If I hire another company to do some work for me (work that I dont necessarily do) when they give me a bid for the work and I submit it along with my bid (this is commercial ccu) do I add onto that bid for me to make a little, if so how much %. Ive never used a sub before. For example purposes lets say their bid is $1000.00. Thanks guys!
Just thinking out loud here, but if it were me I would try to bring them down as far as they could go with them still being comfortable with it, and add on how much I think it would take for my guys to have to complete what they started should things go wrong.
For instance, I am being subbed out right now on a job for a large company, my price is 1200.00 and their markup is 1000 bucks more. They have the advantage of knowing the budget allowance for their client. They openly tell me this though, and I have no problem with it at all. I am fine with what I am getting on this job, everyone is happy.
So maybe if you were able to have a meeting with your sub, be open with them and have them help you understand their price structure-and let them know you need to make some coin on it as well, they may be open to lowering the price to stay busy if of course it won’t sacrifice quality.
I sub-contract services that are outside of my expertise. Most recently was a parking lot stripping project for $1200. My contractors provide the estimates, and I close it. My company takes 30% off the top, contractor gets the rest.
Some say its to much, some put a little extra padding, but most think its fair. When you pad your own fees on top of sub-contracting estimates it can get complicated and you will no longer be giving your client a very competitive rate.
I’ve never subbed out anything real sizable, but if and when I do I will write up a contractual agreement to make the terms clear for both parties as a protection. And of course the sub needs to definitely satisfy the legal requirements of a sub or you’ll be responsible for workman’s comp. etc.
I have half a dozen big jobs requiring lift etc… I sub out every year to the same company. Initially I took his bid, added what I wanted and Proposed it. I guess the % added is between 20% to 40%. It may differ from state to state but in WA state we pay a B&O tax. That’s paid on the entire sum. So if I was to sub out and not mark it up, I’d be losing money on the deal.
[B][COLOR=“green”][SIZE=“4”][FONT=“Franklin Gothic Medium”]Just a thought…
From a Sub-contractor / One who Sub-contracts…[/FONT][/SIZE][/COLOR][/B]
Sub contracting is a double edge sword… The ones that are subed to, need the work most of the time.
The ones who do the subing don’t have anyone to do the work, for what ever reason !
So if it is done right it can be a win-win situation ! If one side takes advantage of the other side knowing they can take advantage of their need then it’s a win / lose situation !
The way I would sub it, is to give a bid on a job as though your worker were doing it ! Give the best bid possible, to win the account !
Now with the one you sub it to, you and them sign a contract, and in the contract you are to reveal the bid price, And they can either get paid 50%, 60% or 65-70% of the bid price.
Now most companies offer 60% which is a fair percentage, the companies who offer only 50% in my opinion is taking advantage of the sub-ee because of their needs !
Now I have been a sub contractor so I know that only 50% is not fair. Now when I sub-contract a job I’ll pay them 65%-70% because that is the above board way of paying and will always keep them on line when you need them, and most time for that amount they will always step up because they know the one subing is being a straight shooter !
Now if a sub-ee wants you to pay them the same price as your bid price and then you’ll have raise the initial price lets say 25% then the sub-ee is taking advantage of you because of your need.
Now if you have to raise your price 25% on top of what your initial bid is you’ll probably won’t get the job because a competitive bidder will be close to your initial bid and they will win the account !
Sub-contractors should get less then the initial bid,ergo SUB-CONTRACTORS ! So 50% is way to low, 60% is fair and a standard, but 65%-70% is showing your making money but you really are above board…I would, and have paid 65%-70% when I have a sub-contractor who is well worth it !
In the contract they should be required to have a business license, liability insurance, all their own tools to do the job, their own vehicle, and to do the job to a standard set by you and they must full-fill that before they get paid…but they should get paid when they complete the job and not when the job pays the invoice !
Lifts and such should always be included in the bid if they are NEEDED… But if it is a type of job that needs someone to chair or stage it, then make sure the subee has insurance for that, and are experienced in that !