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Rough % Markup on Subcontractors

Discussion in 'Commercial Snow Removal' started by Stoneheadmtn, Sep 6, 2008.

  1. Stoneheadmtn

    Stoneheadmtn Member
    Messages: 40

    I've been plowing as an operator off and on part time since 1978. Some big lots and some small jobs but always more as a "paying hobby" than as a prime revenue source. Last season we took on a few commercial jobs as a sub for a large bidder from out of town and the clients now are asking us to bid the jobs direct. These jobs paid well enough that we're looking at adding more equipment. Are you paying subs 90% of the bid? 75%? 50%?
    I don't want to lowball the jobs but do want them. The client has alot more accts to offer in my area and I want to keep them happy looking to add more of their accts. next year. If I add 20% to what we were paid last year (as a sub) should that be close? These are per push/salt/shovel/calcuim bids. My impression is that the original bidder was making a good sized chunk off the jobs, judging by the NEW Mercedes SUV's he and his wife drive, but he bids a crapload of work so who knows? Thanks, Jon
  2. elite1msmith

    elite1msmith 2000 Club Member
    from chicago
    Messages: 2,762

    umm l really dont know.. but if i paid you 75 , i would at least be charging 100
  3. Stoneheadmtn

    Stoneheadmtn Member
    Messages: 40

    Thanks. I don't mind being a little low but didn't want to undershoot last year to far.
  4. elite1msmith

    elite1msmith 2000 Club Member
    from chicago
    Messages: 2,762

    salting , i have no clue what to tell you the relationship is, were you paid per applicaiton, ? per ton? or jsut your hourly rate?
  5. Stoneheadmtn

    Stoneheadmtn Member
    Messages: 40

    per aplication/push

    We were paid per push / per salt application / per shovel-calcium. One job was about $190 push / $80 salt / $180 shovel walks-calcium as the sub. So I'm thinking add about 20% to those amounts, to bid direct would make it $228 push / $96 salt / $216 shovel walks-calcium IF the bidder was paying us about 75% of what he'd bid it at. We'd still be under last years bid. Of course we had to have proof of all the same insurances last year as a sub that the primary bidder had. So even with the gas and salt increases we'll be paid better than last year. The biggest reason is getting paid on time. The company we subbed for held funds for over 90 days on most invoices, the client tells me they paid all invoices within 30 days.
  6. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,194

    You will get the jobs for sure at those rates. I'd add at min 25% and you will still get the jobs. JMO
  7. Stoneheadmtn

    Stoneheadmtn Member
    Messages: 40

    Thanks Guys. I'll submit this week and see what happens. Will let you know. Jon
  8. M.McDaniel

    M.McDaniel Member
    Messages: 49

    Are you sure the contractor you worked for last year is ok with you bidding on this work? You might consider whether or not you are burning bridges. That account was never yours, so it seems, and stepping on toes, especially with power players (hence the mercedes) is bad mojo. You said you have been off and on for a while, you may consider the ramifications of your choice by talking with veterans in the industry. You may have done lasting damage by even talking with this customer. You may consider all these things before you go further. Industry insiders can really wreak havoc when they feel disrespected, and I'm assuming thats what last years contractor was.
  9. elite1msmith

    elite1msmith 2000 Club Member
    from chicago
    Messages: 2,762

    yeah thats a good point, what if you dont get the bid? then who are you going to work for?
  10. cet

    cet PlowSite Fanatic
    Messages: 7,257

    How big was the place you plowed? There is no way I would charge $80 to salt something that took $190 to plow. How long were you plowing? You are either getting extremely good money plowing or the salt price is very low.
  11. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    I was taught to never bite the hand that feeds you.
    your business but seems like you want to bid this job and other jobs for the same people around town which more than likley belong to the person your subbing for too. Thats one of those unseen rules of business im not sure i would be willing to violate. could hurt your future business relations. And since you were subbing from him you have somewhat of a inside scoop and are on here trying to nail down about what the guy bids so you can bid accordingly.

    two cents.
  12. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    I would doubt that the customer is telling the guy that had it last year that he is talking to you. I would say if you don't get the job, the other guy will and he will ask you to plow it.

    In my opinion you have a couple options.

    1 bid it based on your hourly rate x how long it took you to do it last season and not worry about how much the guy kept.

    2 ad a percentage of what you think the guy last year took from the job for himself.

    3 ask the customer what he was paying.

    I don't have subs so I don't know how much to keep. I would base it on the job and what the sub thought he needed.
  13. jayman3

    jayman3 Senior Member
    Messages: 372

    I also sub for a big contractor in my area and believe me I too have been approached by the property managers to submit a price for the upcoming season but refuse to do that to the guy I work for instead I just do my job and do it well and I am always given something at the end of the season for the quality of work I performed,but I do hear you it is hard but i was always tought not to burn those bridges,and like someone else has said what if you don't get these accounts and he finds out you bid against him do you really thing he will hire you I know I wouldn't I wouldn't even bother with you if you where even thinking of doing this.:nono:
  14. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    I agree with the bridge burners. If your main contractor told you they weren't bidding it, or no longer wanted it, then that's fine but otherwise, I think you're in trouble.

    I think you have a mighty wrong picture of what being the main contractor really has to do and why they get a markup.

    • I have to get up every hour or so, the sub only has to get up when he gets called.
    • I have to buy all the salt/shovels/etc all in advance and maybe get paid during that season, the sub has none of these expenses.
    • If the sub breaks down, they go and get fixed. I have to find someone to finish the job, do it myself, work more hours and still pay the bill for getting fixed.
    • Most all the jobs are a set price (per push for me, many people have seasonal's), the sub gets paid for every hour you work, no matter if travel time, coffee time, or plow time.
    • The sub probably get paid at the end of each day of work, or at the least a week later. I might not get paid for a month or more by the client.
    • I have to go hunt down customers, pay for advertising, chase down payments, deal with insurance companies and suppliers every day, pretty much all year, the sub just has to show up when it snows.
    • and it's my name on the side of the door, not the sub's, at the end of the day I have to go check that the sub did their work correctly and got all the areas, do cleanup, talk to anyone, take calls, etc. The sub goes home and goes back to sleep.
    It's not all peaches and cream my friend.
  15. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,194

    I hate to say this but I do agree with Bri.:cry:
  16. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    It sounds like most of you guys have a good relationship with the generals that hire you as subs.

    This guy said he did not get paid for 90 days. Would you be looking for other work if you weren't paid for 90 days? Alot of dogs bite the hand that feeds them after not being feed for 90 days. If it took me 90 days to cross a bridge, I'd burn that son of a b****
  17. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    key word here is looking for OTHER work. Not the same work. Or addressing the pay delay upfront.
    Not sure if going behind the guys back and bidding is the right way to handle it. At the least i would say he should tell the guy he wont be subbing for him this coming season and he was considering bidding on the work so as not to come acrossed as being underhanded.

    hey wtf do i know though i dont even sub.
  18. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    It's a tough call. But the few accounts we do (as subs) for out-of -town mgmt, have non competes. You also have to take into account that if these large contractors feel you violated their trust (which in my eyes bidding on it without talk to him you are). They may find all the work your doing & lowball it all to drive you out of business, assuming he has deep pockets, here they do.
  19. JK828

    JK828 Junior Member
    Messages: 18

    Where in central PA are you located? I would be concerned about the fact that central PA is made up of many small towns. Word travels fast especially in these small communities.
    Since I rely on word of mouth for much of my business, I would want those words to be positive. Taking business from your employer may not produce the results you want in the long run. I personaly would not go about getting business this way. The no- compete aspect of this is just common courtesy.
  20. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    a person you sub from is not your employer

    i would say if these contracts asked you to bid then it is fair game, not like you went to them and said hey we do your plowing for this other guy and we can do it cheaper

    why care what your general thinks if he doesnt pay for 90 days

    kinda got to look out for number 1 too imo