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Rock On
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In many states if your subs are not buying materials they are not considered subs
It is one of the criteria for determining if they are subs or employees

I know of no accurate percentage for materials, though if someone here has one, they'll need to know if you are talking re-paints or new const.
If people use them, I suspect like the sq. ft. pricing arguments it would be easier for new const. then for re-paints
On specific re-paint projects the sundries and/or prep materials can far exceed the actual paint materials...or not
With new const. it's more likely you'll have the same surface/prep/materials/sundries on each job
 

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Your proposed split is generous.
For repaints, my experience is that materials are generally in the range of 15% to 25% (primer, paint, caulk) for repaints. That can vary, of course, depending on how much prep., other materials (replacement wood, etc.).

A couple of other considerations:
- Insurance (liability and workers comp): Does sub have?
- Rework (return for touchups): Will sub do it? (good luck, with some)
- Non-compete (what if a neighbor walks over and asks for a quote?)

I'm not familiar with "buying materials" being a requirement for somebody to be considered a subcontractor.

These are 20 points considered by the IRS in determining whether or not somebody's a sub:
  • Is the worker required to comply with instructions?
  • Is the worker provided with training?
  • Are the worker's services integral to the business operations?
  • Must the worker render the services personally?
  • Who has the power to hire, supervise and pay assistants?
  • Is there a continuing relationship?
  • Are there set hours of work?
  • Is there a full-time work requirement?
  • Is the work done on the premises of the business?
  • Is the order or sequence of the work established?
  • Are oral or written reports required?
  • Is payment made by the hour, week or month?
  • Who pays the worker's business and/or travel expenses?
  • Who furnished the worker's tools and materials?
  • Has the worker made a significant investment for work facilities?
  • Will the worker realize a profit or loss from the activity?
  • Does the worker work for more then one business at a time?
  • Are the worker's services available to the general public?
  • May the worker be discharged?
  • Does the worker have the right to terminate the relationship at any time?
 

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I know it is different with every job but is there a percentage that you would say would be an average material cost? I am just trying to put some numbers togther to work up some sub contracting agreements with some friends for eithing subcontracrting out or even in. I would like to come up with two agreements - one that includes materials and one that does not.

For example maybe something like 20/80 split if the sub buys materials and 40/60 if they do not. I would like it to be fair so that, several companies both outside painting and within, it will be benefical to both parties.

Any suggestions?
its funny everytime talks about a sub, someone comes on and ask if you know what a sub is. lol

my research in the split is 45% to sub he has ins, pay for materials.

I think it can be any whear from 40 to 50 percent to them.
 

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Systems Fanatic
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I have used subs for years. They pay for materials-- that injects a certain risk on their part and helps address some of the IRS requirements. I pay them 55% of the job. They handle materials, labor, and equipment.

Your gross profit should generally be 40% to 50% whether you are using subs or employees.

Materials on our jobs are typically about 10% of the price.

Brian Phillips
 

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I have used subs for years. They pay for materials-- that injects a certain risk on their part and helps address some of the IRS requirements. I pay them 55% of the job. They handle materials, labor, and equipment.

Your gross profit should generally be 40% to 50% whether you are using subs or employees.

Materials on our jobs are typically about 10% of the price.

Brian Phillips
Brian when you say they pay for materials, do they actually buy the materials on their own account,??? or do they pay you back for materials??

thanks
dave mac
 

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Exterior Restoration
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Your proposed split is generous.
For repaints, my experience is that materials are generally in the range of 15% to 25% (primer, paint, caulk) for repaints. That can vary, of course, depending on how much prep., other materials (replacement wood, etc.).

A couple of other considerations:
- Insurance (liability and workers comp): Does sub have?
- Rework (return for touchups): Will sub do it? (good luck, with some)
- Non-compete (what if a neighbor walks over and asks for a quote?)

I'm not familiar with "buying materials" being a requirement for somebody to be considered a subcontractor.

These are 20 points considered by the IRS in determining whether or not somebody's a sub:
  • Is the worker required to comply with instructions?
  • Is the worker provided with training?
  • Are the worker's services integral to the business operations?
  • Must the worker render the services personally?
  • Who has the power to hire, supervise and pay assistants?
  • Is there a continuing relationship?
  • Are there set hours of work?
  • Is there a full-time work requirement?
  • Is the work done on the premises of the business?
  • Is the order or sequence of the work established?
  • Are oral or written reports required?
  • Is payment made by the hour, week or month?
  • Who pays the worker's business and/or travel expenses?
  • Who furnished the worker's tools and materials?
  • Has the worker made a significant investment for work facilities?
  • Will the worker realize a profit or loss from the activity?
  • Does the worker work for more then one business at a time?
  • Are the worker's services available to the general public?
  • May the worker be discharged?
  • Does the worker have the right to terminate the relationship at any time?
Great post Tom. Don't want to get hit with back taxes for buying paint.
 

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I never understood how subs make any money. They get half, or a little more of the final price and they pay for labor, materials, insurances, comp., and all other fee's? Is there something im missing? How does a sub make any money?
 

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Systems Fanatic
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I never understood how subs make any money. They get half, or a little more of the final price and they pay for labor, materials, insurances, comp., and all other fee's? Is there something im missing? How does a sub make any money?
I charge $54 per hour for labor. So that works out to $29.70 per hour for the sub. If he has a 3 man crew, he gets $89.10 per hour. Out of this he pays he labor. which is typically about $28 per hour for 2 guys. So he winds up with about $60 per hour. He still has some expenses to pay out of that.

It doesn't always work out exactly like this, but my subs typically make $35 to $40 per hour after expenses. And they don't have to worry about marketing, estimating, sales, etc.

Brian Phillilps
 

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I charge $54 per hour for labor. So that works out to $29.70 per hour for the sub. If he has a 3 man crew, he gets $89.10 per hour. Out of this he pays he labor. which is typically about $28 per hour for 2 guys. So he winds up with about $60 per hour. He still has some expenses to pay out of that.

It doesn't always work out exactly like this, but my subs typically make $35 to $40 per hour after expenses. And they don't have to worry about marketing, estimating, sales, etc.

Brian Phillilps
sounds like a darn good living to me!!!! Do you ever find them to want more??

Brian do you,or have you tracked the hrs of your subs on a job basis?? just to double check your estimating.
 

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I charge $54 per hour for labor. So that works out to $29.70 per hour for the sub. If he has a 3 man crew, he gets $89.10 per hour. Out of this he pays he labor. which is typically about $28 per hour for 2 guys. So he winds up with about $60 per hour. He still has some expenses to pay out of that.

It doesn't always work out exactly like this, but my subs typically make $35 to $40 per hour after expenses. And they don't have to worry about marketing, estimating, sales, etc.

Brian Phillilps
So does that mean that you charge 1296.00 plus materials per day for a 3 man crew? If you get that, than I definitely understand now how a sub can make money. No matter how much knowledge I have, or how good my references are, and how good I think I am at selling, I cannot get more than 900 a day including materials. Im not going to blame my market, even though I would like to:)
 

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Dave,
We do job costing on every job. The numbers vary some, but my estimating is generally pretty good.

Alex,
The subs can and do produce $1200+ per day. However, a few of my subs only paint part-time, and one doesn't paint at all. Also, they tend to work 8 hour days, and often finish jobs mid-day, so they take the rest of the day off. These factors drive down what they produce, as well as what they take home.

Since they are subs I can't dictate their hours. They do good work, customers like them, and they are happy with what they make. If they are happy, and the customer is happy, then I'm happy.

Brian Phillips
 

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Brian, thanks for answering all the questions!!!

one more lol

How do you track the hours per job?? and how detailed are you on tracking the hours. example. do you just track say the Jones job, that your sub with three men spent 8 hrs their on monday, wich is a total of 24 man hrs.

Or do you go into more detail, example, painter one spent 5 hrs doing windows, then 3 hrs doing boxing. etc.....



thanks
dave mac
 

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One more for Brian also:)

When a customer accepts your estimate and wants to schedule the job how do you go about that with subs? Do you tell the customer you will get back to them when you find out when your subs are available, or do you schedule right then and then find a sub that is available for that time?

Thanks for the info!!
 

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How do you track the hours per job?? and how detailed are you on tracking the hours. example. do you just track say the Jones job, that your sub with three men spent 8 hrs their on monday, wich is a total of 24 man hrs.

Or do you go into more detail, example, painter one spent 5 hrs doing windows, then 3 hrs doing boxing. etc.....
Dave,

Usually I just get the total hours for the job. I do ask the sub to break out his actual hours on the job, versus picking up materials, reading the paper, etc. On occasion I'll ask for more detail, particularly if the job goes over by a significant amount.

Brian Phillips
 

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When a customer accepts your estimate and wants to schedule the job how do you go about that with subs? Do you tell the customer you will get back to them when you find out when your subs are available, or do you schedule right then and then find a sub that is available for that time?
Alex,

We keep up with our sub's availability. But when I sell the job I tell the customer our backlog at the time and then determine which sub will be available and be a good fit.

I have 6 subs I use regularly, and a few others I use occasionally. One works for me about 95% of the time. Another is about 50% of the time. The others are about 20% to 25%. So I seldom have trouble finding someone who is available. I usually have 3 or 4 jobs going on, though sometimes only 1. It gives me a lot of flexibility.

Brian Phillips
 
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