line-item math every Sunday night. It feels professional, and it’s a "set it and forget it" model for the homeowner.
However, from a strategic positioning standpoint, all-inclusive billing is a gamble where the house: that’s you: often loses. When you include chemicals in a flat monthly rate, you are essentially shorting the commodities market. You are betting that the price of chlorine, acid, and shock will stay low enough for you to maintain a profit margin.
But as we’ve seen over the last few years, the "shimmering water" of the pool industry can get cloudy fast when supply chain disruptions hit. If chemical prices spike 20%, your revenue stays the same while your expenses soar. To a savvy buyer looking at your books on our routes for sale page, that looks like an unmitigated risk.
Why "Plus-Chems" is the Strategic Choice for Valuation
In the world of business brokerage, we don't just look at how much money is coming in; we look at the quality of that income. This is where the "plus-chems" (or pass-through) model shines like a freshly tiled spa.
In a plus-chems model, you charge a flat base rate for the labor and service, and the chemicals used are billed on top of that: either at cost or with a small markup. Here is why this makes your business a "solid investment" for a potential buyer:
1. Margin Protection
With a pass-through model, your profit margin on labor is protected. Whether a pool requires two tabs or ten, your take-home pay for the time spent on-site remains consistent. Buyers love predictability. When a buyer visits Sealey Business Brokers to find their next venture, they are looking for a business that can withstand economic shifts. A plus-chems route is recession-resistant and inflation-proof.
2. Scalability and Clarity
If you are looking to grow, the plus-chems model allows you to scale without the fear of "problem pools" eating your lunch. We all have that one customer with the overhanging oak tree and the broken gate who uses three times the chemicals of a standard backyard pool. In an all-inclusive model, that customer is actually costing you money. In a plus-chems model, they pay for what they use. This transparency makes your Net Operating Income (NOI) much cleaner and easier to verify during due diligence.
3. Higher Valuation Multiples
When we value a pool route, we often use a multiple of the monthly recurring revenue (MRR) or a multiple of the annual cash flow. However, not all revenue is created equal. A route with $10,000 in monthly revenue where $3,000 goes to chemicals is less valuable than a route with $8,000 in labor revenue where chemicals are billed separately. Why? Because the $8,000 is "pure" service revenue with almost no variable cost attached.
Navigating the Shift: Taking the Plunge
If you’re currently running an all-inclusive route, you might feel like you’re treading water, afraid that changing your billing will cause a mass exodus of customers. I’m here to tell you: the water is fine.
Most customers understand that the cost of living: and the cost of chemicals: is rising. When you frame the transition as a way to ensure they only pay for exactly what their pool needs, rather than a "buffer" price that covers everyone, they often appreciate the fairness.
If you are planning to sell your route in the next 12 to 24 months, making this switch now is one of the most impactful things you can do to increase your exit price. You are essentially cleaning the filters of your financial statements, making the business much more attractive to "lucrative" buyers, including those looking for E2-Visa opportunities.
What Buyers Are Actually Looking For
When a buyer looks at a listing, they aren't just buying a list of addresses; they are buying a lifestyle and a reliable income stream. They want to know that if they take over the route tomorrow, they won't be hit with a "hidden" expense that drops their take-home pay below what they projected.
A plus-chems route tells a buyer:
- The owner is sophisticated: You understand your margins and manage the business like a pro.
- The customers are trained: Your client base is already accustomed to professional billing practices, making the transition to a new owner much smoother.
- The upside is clear: There is less "cleaning up" to do on the books.
If you’re curious about how your current billing model affects your specific market value, don’t hesitate to contact us. We’ve helped hundreds of owners navigate these uncharted waters to find the best possible outcome for their hard work.
Breaking Down the Math: A Tale of Two Routes
Let’s look at a quick comparison to see how this plays out in the real world.
Route A: All-Inclusive
- 100 Pools at $160/month
- Total Revenue: $16,000
- Average Chemical Cost: $35/pool
- Net Service Income: $12,500
- Valuation Risk: If chemical costs rise to $45, Net Income drops to $11,500.
Route B: Plus-Chems
- 100 Pools at $130/month (Base) + Chemicals
- Total Base Revenue: $13,000
- Chemicals Billed: $3,500 (Pass-through)
- Net Service Income: $13,000
- Valuation Benefit: Net Income stays at $13,000 regardless of chemical price spikes. The customer absorbs the market volatility, not the owner.
In the eyes of a broker and a buyer, Route B is significantly more "resilient." It represents a "shimmering" opportunity because the risk has been effectively transferred away from the business owner.
Stepping Stones to a Better Business
If you’re ready to stop treading water and start making a splash with your business valuation, here are three tips to help you transition to a more attractive billing model:
- Audit Your Usage: Spend one month tracking exactly what you spend per pool. You might be surprised to find which "easy" pools are actually your least profitable.
- Standardize Your "Plus" Items: Decide what is included in the base (e.g., standard liquid chlorine and acid) and what is an extra (e.g., conditioner, phosphate remover, specialty shocks).
- Communicate with Confidence: Send a professional letter to your clients. Explain that to maintain the high quality of service they expect, you are moving to a transparent billing model that ensures they only pay for the chemicals their specific pool requires.
Anchoring Your Enterprise for the Future
The pool industry is a sun-soaked tapestry of opportunity, but your success depends on the strength of your business's foundation. Whether you are operating Arizona routes or managing a fleet in other states, your billing model is the rudder that steers your ship.
Don’t let an outdated billing model be the anchor that holds you back. By moving toward a plus-chems or pass-through system, you are not just making your life easier today; you are building a more valuable, more sellable, and more professional business for tomorrow.
If you’re looking for more "strategic positioning" advice or want to see how your route stacks up against the competition, check out our resources page or join our newsletter for the latest industry insights.
The market is heating up, and there’s never been a better time to ensure your business is worth every penny of your hard work. Let’s make sure your exit is as refreshing as a dive into a crystal-clear pool.
Ready to take the next step? Whether you want to buy a route or find out what yours is worth, Arif and the team at Sealey Business Brokers are here to help you navigate the process with ease. Dive in( the water’s perfect!)
