"How to Pay 50% to Sub Contractors" By Painting Business Pro
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- Опубликовано: 25 янв 2015
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One of the biggest questions I get is how do I pay my subs 50%? And why don't they just do it on their own?
This video covers how we're able to pay our contractors 50% and why they don't venture off and do the business without us. Basically - we pay a very fair amount, which happens to work out to 50%. When we quote a job, we price ourselves so that we can pay 50% to materials and labor.
Whether we sub-contract the painting work, or we hire employees... either way we need to keep our labor + materials around 50% to run a healthy profitable business.
And that 50% needs to be a fair amount, or we will not be able to keep workers.
Contractors don't go do it on their own, because it's a different kind of business. Watch the video to learn more - but basically marketing, sales, and managing the production of the job takes a lot of time and money - which the contractor doesn't have to worry about if they are sub-contracting.
If they were doing it all, they would also need to raise prices to account for the expenses of marketing, sales, and production management.
Thanks for the video!
Brilliant.
Great content Eric
New and old videos
Keep up the good work
Thanks! Will do!
I love it!
very good info, thank you
You're welcome!
You explained it so well and more blessings to you & your Family for you are a good for what you do👍🇵🇭
Great! You're welcome!
Great video!!!
Thanks!
Great video
Yep! Everything it's a team job!
Like I had a restaurant and I worked with a company that they delivered the food, make the sales and just consumed from my restaurant.. I charged a little less to them cause they bought big quantities of food from me and they sell it for more... All they were doing was marketing and delivering my food... That's what the business world is all about in any type of industry :)
The material should come off the top and then split 50%
I own painting business in Springfield, IL. We are top ranked, marketing on FB only. I watch your videos all the time. hank you for your continual wisdom. I am in the process of looking for good, trustworthy subs, but even in a large metropolitan area, it's very slim pickings. I have seen your videos on hiring and ads. How can I run ads just for subs?
We find all of our subs from networking our existing subs (maybe 10-20% of our subs) and posting on Craigslist (80% of our subs). We post in the general labor and skilled trades section. Basically say that you're a fast growing company with tons of work and you are looking for subcontractors who want to build a long lasting relationship. We have a ton of work and I'm looking for someone to work with long term. Must have (then list your requirements). Then they call, then you talk, then you send them a picture and how much you'd pay for a job as an example, then you meet at a house and start a job.
All of this is covered in great detail in my full training course: www.paintingbusinesspro.com/course
I'm interested to talk to you about the Facebook marketing. We're just now testing that. Shoot me an email and you can teach me FB marketing strategy and I'll teach you basics on subs. eric@paintingbusinesspro.com
My company subs at 63% but makes the subs pay for materials so it works out about the same as your system. Works great, the subs love it, our customer prices are still competitive, and on the rare occasion a customer asks "do you sub your work out?" that is a good thing, means they are serious about hiring, we have the perfect answer to that question. It's about how you present it.
I agree 100%. And to clarify, we pay 50% to our subcontractors and they also buy materials.
What's your perfect answer?
Eric,
Just curious about how you would provide Insurance for a Subcontractor such as Workers Comp if the painter is a freelancer/independent contractor that is not an employee of yours? I would think if you have only a GL Policy and say your painter doesn't have any coverage you would have to pass on them, is there any way around it if you still want them to do the job like a Temp Coverage policy?
Hey Eric. First off great info you have here. Ive been in the roof cleaning business for sometime now and recently moved from the south to the Midwest. Getting here I have found roof cleaning doesn't seem as demanding, so I have been looking into starting a painting business instead. I like your model you present, but I was wondering how you split the paint cost with this pricing structure? Do you charge say $3000 and have your client pay for paint or do you split the paint cost with the sub or do you say here is your 50% mr sub, and they pay for all of the paint? Long question short, who and how does paint cost get split or paid for? Thanks man!
Hi Eric, This is awesome stuff! Thanks for doing these videos. Does the contractor pay for the job materials? Scott
+Eric Barstow
Thank you , You have answered my first question
My question is, do you find out how much the sub charge for a job or do you tell how much your welling to pay for the job? Do you get a deposit on a job, if so how much? not understanding the process.
Excellent info.
Can you comment on your change in operation regarding negotiation with contractors after underbidding? In a different one of your videos you say you don’t negotiate as it starts a downward pattern.
I don't negotiate. I always set the price. So if a sub asks for more money, I will say no, but then offer more money to another sub for example - so I'm always the one setting the price to avoid the slippery slope.
What’s the best way to find subcontractors, and should I find companies to be subs or more so individuals/small businesses
Individuals and small businesses. Craigslist is what we use most... and referrals from the paint store reps.
@@PaintingBusinessPro ok thanks a lot
how do you tell costumers that your subcontracting at estimates if they ask? I know that alot of costumers are not to keen on their job being suncontracted so Im wondering what to tell them if they ask and not lose the job
I agree I have gone the employee route for a little over a year now and it is very expensive and time consuming and stressful i have been wanting to go the sub route for a while but that was my only hangup so that helps alot thank you
K&H Painting LLC - Grove City painters @paintingbusinesspro what was the answer to this question?
i have a question. do you provide the materials and equipment like paints, joint compound, rollers, sand papers etc. to the sub-contractors? or is it part of their 50%?
Do you give your subs a deposit (for each job) so they can pay for the materials? Do you demand a specific quality or line of paint to be used on a job?
do you require your contractors to carry liability insurance when you sub contract?
Can this apply to a handyman business? Great video.
I think the common principles can apply for sure. There will always be small tweaks and adjustments, but the fundamentals would be very similar for any other home service type of business. Glad you enjoyed the video!
Great concept Eric. I'm actually about to start this journey and hopefully after establishing a reputable name and higher finances,I plan on getting into the aspect you focus on, marketing and sub-contracting. Im going to do the majority of the painting with one other guy for now. My question is, how long should a new company like mine wait before trying to sub-contract?
Oh man, I am just at the brink of doing this, went through an entrepreneur program for 40 weeks, got my business plan approved etc... I have been debating this very issue for the past 40 weeks and I have come to the very same conclusion, and watching Eric's stuff really confirms it. I am a good painter, but better at personal interactions with people, I realize my strength of one over the other and I have to gear my business this very same way. Good luck to you and your business mate! I wish you the very best and everyone else for that matter.
Thank you Eric if you are reading, you really helped me man. cheers from Halifax, Nova Scotia, Canada
Hey I'm having trouble logging into my account
How about worker comp? If your sub doesn't have it, and somebody is hurt, what then?
Yes, and thank you.
All the insurance, bonding, licensing cost.
Hello Eric so you do go in and estimate yourself
Thanks can you make a video explaining the estimating process and what items to bring along to the prospecting client
Anyway we can talk
Yea - shoot me an email with your info. eric@paintingbusinesspro.com
Also I have employees & I've ALWAYS said how much longer it takes most of them to do things than it would take myself. I know this because I painted for my dads company for 10 years & the first 2 years at my own company. By the hour they have no drive or motivation. Meanwhile I am stressed out to no end it seems almost weekly, probably daily. I have 4 men right now & it is expensive! They want to make $16.00 per hour but put out roughly $11-14 per hr of work. Before watching your video, my goal has always been to make around 50% on each project. We usually meet that mark but not always. I am going to think on possibly paying them per job & not by the hour.
+Eric Barstow I am very seriously considering it. This isnt the 1st time Ive contemplated this either. I thought about trying it last year. Even mentioned it to the men, but I moved on & never pushed the issue. Now here I am thinking about it again. Something has to give for sure. Thanks for the reply. I look forward to speaking more with you.
paid per job is always more cost effective then hourly since most painters just drag and dont givea fuck , so this way they know how much they will make and if they are slower then normal they will lose out on hourly rates instead of milking the owner/you dry
how can I be a sub- contractor for a company
Is it possible to use this type of system with an employee run company? For instance setting up a job with hours and budget and say here's " x " amount of money to complete the job. They feel is they finish the work faster they are making more per hour but really it's exactly how much you budgeted for labour.
Exactly. If I used employees (and when I did use employees) that's how we did it. We paid 50 hours out for this job whether they finish it in 30 hours or 60 hours. Give them a bonus for staying under the material budget too.
Do I need to get liability and work comp insurance if I am hiring a sub?
Ok thank you
the problem with subs is if they are good ,they will give their own business cards.They will rob customers left and right
I'm just starting out as a subcontractor doing interior and exterior painting painting on the east coast in north Carolina by the beach. Most of my jobs are rolling instead of spraying. Can you recommend a ballpark "per square foot " price to bid my jobs at just for the labor? The general contractor is providing the paint and materials.
I don't bid per square foot. You can get estimating formulas here, including rolling: www.paintingbusinesspro.com/estimating-guide
How do you tax the subcontractors 50%?
We don't tax them. If you are paying 6% off the top to taxes, for example... you charge $1,000 plus the 6% tax is $1060. I'd pay the contractors $500 then, and the 6% just comes off the top for taxes.
Do you have them sign a contract? What stops subs from getting referals from customers or adding more work you dont know about.
Yes, it is called a "non-compete" if you have lawyers, you can have them write one up. You can also go to legal zoom and hire a free lancer. If all else fails there is always templates online.
What's wrong with a sub getting referrals? That's the question.......he did all the labour, the referal is based upon the labour of his hands, that's why he was sent there, because the contractor cant paint! Not if all he does is estimate....besides,his contract is up,there's no legal obligation there with you or him,job is done. Now if you want to give him a little something, just because you wouldn't be there if it wasn't for him, then go for it...
If you allow him to get referrals from a house he painted that you originated for him to begin with i.e. you got the lead and sold the job that he painted and got paid for. If that job gives him a referral as a result. Sure, fine, allow that. But Have it laid out in a contract that if he does get referrals from a job that you originated for him. You get a cut of that profit from the referral he gets. Remember that you got him a job he would not have gotten for himself. So its fair that if you hand him a job, and he gets a referral as a result, that's still your company he is representing. So you should also get paid for that referral. You still own that work. Thats business. If he was getting his own work, he wouldn't owe you anything for that. But it was your hard work that brought that referral. Make sense.
Exactly.
You make it a legal obligation as part of the contract he has with you to not compete with your business. While he is your sub, he is an extension of and represents your company not his. He wears your company logo etc. If he gets a referral as a result of work you got for him... I would consider that MY referral, not his... I would treat that as a situation where I might pay him a bonus for the referral since it will make both of us money. Which would further incentivize him to be honest and report any referrals to you. Remember he doesn't like marketing and sales typically or he wouldn't need you to find work for him. So he gives you the referral as per the contract with you. You go out and do the estimate, and sell the job. If the job results in work. then he gets paid + referral bonus. Easy.
When paying your subs is that including the money you have to pay for the gallons of paint or do you have to buy that too
We have our subcontractors purchase materials.
Do you require your subs to both workers comp and liability, neither or just one?
If they don't carried either do you still hire them, and if so how do you factor that into their 50%, do they then get less and if so whats the difference in percentile? Thanks
General liability insurance is required. We also have them sign a subcontractor agreement and hold harmless clause. We have some requirements for how their certificate of insurance needs to look with us as additional insured.
Workers comp is not required - we can put them on our policy. We pay 2% less if they don't have WC
When deducting materials from the 50% sub payment is that at retail or cost deducted?
Thank you
@@thehousepainters3456 We don't deduct anything. They buy the materials. If I buy the materials, I deduct from their 50% whatever it cost me. My labor plus material costs should be aiming for 50%.
Thanks, how do you assure they maintain their liability coverage, and what requirements are they're for their liability certs?
Hi do you have a painting leads here in NYC?
Yes we do! Get in touch here: www.paintingleads.com
Your exactly right. I get subbed out all the time by someone just like you. He gets all the jobs,pays for marketing,etc, and gives me a flat rate. Then I get to the job walk it and get the price from him by phone usually. If I like the # im all in, start it that day. If I feel he is a little or alot short then i let him know. We work with eachother, because in the end its about providing a service(good service) and making a fair wage for him and myself. I run the whole job, even walk it and figure out how much paint I need, then i go and put it on his account....thats after we discuss which material will be used. All that's factored in, my running around, and if its not I let him know,how? Because I've learned to keep track of time,"time is money". Not only that, but i mention potential problems up front,just so were on same page,maybe he missed something
That's great man. Exactly! It has to be a win-win for both people. It's about partnership and working as a team. My subs are my guys - they are my partners. We split the job 50/50 and we do our part and they do theres. We have guys who have worked with us for nearly 10 years. It has to be a win win.
And paying for all the ADVERTISING
Where can I fiend sub contactos.?
We usually recruit on Craigslist in the general labor section.
Hey Eric, I've been doing this for the last 3 years but with tile. I got a pretty good sales pitch but I need to work on my lead generating. I live in Greeley, about 30 mins from Ft collins. I use bandit signs for my marketing, I don't know if you have ever seen my signs. They say tile installation. I'm tired of dealing with the city. I've seen your older videos and you gave me the idea of buying leads and door to door sales. I haven't been able to test them. I tried getting some people to do door to door for me but I can't get anyone to do it. I posted Craigslist ads but I haven't gotten calls. Any suggestions?
Hey man, I was reading your post and thought about my friend who does tile as an in-home service... he for certain gets a lot of referrals and has at least 5 jobs on the go, just himself, not sure how he does it, but I think it has to do with the setting tile of grout. He does not advertise at this time and has no need. I think he went about it via networking. So you go out into the community, meet people talk to them, if they get onto your job etc you then offer a business card so it doesn't seem like a hard in your face type of sale and is natural conversation. Then there you have planted a seed, they may not need your work but someone else they know might...this can snowball if you start meeting a lot of people. Go to groups put on by your community, like small business breakfasts,gatherings, public events, etc this is a good avenue for sure. cheers :)
Hey, I do handyman job.I belong to Go To Group BNI Network. 5 years in this business never stop.They are awesome i don't know where you are.But BNI is everywhere.Just google and visit.
hey Eric I am located in Rochester new york
Eric, if i estimated a job to cost roughly 5 K? Should I charge the customer 10 K? so I can afford to pay subcontractor 50 percent? right?
never mind watching a video again you answered my question.
I have the same question
What if the customer pays the amount that you paid to subcontractor then refuses hey your fee. In other words what if the customer talk to the contractor.
ErBarstow
Question did you run into the problem of your insurance company putting a limit on the amount of money your plowed to sub out a year?? Mine is supposedly only $6,000 and the max I could ever get is $15,000! Have you ever come across this issue?
No, never heard of that or run into that.
I have a question regarding licensing. So, I had a thought. The subs I hire will have a painting license and insurance... Lets say I want to expand later and include more services like carpentry, concrete... That is the ability to sub out that work. Should I get a general contractor license so that I can sub that out, or still require my sub to have that type of licensing. I've heard a couple different schools of though. I believe you can contract paint work as well with a general license. So would that kill two birds with one stone so to speak? Thoughts?
I recommend to people to NOT do that exact thing. IT's hard enough to build a business (because of building teams and employees). And when you complicate your business by adding more trades, it makes your future Job Openings a lot more complicated, making it harder to hire, train, and manage people for those positions.
There is plenty of work out there to stay in one lane. If anything, I would work out a referral/finders fee with another contractor and send all that work their way. But I wouldn't do it in house.
If you do decide to do it anyways, you'll just have to check local regulations and requirements to see the best route.
You CAN expand into more trades. I just would wait until the first trade is AUTOMATED, with a team who runs that business, so most of your time you can allocate to building the new trade, new systems, and putting people in place for that one.
Hope this helps!
Eric
Thanks for reaching out Eric.
Fair enough. Makes sense. Get one mechanism working then look into other interests later once the first is on auto-pilot. Eric, I want to personally thank you for the swift response. It means a lot. I have been in the painting industry off and on for 18-22 years. I have decided to start my own company. I started a Home Maintenance business and had it for 4 years in the past. Had a city business license and primarily did painting. Some 4,000 dollar jobs and other smaller jobs alike. I started out by painting curb numbers and doing smaller projects for friends and family to earn the money to invest in sprayers, ladders and equipment. This was around the time that you talked about, the market crash. 2005-2008 ish. In the end I had 10k in equipment amassed. I got off the ground, but I wasn't off to the races and running. I eventually ended up getting into financial services, then was a Drug and Alcohol Counselor before being laid off. Recently I worked for a company as a painter. Got laid off after the project they were working on got caught up and back on schedule. Needless to say I am tired of being hired and laid off. I'd like to be the master of my own destiny. I am the father of 2 boys, 18 and 11. They have only seen me struggle in my life to make ends meet their whole life. I'm a single father, I have full custody and raise them alone, their mom not in the picture. Anyway... I know that the only way to be truly financially secure is to have your own business... A job... (Just over broke) is not the way to get ahead in life but can fill in the gaps of course when starting your own company until you can fire your job/quit and rel. I am broke right now but I want to get your course for the sake of my kids. I need to be successful. I don't ever want to tell them we cant go somewhere nice, or out to eat, or to a theme park because I don't have money. It makes me extremely sad that I have not done ANY of those things with them, save for occasionally going out to eat. I know I can make this business I am starting work. I know this is long already so I will cut it short soon. I remember back in 2005 or so, I found you on the web, I used some of the advice you gave but not all. I sort of borrowed info from several sources. Which is not all bad surely. I am now ready to give you my full attention as I believe it was destiny / fate for me to come across your website again 13 years later. I heard the story of the guy you trained in 4-1.5-hour phone calls and is now wildly successful... I thought just maybe. You'd be willing to do that again someday. I will invest in your course for sure now. my email is info@dppainters.com... website www.dppainters.com and # is 707-816-9591. Would love to hear from you sometime. Any feedback, guidance or whatever is extremely welcome. I'm all ears, eyes, and open mind. Shut mouth, no excuses, I agree with you on the excuses thing completely. There is no excuses for anything. Only hard measurable work.
Ill be in touch
How does the contracts with subcontractors work?
Pretty straight forward. Basically you agree on a price for them to execute the contract you have with the customer. We have a basic subcontractor agreement in the program we offer. www.paintingbusinesspro.com/course
I need this course in Spanish I don't understand English very well right now
@@juanrios9977 Hola Juan, ? Cómo estas?
Puedo ayudarte de forma gratuita. Envíame un correo electrónico a: ademir.pmi estoy en gmail.com
Yo leo, escribo y hablo mui bien en Portugués, Inglés y Español.
Y puedo hacer llamadas por Internet usando Whatsapp, Skype o Signal.
Hello Juan? How are you?
I can help you for free. Send me an email to: ademir.pmi I am at gmail.com
I read, write and speak very well in Portuguese, English and Spanish.
And I can make Internet calls using Whatsapp, Skype or Signal.
Why are you so willing to help?
Two reasons. One is that I really enjoy teaching other people and sharing everything I've learned. Second, it's a business of mine. I sell online courses on how to start and build a painting company, which I have also grown to really love too, seeing my members/students kicking ass in business.
How does the customer feel about you bidding the job and a different company coming out to perform the work ..
It's not a different company. I pay them as a business, but they are on the job representing our company. They don't have other company names on their clothes or vehicles. They are there representing us, on behalf of us.
Hey Eric, do you only hire subs that are lic & ins themselves? (im in Florida)
In Colorado, a license isn't required. So, no. We always require insurance, but not workers comp. If they have workers comp, we pay them 2% more on every job. Otherwise our policy will cover them.
If I was in Florida, I would try to find people who are licensed. If that is a big hurdle (or the licensed ones want too much money), I would figure out the rules for having subs who aren't licensed. Do I have to pay more? What is the consequence if I get in trouble? What are the rules and how do I be responsible for it all.
Hope this helps!
NEED ADVICE PLEASE!!!!
**OUR SELLING MEMORABILIA DEAL**
Brian - THE COMPANY (85%)
- The product
Jay (CONTRACTOR) (5%)
- brought me into this deal. Connected to the company.
- drives me to location
Rick (SUB-CONTRACTOR) (10%)
- listings
- take pictures and edit
- crunching the numbers, payouts, etc
- shipping
- communicating with customers
- my ebay site
- research product
- I deal with the complaints
MY QUESTION IS - SHOULD THE CONTRACTOR TAKE AN EQUAL PERCENTAGE AS THE SUB-CONTRACTOR???? JAY WANTS 10% BUT I DO A LOT MORE. IT SEEMS UNFAIR. AM I RIGHT?
Am I to assume that the cost of the materials come from the 50% allocated to the company.The contractors 50% is strictly labor?
+Sherry Bryant My question was answered in the comment section below .... the supplies come from the contractors 50%. Tks, Im new to the business
When you pay 50% do the sub must provide the materials and paint?
They provide materials out of their 50%. Or if we are using employees, labor plus materials is targeted for 50% total.
@@PaintingBusinessPro in here in Florida Tampa people are expensive while labor is cheaper
It's never easy with subcontractors . Profit is very little the only way to make good money in painting is to have a good experienced team , knowledge skills ,what you saying here is just for the books . There is a lot of competition in painting business you have to work your butt off my man . That's the best way
Our numbers tell a different story. There are many ways to run a business, but scaling a multi million dollar company utilizing subcontractors and all the other advice on my channel has proven to be highly effective.
if is a $3'000 job and you pay 50% to the sub =$1,500 and hi has to buy materials,pay insurance,and pay it least one helper and cover his on expenses if the job last 4 to 5 days???
not too bad 200 a day u 100 a helper
4 days only 1200
So If I estimate a house for $4k should I charge the customer $8k so I can pay my sub contractor
Kind of but not exactly. When we estimate a house, we estimate OUR price. And the way we estimate OUR price, allows us to pay a subcontractor 50% of that price and it's a good price for them.
It'd be the same if we used employees. We would estimate a house for $4,000 with a goal of labor and materials being $2000. This allows us enough margin for all over the overhead for the business like marketing, sales people, color consultant, production people, insurance, office, bonuses, warranty work, accounting, etc... and leave us a healthy profit margin.
I teach people how to build a large scale painting company. You need these kinds of margins to build a large business and maintain healthy profit.
PaintingBusinessPro great, thank you!
when you say subs, you mean they have to have workers com, and liability insurance, correct? AS YOU SAID, THE SUBS ARN'T GOING TO WORK FOR LESS THAN WHAT THEY CHARGE, BECAUSE THEY HAVE TO PAY THEIR EXPENSES ALSO, AND FOR THAT REASON THE HOME OWNERS AREN"T STUPPID TO PAY DOUBLE FOR A SIMPLE PAINT JOB, THIS WAS MY TAKE ON YOUR ASSESMENTS.
Eric... What does the home owner say to you when they find out you are sub contracting the job out. How do you handle that part of it? Thank you and anxiously waiting reply...
*****
My thoughts exactly, you have a sub-contractor contract where certain things have to be done and not done...ie, they can't show up in their own uniforms or post their own company brands on site, etc might be two things to consider, I know this has plagues my dreams (or nightmares lol) as of late ...lol omg. I keep having dreams where my subs show up in their company vans with enormous logos on the side. I was debating whether I should even bother hiding the fact and have it disclosed on my website as an up front kind of approach. Still debating this. cheers :)
I like Eric he is a smart nice guy, but to be honest working as a sub contractor painter is not fun, you are just getting 50% or less of the total cost.and with their rules you are just helping them to build their company and you are stuck all the time doing the labor,you never gonna see you company grow, I want to make my business grow and have reputation not just show up and do the labor and be invisible.
Some guys are happy to be a subcontractor. If someone isn't, then you should do what I'm doing. But also, people have the wrong expectations for what I'm doing. It's not easy to build a business.
Some people like the trade, the painting, the work itself. Some people like the business side. But it's two totally different worlds to operate in. And if you don't like, or aren't good at, the business stuff, it likely won't work out.
There are problems you deal with as a subcontractor. There are also a lot problems you deal with as a business owner.
Just my two cents.
I’m not understanding about 50%...
Most subcontractors are not business people so you cannot trust them to act as a business. For instance, I do drywall. I can’t trust a guy to have material delivered on time, and garbage removed, etc. I can just trust him to do the work of drywall. So do you get your subs to provide materials ?
Yea they do provide materials. We don't really have any issues when we find good subs!
PaintingBusinessPro I guess paint is a lot different then drywall because drywall requires a separate site visit to supervise the boom trucks and all. What would you say about 45-60% of labor only instead of whole job?
Also, how does your painters know that you are being truthful with the 50% (I’m not implying your not being truthful). Do you share invoices or do you just tell them “this is what this job is worth”
@@durhamdrywallandfinish6998 We don't hide anything. We also don't talk in percentages with our guys - we talk in total dollars. Percentages don't matter, except for knowing my own financials.
PaintingBusinessPro ok I hear you, but these subs know the going rates and can easily use a tape measure to determine whether they are not getting their proper sq ft price.
I’m going hard at these questions because it’s questions I’ve been asked every time I try this. I sub out for 50 cents a sq ft. The union pays 30 cents...
EVERY sub demands more and says “oh look at all the cornerbeads, or look at that over there, that’s not straight 50 cents, that’s going to take time “
So how do you overcome this. I’d love to have a call with you to debate this because I just don’t think it’s a long term solution ! Thanks for the help, I do hope it can work but in my experience it just doesn’t
@@durhamdrywallandfinish6998 I'm not sure because I'm not in the drywall business. But I do hear the same kind of argument from painting contractors. My experience is that it's all about how you present your prices, that you stand your ground, and subs always ask for more money,.. But if you are actually paying more than most do, stand your ground and they'll come back. That's the best I can do for you!
Do you demand that every sub-contractor be licensed and Insured?...Do you have a subcontractor "contract form" you'd like to share?
I've been a top sub contractor for Certa Pro who hires nothing but sub contractors. I have done work and have been hired to fix subpar work other subs did. It costed Certa Pro thousands to pay me and legal fees when the shady sub takes them to court for not paying them for the crapy job. Read some of the negative Certa Pro customer reviews and you'll see that hiring subs is risky. Most subs have the mentallity to get in and out as cheep as they can they don't follow any vision of the business.
If your a small painting business you can't afford to have subs give you a bad reputation. You are small and need to grow by having a great reputation. Your employees or subs are a reflection of your business. Certa Pro can afford the risk because their marketing machine generates 5-6 estimates a day for a single franchisee owner. A single sales rep on average closes $600,000 in business a year. It's all in the numbers for them.
Won't the customers think it's weird that ABC company is giving them and estimate but then XYZ company comes in and paints it?
It doesn't work that way. They can't be representing any company but ours if they sub for us.
Subs have to do a good job! Thats priority, and they don't have to say yes to ever job you shoot there way either,especially if the # is a little low. Besides,if your a sub, you should be hustling up some side work while your there, or doing some kind of estimating your own jobs just to make up the difference of working for someone who is taking 50% of your labour. If you do that you will make ok money......i pick up extras just about every job in on, because the customer will just about everytime want to add something, and I've already brought that to the attention of the guy who subbed me out,but they don't want to be bothered with that...what, are they going to drive back to estimate a ceiling, or laundry room,etc. No, he is trying to land the next good job, so don't even bother him with that, give the customer a price $$$ and make them happy... I do that, then have my worker do it, and make extra, and even kick down my workers with a bonus when extra stuff comes up.
If that works with your boss that's wonderful. And every working arrangement has their own agreements. We make sure ALL sales with a customer go through us, and we would bid that over the phone or let our subcontractor bid it, but they need to include us. Because we don't want them representing any company besides ours while on the job site. But for us it's about paying our guys well enough that they don't need to go and get extras or side work, because they are making great money working with us.
Great means there busting there but physically,but they will start to wear down,then what,you give them paid vocations,paid sick leave,etc?
Of coarse not,so there's no way im going to make the same with a job that you subbed me out on, rather than me cutting you out and doing the whole shebang! I've been there and done that on both ends, and when i get jobs lined up myself those jobs get worked into the schedule and that is necessary so myself and my guys can take a vocation.
When your a good painter you really don't have to settle for less,but you need to stay busy for sure...so taking the jobs that come your way is a good thing and then you'll land your own, because I've had customers that strictly wanted my work for future jobs at the house, and no one else,because even they know that if the middle man is cut out they might catch a break,and they will....not a whole lot,but they will.
So on your end when that happens,if it happens,have enough guys to fill in......then everyone is happy.
Why don't you just charge them 3 X the price and pay the contractor 33 %, HA HA, if you follow that logic.
That would price ourselves too high in the market.
Your prices are way to low to begin with. Those subs are really employees and you just don't want the headaches of payroll. Your business plan is no different than Cert Pro and all the other painting franchise whos pricing is low to begin with.
nick dunse Exactly
can you elabourate on that? what should his prices be?
oh god i hate certamexican they do shit work
Sounds like your just a broker playing contract, I'll would just pay you a 7% finders fee being generous
Kind of. It's more complicated than that, and it's the same thing any large company is doing whether they use contractors or employees, the margins all end up being the same to have a larger company to afford all the overhead required with a larger company.
I just watched this video and it's crazy.
I would understand maybe a profit of 40% after paying Labor and Material or what you call "Subcontractor".
I own a Painting Business and I do the same process by not having payroll. But what scares me is that when I have a big profit I know that it means paying more taxes so I'm not sure how to manage to pay low taxes on such as high profit.
I don't know, maybe I'm paying so much on taxes because I'm not US Citizen?
Just a comment from my own experience. I definitely agree with you on getting Subs to do the painting work.
I mean... no matter how yo make your money, you should end up being taxes the same percentages based on the income bracket you are in. But there are no payroll taxes (paid from the company, not personally) attached to paying subcontractors. You can still hit the same margins whether you use employees or subs, it's just two different ways to go about it.
And I've found that using subcontractors is a more efficient way to get work produced at a high volume, and most of the concerns people have about using subs are hypothetical and aren't real issues if you manage it properly.
As far as our percentages, that has more to do with our overall financials and business plan than anything else. For the most part, the labor + materials (cost of job) is market price. The markup (company expenses + profit) is what changes.
It's possible that we're charging more than you, or maybe we have kept our payouts to subs lower.
Thanks for the comment!
Make sense. Yeah, I forgot that big business take more overhead than small businesses like mine, maybe that's why it seems so different from our percentage.
Thanks for replying. I barely started watching this videos and they are really helpful.
Have a great start of the week!
The only reason why I think getting Subcontractor is that sometimes it's hard to get them to come back for touch up but I guess that's why we need to pick subs correctly.
Thank you! You have a great week too. If you are enjoying the videos, I'd really recommend looking into my full course here: www.paintingbusinesspro.com/course
You can email me at Eric@paintingbusinesspro.com with any questions as well. Keep killin' it!
Can't find good subs? .... they got all the work they can handle and don't have to scoop all the gravy off the top and hand it over to someone who doesn't know a paint brush from a hole in the ground
We have great subs who we have a wonderful working relationship with. You don't know what you're talking about.
Receive half the money and do none of the labor. Only a crooked mind would consider this to be fair.
This is how business works my man. If you hate on it, you are just going to miss the point. Walk into any retailer, or any big business... the COGS (cost of goods sold) is always going to be 50% or less of the total price tag. That's because to run a large, reputable business you have a lot of overhead, staff, marketing, insurance, offices, etc...
In the painting business, COGS is labor and materials.
50% of $2,000 or 50% of $4,000 are very different numbers. To run a business this way, we end up being the higher priced companies in the market, the largest companies in the market, and we still have to pay market rates for labor and materials.
There is nothing crooked about it. It's how you build a successful company, which includes treating your people well and paying them well (that includes our subs).
if customers and contractors are happy, NO NOT CROOKED. The paint sub can drive around all day giving estimates and answering customers calls FOR FREE. OR they can show up and start painting, not have to worry about online customer reviews, and dealing with the general public. Pick your poison.