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I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?

 
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Old 04-03-2014, 09:19 AM   #1
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I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


I am about to start doing work for a new contractor this year doing his roofing projects. I myself do general contracting however, I have done roofing as my main thing over my career. I do not have the manpower on my crew to handle the volume this contractor will be giving me and I have hired another subcontractor under me that I trust to handle the volume. The problem resides with the fact that I am now in fact double subbing and someone has to eat the costs of that inefficiency. I know the work and I know it deserves the pricing it demands and my subcontractor has given me a locked in price structure for the year that is along where I would do it myself. I Have informed the GC to the fact that this is how it will be if he hires me for sure and that I will be higher priced compared to others out there and with that he gets my business skills and the handling of things when they come up and keeping issues out of his mind in relation to the roofing projects he gives me. My issue is I know I am marking up to higher prices but what would be right? lets say My sub charges 70/sq I initially am thinking a 15% would be fair which would make my pricing 82.35/sq.

Anyone have some input or suggestions? Is this something I should pass on? He is a very nice guy and has tons of work based on his reputation and he said he will pay more to keep that. I like to believe that my work reflects high quality in service and trade up to the standards he would like.
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Old 04-03-2014, 09:25 AM   #2
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


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Originally Posted by Sniffer View Post
I am about to start doing work for a new contractor this year doing his roofing projects. I myself do general contracting however, I have done roofing as my main thing over my career. I do not have the manpower on my crew to handle the volume this contractor will be giving me and I have hired another subcontractor under me that I trust to handle the volume. The problem resides with the fact that I am now in fact double subbing and someone has to eat the costs of that inefficiency. I know the work and I know it deserves the pricing it demands and my subcontractor has given me a locked in price structure for the year that is along where I would do it myself. I Have informed the GC to the fact that this is how it will be if he hires me for sure and that I will be higher priced compared to others out there and with that he gets my business skills and the handling of things when they come up and keeping issues out of his mind in relation to the roofing projects he gives me. My issue is I know I am marking up to higher prices but what would be right? lets say My sub charges 70/sq I initially am thinking a 15% would be fair which would make my pricing 82.35/sq.

Anyone have some input or suggestions? Is this something I should pass on? He is a very nice guy and has tons of work based on his reputation and he said he will pay more to keep that. I like to believe that my work reflects high quality in service and trade up to the standards he would like.

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Old 04-03-2014, 09:28 AM   #3
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


Twin cities mn
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Old 04-03-2014, 09:45 AM   #4
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


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Twin cities mn
I would keep your price as low as possible. If you can keep this guy happy then he will feed you more work.

You will be in business a very long time....

Give him a great deal now and he'll get more work lined up.

Charging by the square is the best way, sounds like you got it all figured out already. And definitely lock in your prices for the whole year.
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Old 04-03-2014, 10:29 AM   #5
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


Quote:
Originally Posted by Sniffer
I am about to start doing work for a new contractor this year doing his roofing projects. I myself do general contracting however, I have done roofing as my main thing over my career. I do not have the manpower on my crew to handle the volume this contractor will be giving me and I have hired another subcontractor under me that I trust to handle the volume. The problem resides with the fact that I am now in fact double subbing and someone has to eat the costs of that inefficiency. I know the work and I know it deserves the pricing it demands and my subcontractor has given me a locked in price structure for the year that is along where I would do it myself. I Have informed the GC to the fact that this is how it will be if he hires me for sure and that I will be higher priced compared to others out there and with that he gets my business skills and the handling of things when they come up and keeping issues out of his mind in relation to the roofing projects he gives me. My issue is I know I am marking up to higher prices but what would be right? lets say My sub charges 70/sq I initially am thinking a 15% would be fair which would make my pricing 82.35/sq. Anyone have some input or suggestions? Is this something I should pass on? He is a very nice guy and has tons of work based on his reputation and he said he will pay more to keep that. I like to believe that my work reflects high quality in service and trade up to the standards he would like.
Who handles deliveries, colors, schedules, warranty ? Labor only? How many roofs? 1 or 4 a month? You need a sub at 50 and you charge 90.
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Old 04-03-2014, 11:03 AM   #6
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


At this point, he handles sales, color, delivery etc..warranty is another thing, that will need to be discussed. However, on the other hand I will be handling anything that pops up during the work. Handling the customer on the job, and just being the face of the workers in a sense.
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Old 04-03-2014, 11:35 AM   #7
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


Also as of now it looks to be about 1-5 a month starting out and progressing from there.
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Old 04-03-2014, 11:53 AM   #8
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


its a bad road your going down, a sub subbing out, why should the GC give you more than the sub your giving
?
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Old 04-03-2014, 12:16 PM   #9
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


He told me he will pay for quality, as in he has a very strong reputation in the area and 90% of the work is referral and prior customers. I can deliver the quality experience and dedication to the actual product as that is the same way I get most of my work. In his words he wants to create a better image for roofing than in the past and is willing to pay for that, which is where I come in.
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Old 04-03-2014, 12:20 PM   #10
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


You should of charged the same price from the beginning including the 15% markup. This way he doesn't feel like he's paying for the job and a superintendent, on the jobs your not doing. Now he won't know his costs before he bids. He has no way of knowing if your going to do the job or if this will be one your too busy to get to.
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Old 04-03-2014, 12:28 PM   #11
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


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You should of charged the same price from the beginning including the 15% markup. This way he doesn't feel like he's paying for the job and a superintendent, on the jobs your not doing. Now he won't know his costs before he bids. He has no way of knowing if your going to do the job or if this will be one your too busy to get to.
I agree with Mike.... Figure out a rate you can live with and that's your FIRM price you give the guy, no matter which crew you use. If you sub it out, you make a little less. If your crew does it, then you make a little more.

Good luck.
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Old 04-03-2014, 01:14 PM   #12
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


And no crying at this forum in six months when the GC and sub-sub get together and cut you out of the equation.
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Old 04-03-2014, 01:23 PM   #13
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


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And no crying at this forum in six months when the GC and sub-sub get together and cut you out of the equation.
infact, if the subs sub is as good as the sub, And the GC is a god loving christian with strong morals and the "I dont care if I make money, as long as my subs ( and their subs) are happy" that everybody loves,
you should have no problems.

Your best bet and least of problems is to ask the sub for a percentage up front, for the work your passing to him, a 5% maybe,
Then have him meet with the GC and let them take care of their business.

That way if problems accur, they are not yours and the god loving GC will always come back to you,

Putting your self in the middle with no real substantial gain(money wise)
is a bad decision.

the worst that could happen is you lose a sub,GC and a reputation and for what, a few bucks.

never risk in business if there is nothing to gain
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Old 04-03-2014, 04:02 PM   #14
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


I suppose it all depends on the character of the GC. I pay my main sub (he runs several crews - which I am sure are subs for him) and they do EXCELLENT work for me. It's to MY standards, I'm comfortable with his pricing, and I get excellent service from him all around.

So, why in the world would I try and "steal" any of his guys, just to save a few bucks? That would be a horrible business decision on my part. I would be placing my eggs in one basket. And my guess is, the minute I couldn't keep him busy 24/7, he would bolt right back to my main sub. But, I would have ruined my good name with my main sub and he would likely refuse to work for me again.
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Old 04-03-2014, 05:39 PM   #15
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


This is so dumb I can't even put it into words.
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Old 04-03-2014, 05:50 PM   #16
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


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This is so dumb I can't even put it into words.
This is almost considered normal here.

This Contractor WILL drop this guy in six months. We have lost out on some of the largest and best builders in this state for cheaper labor. The Mexi's will do them for $25 a square. Especially if there aren't enough storms.

Many Contractors that do roofing in MN is a sub of a sub of a sub.

Hey sniffer, make sure they are at least licensed. If not, not legal here.


These kind of GC's will string a guy along for a long time waiting for payment too. They will want quite a few done before you are paid.

If you have enough of your own work, I wouldn't even bother with them. 1-5 houses a week? This company doesn't give a rats ass about their subs.

Last edited by MJW; 04-03-2014 at 05:54 PM.
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Old 04-03-2014, 06:25 PM   #17
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Re: I Am Sub-Contracting & Need To Hire A Sub Under Me. What Margin Should I Do?


Thank you for posting on ContractorTalk.com. Straight pricing questions are frowned upon here, as are 'Going Rate' questions. If you are a contractor seeking advice regarding your pricing structure, the Moderators of this forum would like to direct you to this thread: "Pricing, Estimating and Success".

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