# Best way as a Business owner to pay Subs



## Harford13 (Dec 20, 2010)

How are most of you business owners out there paying your subs? It would seem to me that most employers choose to pay by the hour, and that this is how subs expect to get paid. Has anyone had any luck paying subs by the account? This seems to me to be the most economic way to ensure your not getting shorted on time, and you don't have to worry about guys dragging there feet to get that extra hour or two. I am hiring my first employee this year, well my first employee outside of family and guys are turning there noses away when I tell them I'm going to pay them a percentage of what I make on each lot. How is this not fair, and are subs really that used to fudging the numbers that they don't want to get paid for the work they actually do, or is there a reason I cannot think of that is making guys bulk at the idea? I'm in the business to make money just like anyone else, I'm not paying you to drive from site to site, stop and get your coffee, fuel, etc.. I haven't set a rock solid percentage yet, as far as what's fair to pay these guys but I figure that this is negotiable, and will be based on experience and equipment. The faster you can get through my route and maintain your quality of work the faster you can make money from me and move on to plowing your own accounts etc. This makes sense in my mind, what am I missing?


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## ducaticorse (Oct 16, 2012)

A percentage of the account is the best way to go 100%. Easier to forecast how much money you will bring in, and easier for the sub to know exactly what he is making. Plus everything else you mentioned. 

I was subbing for a GC for a few years on a large supermarket, he got 17% off the top of the contract dealt with the client, which was based on per increment snow fall, and I ran the show on the ground. 

What were you thinking of doing for a percentage out of curiosity?


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## ducaticorse (Oct 16, 2012)

As far as the sub flipping their noses, I guess that you need to know the difference between dealing with a business person, and the person short of view who see's only that 65-70 an hourly. I did far better on a percentage than I ever would have on hourly at this particular lot. We had a one inch trigger. I could do the entire lot under three inches in under 4/5 hours by myself and my gross was about $1025. If I had to call in help in a major storm, I had a guy close that would come in for $65 an hour. It worked out well. 

Not to say every deal is like this, but you as a contractor also have to understand that you are going to get a minority of the percentage. I would say anything over 20% is pushing it.


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## Italiano67 (Feb 16, 2005)

If I was working as a sub (which I am not but I do hire them) and you didnt pay travel time between sites I would not work for you. You are the guy who gets the work and puts the sub on a route. Why would you only pay him for plowing when he is doing your bidding by plowing your specific plan for him? I can see not paying for coffee breaks or time from the last job home but even getting fuel I would consider part of the job especially when he is out for a long time. Do you dock your employees for taking a bathroom break? If you bid your jobs that tight that you cant cover a quality sub for those things that is your own fault.


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## Harford13 (Dec 20, 2010)

I was thinking that 15% is fair. Again if a guy works hard and keeps my clients happy I'll go less than that. I've had most of these accounts for years so everything is easy for me, it's all cut and paste paperwork.


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## ducaticorse (Oct 16, 2012)

Italiano67;1526485 said:


> If I was working as a sub (which I am not but I do hire them) and you didnt pay travel time between sites I would not work for you. You are the guy who gets the work and puts the sub on a route. Why would you only pay him for plowing when he is doing your bidding by plowing your specific plan for him? I can see not paying for coffee breaks or time from the last job home but even getting fuel I would consider part of the job especially when he is out for a long time. Do you dock your employees for taking a bathroom break? If you bid your jobs that tight that you cant cover a quality sub for those things that is your own fault.


Well with the percentage base, you would take into account travel times between sites and adjust percentages accordingly.

As for taking bathroom breaks, smoke breaks and stopping for food fuel and water. Coming from both sides of the fence now, it's mighty funny how when it's on your own dime, you take less stops, and u go a tad faster getting those stops complete....


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## ducaticorse (Oct 16, 2012)

Harford13;1526486 said:


> I was thinking that 15% is fair. Again if a guy works hard and keeps my clients happy I'll go less than that. I've had most of these accounts for years so everything is easy for me, it's all cut and paste paperwork.


15% is a good number.....


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## grandview (Oct 9, 2005)

First get your terms right,Sub and employee. Employee get paid by the hour. A sub can be paid by the hour or the job.


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## ducaticorse (Oct 16, 2012)

Stop busting balls. He obviously misspoke after using the proper term first... How about some input to the question he is asking about?


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## ducaticorse (Oct 16, 2012)

And just as an FYI Grandview..

http://www.thefreedictionary.com/_/dict.aspx?word=employee


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## Burkartsplow (Nov 1, 2007)

I think a percentage is nice but a lot of companies just do hourly. I have companies cal me to sub out lots to me in my area if I have room and I just tell them I want a per push price. Now the percentage I am receiving for that lot I have no idea but I go and take a look and figure it it is worth it. If not I say no thanks. I don't think they want to give out a percentage because then they are essentially giving away their pricing for the job and a lot of guys like to keep that under wraps, myself being one of them. But In my area a sub can expect $45 to $50 an hour from a company and for me to put put a truck on the lot and pay my driver and costs it is just not worth it. I can have my guy go do resis and pull in $150 an hour. But these companies think $50 an hour is a good price and they find guys to take it. Kind of went off track. Sorry about that.


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## Wilnip (Oct 4, 2011)

I have worked as a sub and still have one truck subed out doing residentials for the contractor after my commercials are done. He pays percentage and we can still average a decent pay. Just explain to your subs that they will average $x per hour, more if they hustle. As far as the paying travel time between jobs, that should already be figured into your price per property so the sub is still getting paid travel in the long run.


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## ducaticorse (Oct 16, 2012)

Burkartsplow;1526564 said:


> I think a percentage is nice but a lot of companies just do hourly. I have companies cal me to sub out lots to me in my area if I have room and I just tell them I want a per push price. Now the percentage I am receiving for that lot I have no idea but I go and take a look and figure it it is worth it. If not I say no thanks. I don't think they want to give out a percentage because then they are essentially giving away their pricing for the job and a lot of guys like to keep that under wraps, myself being one of them. But In my area a sub can expect $45 to $50 an hour from a company and for me to put put a truck on the lot and pay my driver and costs it is just not worth it. I can have my guy go do resis and pull in $150 an hour. But these companies think $50 an hour is a good price and they find guys to take it. Kind of went off track. Sorry about that.


Good points.. I myself would be less concerned with someone knowing what I am charging, than trying to find a reliable guy that appreciated being rewarded for fast and dependable quality work, and fully understood how beneficial a percentage base cut can be over hourly. Any knucklehead can figure pricing to a ball park with simple calculations. There is much more to landing an account than just a number, (well for those worth doing IMHO).


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## grandview (Oct 9, 2005)

ducaticorse;1526619 said:


> Good points.. I myself would be less concerned with someone knowing what I am charging, than trying to find a reliable guy that appreciated being rewarded for fast and dependable quality work, and fully understood how beneficial a percentage base cut can be over hourly. Any knucklehead can figure pricing to a ball park with simple calculations. There is much more to landing an account than just a number, (well for those worth doing IMHO).


Partly good point. If your worried about him stopping for coffee or shooting the crap ,it's part of your soft cost of doing business. Figure it costs you s few bucks for him doing this ,but in return you know he's reliable and don't need to be badysitted doing the work and you don't have to worry about looking for other guys ,it might be worth it. But i would stick to hourly.


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## RLM (Jan 12, 2006)

Either way percentage or hourly, that said I wouldn't work as a GC to only get 15%. If i could find a GC that only kept 15%, at that point I would rather be a subcontractor for them. There is no way 15% covers my advertising, estimating, overhead, insurances, etc. let alone profit.


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## hatchmastr (Oct 28, 2011)

grandview tell me something u mean a sub - contractor with his own equiptment own insurance.


i would do 40 % for the sub if he assumes all risk no?


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## grandview (Oct 9, 2005)

hatchmastr;1526710 said:


> grandview tell me something u mean a sub - contractor with his own equiptment own insurance.
> 
> i would do 40 % for the sub if he assumes all risk no?


Yes, He will have risks ,but in the end if something happens you all get sued and the judge and lawyers will figure it out later.


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## hatchmastr (Oct 28, 2011)

does a sub have to have their own liabillty ins. ?? 

if so why would anyone sub for 50? 70? an hour make no sense to me 

but im more of the type to go find my own jobs thru refrences and just meeting new ppl canvicing areas


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## grandview (Oct 9, 2005)

You should have your own insurance,its to protect you ,not them. So guys might not be able to commit full time plowing so they get hooked up with someone to fill in.


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## ducaticorse (Oct 16, 2012)

RLM;1526701 said:


> Either way percentage or hourly, that said I wouldn't work as a GC to only get 15%. If i could find a GC that only kept 15%, at that point I would rather be a subcontractor for them. There is no way 15% covers my advertising, estimating, overhead, insurances, etc. let alone profit.


It does when you are managing enough accounts. It's all about how much respinsiblity you want to have.


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## Sawboy (Dec 18, 2005)

hatchmastr;1526734 said:


> does a sub have to have their own liabillty ins. ??
> 
> if so why would anyone sub for 50? 70? an hour make no sense to me
> 
> but im more of the type to go find my own jobs thru refrences and just meeting new ppl canvicing areas


You don't "have" to have liability insurance as a sub, but its foolish not to. And I'd never hire a sub that didn't. Lawyers go after the biggest wallets. In most cases, that's not the sub, or the contract originator. It's the insurance company. Which means if your sub doesn't have insurance, they're gonna go after yours.

Not to mention, a one million dollar policy when I last had it was about $900/yr IIRC


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## Longae29 (Feb 15, 2008)

See.below....this made no sense


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## Longae29 (Feb 15, 2008)

We pay flat rate 75% for the contractor on jobs we sub everything on. For jobs that we just sub the plowing its hourly.


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## birddseedd (Jul 12, 2010)

Most here in Michigan do hourly because its simpler. I thought about doing a percentage for my guys, but when it comes down to it hourly is easier. plus if i have my guy do some of my drives i like the idea of telling him im paying him more per hour for that work than his current route.

As far as getting screwed by your contractors. what we do is have our guys fill out a time sheet telling when the arrive and leave each site. then you can compare how long they took with how long they should have took and youll know who to give work to and who takes too long.

i acutaly want to write software that will keep track of people as they go threw the route and records it so you can bring up the info and see exactly where they went and how long they were at each stop and what not giving you statistics on each truck


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## Harford13 (Dec 20, 2010)

Keep in mind everyone's overhead is different, 15% may not work for you, however this isn't my full time Job (unless it's snowing) I have the luxury of having a full time job making decent money where I can take leave when it snows. (Yes like a govt. job) I hired a SUB today, he has his own business, own ins. own equipment including secondary equipment in the event of a breakdown. I'm Keeping 15% for my troubles (a few reams of 8 1/2 by 11" paper and a few phone calls) I ran the numbers hourly per site, and it works out to be around $85/ hr per site. Now this is my hourly avg. per site, which he may or may not be able to match. Either way subs around here are making around $90/hr for a pick up. My benefit is not having to worry about some crazy bill coming in from my sub because his employee too 4hrs to clear a lot that took me one hour. His inefficiency isn't my fault, were all in business to be efficient and make money. 
Now I can sub my truck out for $90/hr, let someone else cover my zero tollerance accounts, and still take care of my residentials when I'm done my sub work.


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## Harford13 (Dec 20, 2010)

Harford13;1528519 said:


> Keep in mind everyone's overhead is different, 15% may not work for you, however this isn't my full time Job (unless it's snowing) I have the luxury of having a full time job making decent money where I can take leave when it snows. (Yes like a govt. job) I hired a SUB today, he has his own business, own ins. own equipment including secondary equipment in the event of a breakdown. I'm Keeping 15% for my troubles (a few reams of 8 1/2 by 11" paper and a few phone calls) I ran the numbers hourly per site, and it works out to be around $85/ hr per site. Now this is my hourly avg. per site, which he may or may not be able to match. Either way subs around here are making around $90/hr for a pick up. My benefit is not having to worry about some crazy bill coming in from my sub because his employee too 4hrs to clear a lot that took me one hour. His inefficiency isn't my fault, were all in business to be efficient and make money.
> Now I can sub my truck out for $90/hr, let someone else cover my zero tollerance accounts, and still take care of my residentials when I'm done my sub work.


And for those of you crunching the numbers, No, I'm not billing at $100/hr. I retained all of the salting work for myself, which is where I make most of my profit anyway. And the 
85/hr only works for a 4" or less snowfall, it goes up from there.


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## csi.northcoast (Aug 7, 2010)

Be very careful about paying subs by the hour ( or at least posting on a message board that you do). The IRS and the state may classify those subs as employees.

There is a 12 item list on the classifications of a subcontractor (IRS i believe). The Federal and State gov't (at least in ohio) is looking to colllect as much money as they can.


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