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subbing for a percentage of the contract

Discussion in 'Business Fundamentals' started by dillyolboy, Feb 20, 2003.

  1. dillyolboy

    dillyolboy Member
    Messages: 97

    I was wondering if anyone subs or has subs paid based on a percentage of the total of their contracts? I plow all residential and was thinking about buying my own truck and subbing next year. Keep in mind all these are done on a seasonal contract. I don't like the hourly pay idea. Let's say he has this guy working for him with an old piece of junk and bald tires for 40/hr. I know with a good truck, set up right I can easily plow 3 driveways to his 1 but no one is going to pay me 120/hr to plow. I also like the idea that we're on the same page. Otherwise I want to go out on a light snowfall but he doesn't think it's enough, etc. I can also set up my truck the way I want it. I also have all my money and I don't have to worry if it snows or not. With hourly pay the more productive you are the less you make :(. Does this sound like it would be workable? What would be a good percentage? Any other ideas for payment?

    PINEISLAND1 PlowSite.com Veteran
    Messages: 664

    If you're going that far, to have the truck, insurance, etc, and your getting up to check weather and make the decision to plow, then you certainly don't need to sub. Go ahead and get your own drives, and take all the profit. If it was commercial, it would be different, but with resi's around here, you could get as many as you want of your very own.
  3. Chief Plow

    Chief Plow Senior Member
    Messages: 201

    We sub to 1 guy on a regular basis, and another 1 on call. We have 13 commercial lotts, and 12 drives. We pay each on an hourly rate. They seem happy and so am I. Everything works out ok. Only my opinion.

  4. dillyolboy

    dillyolboy Member
    Messages: 97

    Thanks Tom.
    I have two problems with going on my own. I don't think I could get enough driveways in one area to be efficient. I also am only 19 and I would like to plow some private roads and get lots of the driveways in there and I don't think anyone will take me seriously. The guy I am working for now is OK but I would like more than 2 1/2 hours of plowing and my truck could be set up much better. He on the other hand is happy the way it is and won't let me change it. Don't worry everybody else told me to go on my own too. I just thought I'd see what other plowers had to say about it.
  5. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I'd say "Do both". Keep subbing the way you are, but start getting your own lined up. If you do a good job and are reliable, people will take you seriously. Don't sell yourself short.
  6. chris k

    chris k Senior Member
    Messages: 204

    I have an employee that works for me during the landscape season that plows with his truck for me in the winter. He has some of his own driveways also. I gave him half of whatever he made me. By the hour doesn't work because he mixes his accounts into my route instead of backtracking all the time. We have done this for a few years now and he ends up with about 50-60 an hour when you add it all up. We all stay happy and all of the accounts are happy.
  7. wyldman

    wyldman Member
    Messages: 3,265

    I kinda do the percentage thing with some of our subs.I know what that route will make me,and give him a portion of it for the season.Works out to be a little more than hourly sometimes,but he is happy,and so am I.No more dickering over hours,I just pay him a set price everymonth.He also gets a bonus if we get a big winter or we use our blizzard clause.He also has some of his own stuff he does,so it takes the pressure off there too.I also find doing it this way,they tend to hussle a little more,and not dog it to get more hours in.
  8. BRL

    BRL PlowSite.com - Veteran
    Messages: 1,277

    I have payed it both ways & subbed both ways. They both work well for the most part. You need to find another contractor with more work available in your area if you're not happy with just 2-3 hours of work. Or at least another contractor willing to pay a set rate like you explained, instead of just hourly. There are other subs getting 10 hour shifts, so you just have to find the companies with that kind of work available, if you don't want to get your own route going. Or continue subbing with the current guy PLUS add on work with another contractor that needs help to get more work. Good luck.
  9. dillyolboy

    dillyolboy Member
    Messages: 97

    OK so is 1/2 the contract a good going rate? When you say half of what the route makes me are you talking about the gross amount as stated in the contract w/the customer or what you net off of the route after you pay taxes and do advertising, etc.?
    Thanks guys I guess I'll play it as it comes.
  10. wyldman

    wyldman Member
    Messages: 3,265

    I don't think you can actually put a number on the percentage,as each route is different,and expenses will vary too.

    I will calculate my net,and then try to calculate what I would normally pay a sub hourly (average) to do that route.I will then look at the two numbers and see how much room I have to play with and if I can give the sub a better rate for the winter.Happier subs do better work.

    If your looking at this from the other end (ie:working as a sub for a percentage),I don't think your going to see those numbers from the person your subbing for.I know I would never get into that kinda stuff with a sub.
  11. SkykingHD

    SkykingHD Senior Member
    Messages: 368

    In answer to the % you pay to subs:

    In the trucking industry they pay 65% to driver and 35% was kept by company. Some people say 60% - 40%. We have been paying our subs 65% for years. We make good money and they have enough money to pay for truck, insurance and driver. We have found if you treat subs as you would like to be treated you get so much more back in return. This yr in NE Ohio has been hard on trucks and drivers, our drivers and subs are not complaining they are happy, and respond to every call to work.

    When the money is right every thing is all right.


    This is our 30th yr in snow removal
  12. fordman

    fordman Senior Member
    Messages: 327

    I'm only 17 and have never had a problem with people not taking me seriously especially after they've seen my work, it speaks for itself. Don't let your age be the only factor to keep you from going out on your own. I work for myself and wouldn't have it any other way. Bottom line if you do a good job people shouldn't care how old you are, as long as your over 16 since your driving.
  13. SkykingHD

    SkykingHD Senior Member
    Messages: 368

    young operators

    Our company uses family also. My grandson is 5 and I put him in backhoe with me. Our Children started plowing at 12 on pvt lots. At 16 both daughter and son were plowing, now daughter is 30 and still plowing and son in law is driving salt truck. Is not uncommon to see a child seat in one of our rigs. In our area it is uncommon to see old men like me out in a rig hehehe..

    Good luck just be honest and do best job you can for customer you will survive.

    30 yrs this year in snow removal
  14. John DiMartino

    John DiMartino PlowSite.com Veteran
    Messages: 2,154

    Ill have my daughter plowing out our shop,and house by the time she's 12,she just turned 8 and drives the Ram all over our fields,and golf course.
  15. wyldman

    wyldman Member
    Messages: 3,265

    All my older boys will drive our trucks,but the two little girls,and even the wife,seem to have a hard time staying awake.They say the hum and vibration of the diesels makes them fall asleep.I guess I'll have to work on that issue if they wanna plow when they get older :)

    It's nice when the girls are fussy,I just drive them around in the truck,and their out for the night.
  16. apkole

    apkole Member
    Messages: 75

    We have operated in your community since 1964. Our subs are paid a flat 65% of the route gross, no matter how much they plow. That percentage allows them to re-invest in newer equipment, and put some money in their pocket to boot.

    All of our work is seasonal contracts, but I set the pricing so that the subs pick up a minimum of $90/hr on an average season. Most recently that number has been crowding $130.

    What we get in return are subs who come back year after year. They know the property profiles and provide good service to our customers. This compensation system dramatically reduces complaints related to turnover (we have almost none) and equipment downtime (they have alot of incentive to do maintenance and re-invest in equipment).

    Most of our subs have other full time employment in excavation or construction or are self employed in other businesses. Their employers are pretty flexible. During the cold and snowy times when we are busiest, they are slow so don't mind the guys taking time off to work for us. These guys do not want the responsibility of the customer contacts, contract administration, scheduling, billing, and all of the other issues which come along with owning a snowplowing service company.

  17. SkykingHD

    SkykingHD Senior Member
    Messages: 368


    You have just described the view we have on our subs. Yes very little turn over, good equipment and very loyal. Every thing is right if the money is right.

    We also buy in bulk on parts for plows and pass this discount to subs, allow them to use service garage, and our mechanice who is good on hyd. also helps them repair problems if they have problems.

  18. dillyolboy

    dillyolboy Member
    Messages: 97

    Thanks for the advice. How do you think I can come across as the most professional like having a truck set up for plowing and show it to them or tell them about the guy two miles down the road that you plowed last year. I will let the quality of the job speak for itself :) BUT I first need to get the contract.
    I probably don't need to tell you (Andy and Dave) this but low employee turnover saves tons. I work at a place where just about every year everyone gets switched around (I plowed three routes at different times last year and shoveled an office complex during a couple of snowfalls) and we get lots of calls "there must be a different guy plowing my drive than last year" The driver also creates a lot less grass damage when he had the "opportunity" to fix it the year before.