Contractor Talk - Professional Construction and Remodeling Forum banner

21 - 28 of 28 Posts

·
Registered
Joined
·
416 Posts
Sounds generous

In my area, which probably isn't too different from Iowa, your offer would be considered generous. I'd consider a lower base and some commissison, but wouldn't have a hard and fast scale on commission. I'd base it on how I think they are performing.

Absolutely need a non-compete. If you can get the right person, for the volume of business it sounds like you can do, the bonuses or commissions could push them into the $60K range. Finding the right person is REALLY tough. I've seen some at other companies I thought were grossly overpaid for the sloppy performance, and had people float the idea of coming to work for me at what I thought was highly inflated ideas of their value. Many people might THINK they can run off and start a competitor company, few really have the skill and resources without someone like you backing them. You can always give them a raise if they work out good.
 

·
Registered
Joined
·
3 Posts
15% of the sell goes to the office
Whatever it costs to pay the sub
and than 50-50 between you and the sales man.

Example a painting job sold for 10,000
1,500 goes to the office
3,500 goes to the sub
2,500 goes to you and 2,500 to the sales man. Now if he sold a room addition for 100K thats 15K to you plus the 50% of whatever is left.

This is how most home improvment companies work.
 

·
Pompass Ass
Joined
·
2,090 Posts
They would still bid jobs and get paid as a sub as well as collect a salary for the sales service they provide as additional income with taxes withheld on the salary. Why not just answer the question? Is 40K a brand new truck every two years plus a fuel card along with setting their hours a fair enough offer or not? It's a simple question when you break it down. It may not even end up being a sub when all is said and done but it would be my first choice due to working with them through the years. He may decline the offer.
It depends on how many hours they will be working and what kind of sales they will be generating.
 

·
Registered
Joined
·
120 Posts
15% of the sell goes to the office
Whatever it costs to pay the sub
and than 50-50 between you and the sales man.

Example a painting job sold for 10,000
1,500 goes to the office
3,500 goes to the sub
2,500 goes to you and 2,500 to the sales man. Now if he sold a room addition for 100K thats 15K to you plus the 50% of whatever is left.

This is how most home improvment companies work.
Are you serious? :eek:
 

·
Registered
Joined
·
416 Posts
You got to be kidding

15% of the sell goes to the office
Whatever it costs to pay the sub
and than 50-50 between you and the sales man.

Example a painting job sold for 10,000
1,500 goes to the office
3,500 goes to the sub
2,500 goes to you and 2,500 to the sales man. Now if he sold a room addition for 100K thats 15K to you plus the 50% of whatever is left.

This is how most home improvment companies work.
I don't believe that for a second. The gross margin in most contracting businesses, (especially a business with multiple employees of any size, or subs), is 20-30%. The business then has that 20-30% to pay all their overhead expenses (SG&A) including commissions, PLUS their profit. A net income before tax rate of 12% is really good (NIBT).

So your direct cost of doing a paint job is $3500. You are going to be quoting against individual painters, one to three people, who are going to quote the $3,500 - OR LESS because they are "hongry" or messed the bid up or are lousy business people in figuring what they ought to be pricing it at. Or you are going to be quoting against a contracting firm or GC who quotes it at $5,000 maximum. ($5,000 - $3,500 = $1,500 gross margin or 30%. [$1,500 divided by $5,000 = 30%, or $3,500 divided by 70% (.70) = $5,000]).

You might be a great salesman but I don't think you can consistently close painting jobs, or most contracted jobs like we all do in various fields, with a 65% gross margin. If so, I need to come learn from you or go to work for you.

By the way, a job where one wants a 20% gross margin and your estimated cost is $100 is NOT a quote of $120. That is a job with a 16.67% gross margin. You should divide your estimated cost by the RECIPOCAL of the gross margin percentage you desire. Example for above: 100% - 20% desired GM = 80%. Divide cost of $100 by 80% to quote $125. This gives $25 GM on a job of $125, or 25/125 = 20%.
 

·
Pompass Ass
Joined
·
2,090 Posts
I don't believe that for a second. The gross margin in most contracting businesses, (especially a business with multiple employees of any size, or subs), is 20-30%. The business then has that 20-30% to pay all their overhead expenses (SG&A) including commissions, PLUS their profit. A net income before tax rate of 12% is really good (NIBT).

So your direct cost of doing a paint job is $3500. You are going to be quoting against individual painters, one to three people, who are going to quote the $3,500 - OR LESS because they are "hongry" or messed the bid up or are lousy business people in figuring what they ought to be pricing it at. Or you are going to be quoting against a contracting firm or GC who quotes it at $5,000 maximum. ($5,000 - $3,500 = $1,500 gross margin or 30%. [$1,500 divided by $5,000 = 30%, or $3,500 divided by 70% (.70) = $5,000]).

You might be a great salesman but I don't think you can consistently close painting jobs, or most contracted jobs like we all do in various fields, with a 65% gross margin. If so, I need to come learn from you or go to work for you.

By the way, a job where one wants a 20% gross margin and your estimated cost is $100 is NOT a quote of $120. That is a job with a 16.67% gross margin. You should divide your estimated cost by the RECIPOCAL of the gross margin percentage you desire. Example for above: 100% - 20% desired GM = 80%. Divide cost of $100 by 80% to quote $125. This gives $25 GM on a job of $125, or 25/125 = 20%.
The prices he quoted are for the door knocker home improvement contractors, they are notorious for high prices and crappy work, many of them get or used to get the HO financing and give them a kickback, and when the HO couldn't pay it, they would lose their house, older people usually fall for these types of deals.
 

·
Windows Plus
Joined
·
245 Posts
Are you serious? :eek:
I don't believe that for a second. The gross margin in most contracting businesses, (especially a business with multiple employees of any size, or subs), is 20-30%. The business then has that 20-30% to pay all their overhead expenses (SG&A) including commissions, PLUS their profit. A net income before tax rate of 12% is really good (NIBT).

So your direct cost of doing a paint job is $3500. You are going to be quoting against individual painters, one to three people, who are going to quote the $3,500 - OR LESS because they are "hongry" or messed the bid up or are lousy business people in figuring what they ought to be pricing it at. Or you are going to be quoting against a contracting firm or GC who quotes it at $5,000 maximum. ($5,000 - $3,500 = $1,500 gross margin or 30%. [$1,500 divided by $5,000 = 30%, or $3,500 divided by 70% (.70) = $5,000]).

You might be a great salesman but I don't think you can consistently close painting jobs, or most contracted jobs like we all do in various fields, with a 65% gross margin. If so, I need to come learn from you or go to work for you.

By the way, a job where one wants a 20% gross margin and your estimated cost is $100 is NOT a quote of $120. That is a job with a 16.67% gross margin. You should divide your estimated cost by the RECIPOCAL of the gross margin percentage you desire. Example for above: 100% - 20% desired GM = 80%. Divide cost of $100 by 80% to quote $125. This gives $25 GM on a job of $125, or 25/125 = 20%.
This is moe realistic
 
21 - 28 of 28 Posts
Top