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Sub Percentage?

Discussion in 'Business Fundamentals' started by MajorDave, Oct 30, 2015.

  1. MajorDave

    MajorDave Senior Member
    Messages: 943

    I always see "What would you bid for this?" threads, and I am sure it is here somewhere, but a search gave me a million things so...

    Thinking of this backwards:

    If you have a contract already and want to sub it out, does anyone use any type of simple percentage? Say, for example, you want 20, 25, or 30% of whatever you were awarded to sub it (they provide equipment and salt). Wondering if there is a generally fair % out there?
     
  2. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,535

    On regular job

    T&M jobs are 10 and 10 (21%) mark up.

    Sub contractors are 30% min on bid.


    On snow, I would think 30% is a fair number. I know some companies try for 100%
     
  3. MajorDave

    MajorDave Senior Member
    Messages: 943

    So simple example...my contract is for $1000...I sub it out for $700 End of story. (They pay for all costs - meaning salt).
     
  4. Turbs3000

    Turbs3000 Junior Member
    from Midwest
    Messages: 20

    That would be great assuming they agree. for what it's worth that's a 43% mark up.

    We aim for 15-25% but then again we sub hundreds of sites.

    Things to remember is to have them cover you as additionally insured, you will still be involved should their be a lawsuit, and what's your management time worth as many subs require some hand holding and you checking sites.
     
  5. jhall22guitar

    jhall22guitar PlowSite.com Addict
    Messages: 1,044

    On the bright side, they don't know your mark up.
     
  6. MajorDave

    MajorDave Senior Member
    Messages: 943

     
  7. MajorDave

    MajorDave Senior Member
    Messages: 943

    Ha - ya - just mentioned that above...I guess I want to try to be fair with everyone using a number that is the same so my "story" is always straight and true.
     
  8. vince43m

    vince43m Junior Member
    Messages: 5

    300 is 43% of 700
     
  9. Turbs3000

    Turbs3000 Junior Member
    from Midwest
    Messages: 20

    Markup is 700 * 1.43 (43%) = 1000
    Margin is (1000-700) ÷ 1000 = 30%
     
  10. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,535

    Care to explain?
     
  11. MajorDave

    MajorDave Senior Member
    Messages: 943

    OK - so you proved my point. I am creating a margin --- a 30% margin. (in this example). Remember, my example is that I already have a contract and was wondering what percentage "margin," as you put it, may be an industry standard. You say 15-25%.

    As Olddog asked - explain how you come to this percentage with the over 200 properties you have...I am genuinely interested.
     
  12. Turbs3000

    Turbs3000 Junior Member
    from Midwest
    Messages: 20

    I was only differentiating the 2 because both mark up and margin were mentioned previously and since they obviously vary greatly (percentage wise) I just meant to keep it all on the same terms/page.

    I cannot speak to industry standard or anyone's numbers, only what works for our company. That margin allows us to cover, insurance, billing, collecting, supervision, the 4 million odd requests that come in from customers, and make a little at the bottom line.

    Also, I didn't intend for the # of properties to sound obstinate or snobby in anyway if it was perceived that way, only that numbers feather themselves out over the masses vs 1 or 2 sites.
     
  13. MajorDave

    MajorDave Senior Member
    Messages: 943

    None taken, well maybe a bit, but nice you explained--- but yes, you can get your throat sliced here pretty quickly! haha
     
  14. MajorDave

    MajorDave Senior Member
    Messages: 943

    So it sounds like a generic number would be about 25% so far...
     
  15. born2farm

    born2farm 2000 Club Member
    Messages: 2,310

    Id say our margins fall in the 15 to 25%

    But it also depends in the type of account, how much it gross' for us in a season, how far away it is ect. It costs us more to supervise/babysit a property 40min from our shop vs. one right next door.
     
    Last edited: Oct 30, 2015
  16. absolutely

    absolutely Senior Member
    Messages: 237

    We have 3 subs that supply plowing and sidewalk clearing and salting (our product) of walks. We pay them 70% of what we charge the customer. We salt the lots ourselves but we charge a separate price for that service, so it is easy to break it apart.

    One of our subs used to plow with one of our trucks. Paid him hourly. He bought his own truck that was very similar to what he was using with us, things changed rather quickly. I would say that his route gets done 2.5 - 3 hours quicker (7 hour with our truck average) the jobs look better also. I told him I would charge back for anything he missed or was sub standard.

    Short story long - If I paid him hourly (like I did to dozens of subs over the years) the job would still take 7 hours. He has learned to be efficient and think more like an owner.
     
  17. 1olddogtwo

    1olddogtwo PlowSite Fanatic
    Messages: 11,535

    That 15-25, is that net or gross?
     
  18. born2farm

    born2farm 2000 Club Member
    Messages: 2,310

    We take it off the contact price so gross. After looking at some numbers, were pretty close to 25% across the board.
     
  19. Wayne Volz

    Wayne Volz Senior Member
    Messages: 694

    Sub pay rate

    We pay our subs 75% of the plow cost. We supply them with our material and we get all the ice melter billed.