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Sub Contract Percentages

Discussion in 'Bidding & Estimating' started by MN_SNOW, Oct 11, 2009.

  1. MN_SNOW

    MN_SNOW Junior Member
    from Mn
    Messages: 5

    What is a "fair" rate/percentage to charge for total sub contract snow services for a company.
    The company has no employees or machinery to provide services to their summer lawn accounts that require winter service. Looking to see if I'm nuts here or the other guy a thief.

    Example:
    50 accounts that are small inner city lots. Many with small drives off alley.
    All require sidewalk service @ street as well. Good share of sidewalk footage. My understanding is his billings are @ about a $30 average each. Basicly a few $$ above the mow rate.

    The guy still wants to "profit" on the services he can't provide and I must use his rate. Really pushing a hourly on me that equates to about 35% of his predetermined $30 charge. And projects 20 hrs time to service.
    I can't imagine asking for more then 10% off the top if I was him, and would expect to drop 85% minimum to the sub providing the service.

    You experienced out there help clear the air for me.


    thanks in advance.
    Mn_Snow
     
  2. 2COR517

    2COR517 PlowSite Fanatic
    Messages: 7,115

    Turn the tables. Would you do all the legwork, billing, take the calls, etc. for 10%? Probably not. Apparently he's done a good job servicing these customers in the past, and wants to grow his business. Part of being a sub is that you don't have to do all that, and you know the check is good. As a result, the "reward" part of the deal is much lower. I don't know how much you can push this guy, most areas have an abundance of guys ready to plow for cheap. If you won't do it, someone else probably will. He could hire a couple of lackeys for less than the cost of one good plowman.
     
  3. MN_SNOW

    MN_SNOW Junior Member
    from Mn
    Messages: 5

    Well hopefully I'll be convinced there are many guys willing to service each lot for $10.50 all costs & equipment.
    I don't see any that do anything but plow the drive for $35 let alone get out blowers and do endless footage of sidewalk work.
    If I could dump 100% of my snow services sold on to a sub because I want no part of it, and I only had to process billing for 10%
    or $150 each snow event I'd jump all over it.
    But him getting $1,500 of revenue against my total responsibilities and equipment for $525 seems to be a very tilted field to full fill his obligations. Equates to about $26 hr for me before costs, I don't see many running under $50 hr which is why I'm looking for direction. Appreciate your input though 2cor517
     
  4. 2COR517

    2COR517 PlowSite Fanatic
    Messages: 7,115

    $26 an hour is way too low. You are correct about that. It takes 25 minutes to plow and do the walks?
     
  5. snocrete

    snocrete Banned
    Messages: 2,862

    just like alot will say, there is no magic #......but I will say 35% is not enough for you IMO no matter what the lots are like, considering you are providing ALL the man power and tools/equipment........I will also say that IMO 10% or 15% isn't enough for him either. You need to come up with a workable amount, you seem to already have the time frames figured out, which is the biggest step to estimating who's gonna make what, when its all said & done. Good Luck
     
  6. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    What do you mark up your materials/other subs when you do other summer work?

    20 to 30% right? (or somewhere in there)

    That's what you expect to make off other people, that's what he probably should expect to make.

    He should make about 20%, clearly you're going to have to name him as a named insured (which costs money usually) and you're going to have to figure something out.

    Now, IMO, if I'm a sub I expect to get paid promptly (I mean within a week, a few days at best) and he has to eat getting paid for the 30 to 45 days, that's part of what you get the 20% for. If i'm not getting paid promptly, then I expect more of a percentage as a sub.

    I bet they are all real close together, we do a bunch of tiny lots, front sidewalks and they take like 10 minutes each. There's decent money in it if they are close together. Even at 75% of $30.

    Who's going to manage it? You're in charge and he collects the money? Or he's in charge and you're supplying equipment? (one gets more percentage than the other)

    If he's just going to sit back and bill and do nothign else, that's probably worth 10 to 15%, if he's going ot man the phones and check the work (like a good general contractor would) then that deserves more.
     
  7. Madsider

    Madsider Junior Member
    Messages: 14

    Hourly Rate?

    This is an hourly gig?
     
  8. MN_SNOW

    MN_SNOW Junior Member
    from Mn
    Messages: 5

    Pretty much how he wants it or how it shakes out.
    I use his charge rate and work within his time frame of 4 stps a hour average
    Don't think at this point I care to be held hostage 24/7 all winter for 12 - 14 work days @ 26 hr which ends up like $15 hr after it all.
    With $30 averages I need 70% of the invoice minimum to do it all and then cut taxes and costs out of that.
    If I was just busting clean a drive and going maybe I'd think different, or if he was out doing the same instead of nothing.
    The 30% to push buttons for 5 minutes on a billing program once a month seems more then fair for him.
    Like I said earlier, if I could not provide services I sold, I'd be tickled for someone else to take it all on and still give me 15% for administration duties. Breaking "even" for a service I want nothing to do with is still a good deal in my book. Customers are happy and retained for the summer run, and I did "zero" on the winter end.
     
  9. snocrete

    snocrete Banned
    Messages: 2,862

    P.S. dont take what I say harshly.....I think you may have something good going, just remember you cant make money if he's not?
     
  10. MN_SNOW

    MN_SNOW Junior Member
    from Mn
    Messages: 5

    P.S. dont take what I say harshly.....I think you may have something good going, just remember you cant make money if he's not?

    I take nothing to heart, I'm looking for perspective here from other's to sort out the options.

    That said, I can go work 20 hrs for $15 hr 3 or 4 times a month anywhere and not be on call 24/7, work in the elements, and provide and beat the he!! out of my equipment in the process.
    Again, this guy wants nothing to do with snow services and could care less from a business perspective. After all, you just get subs to do what you will not or can not provide. He targets new accounts that "do not" require winter service.
    I'm looking for the "good thing going" believe me. I just don't see it, or can even justify the arrangement to even be considered.
    I have another offer to run a sidewalk crew with my equipment @ $42 hr as well so I have a good barometer to measure his offer by. The crew thing brings allot of "babysitting" I'm really not fond of doing although one would be my own kid. I just don't see guys running plows/trucks,blowers,shovels,brooms,back packs, for $26 hr.
    Better hope for record snow days (hrs) and light accumulations with "zero" breakdowns to even come close to a reasonable profit @ $26.The conditions, responsibilities and requirements warrant far more then $1,500 a month.
    I'm really a $15 hr employee and not a sub contractor. Should be on a payroll and in his equipment I think.
     
  11. Schuley

    Schuley Senior Member
    Messages: 161

    I've seen 80/20 and 70/30 ish ranges, depends on what your doing and who its for. But ususally you get the 70% and the head guy is taking %20-30% of what you make him.
     
  12. snocrete

    snocrete Banned
    Messages: 2,862

    I agree, and if the #'s work out to be what you say.....it's not worth it. He has bid it 2 cheap to begin with.
     
  13. MN_SNOW

    MN_SNOW Junior Member
    from Mn
    Messages: 5

    "He has bid it 2 cheap to begin with."

    That's the whole issue in my eyes.
    Cant be standing out side clearing countless corner lots of sidewalk footage that the city requires, along with the drive and walks to the house for $30. Stair wells and stair cases at some as well. Then trying to divide that through a sub contractor @ his total expense,equipment and effort. I suppose a few teenagers in a truck with blowers might fill his need but good luck with that.
    I sent him a offer of $22 a property on a 2wk pay cycle, take it or leave it.