From time to time, I’ll contract a job where I won’t do any of the actual onsite work. I know for many of you, this is SOP, but I usually do most of or the majority of my own work. So, overhead aside, is there such a thing as a percentage that you will mark a job up to make a profit on your time invested selling, contracting, and scheduling the job, plus covering possible warranty issues.
I know this question may not be received well by some, but I do feel it’s an answerable question…correct me if I’m wrong. I usually shoot for 8% profit on jobs…that’s free and clear aside from my own labor. Just money for “the company’s” growth.
Here’s what I will be handling….it’s a tear-off, reshingle job.
I will be providing my roofing subcontractor.
I sold the job.
I will warranty the job.
I will contract the job.
I will do all the material purchasing and scheduling of sub and delivery.
I will provide the dumpsters.
I will pull any necessary permits required for the job.
I’ve factored in insurance, materials, dumpster, taxes, and labor costs….what should be in it for me? 8% + a percentage for warranty work? Or should the warranty come out of my profit if something should need fixing? Or should I not expect my “normal” target profit because I’m not actually working onsite?
Am I missing the boat here?
Replies
You're not off base at all. If it were me I would inject a bit more than 8%. You are the one they will call if: no show, crap in the yard, flat tire, leak etc. If you were just giving them the phone number, different story. Might want to think the insurance angle if anyone gets hurt, damage done.
By the way, didn't come over to you at Mikes, but nice to make your acquaintance...........even tho I didn't. Figured there'd be time, but figured wrong. Glad you could make it.
Remodeling Contractor just outside the Glass City.
Quittin' Time
Calvin,
You know, I'm really sorry I didn't get to really meet you either. I totally underestimated the Fest as a whole. Waaaayyy too many interesting folks to try to meet and get aquainted with in one day. I had no idea how friendly the whole thing was going to be. I did my best to get around and touch base with as many as possible, but left knowing that I'd missed a fair share too. My loss. Next year I'm planning a little further ahead than two days! You all are the type of people I like to surround myself with in my daily life.....but Breaktime just seems to be a magnet for good people in general. I'll not sell myself short next year.
And thanks for the advice regarding the original post. Occasionally I will just turn a sub's phone number over to a homeowner (with their graces of course). But this home in particular is one that I've been at for a good deal of the summer. Started with a 3 season porch, led to a few other things, and now they want a quote on a new roof. My sign has been out front of their house all summer, so I know that my name is now attached to that place. Like you said, a no show, a walk-off, an insurance claim.....somehow I will be the one they inevitably pick up the phone and call should something hit the fan. That costs money. Just trying to figure out how much. 8% too low? What say you, 10%?
You know the job, you know the customer and I know you have a handle on the sub's price v. other reputable roofing contractors. Figure the time you'll spend selling/monitoring and make sure that's in there. 10 on the whole thing if it'll withstand the competition doesn't seem too high for me. They're buying your reputation for quality and warranty.
But then again, this from a guy that never covers the job I'm not involved in.........which is dumb because as I've said........your name is usually at the top of the responsibility list, and reputation and you know you're going to make sure the job gets done in a timely manner..........so your covering it anyway, might as well get a pc of the action............now that's a run on sentence.
Next fest, we throw some shoes.Remodeling Contractor just outside the Glass City.
Quittin' Time
Next fest, we throw some shoes.
Done deal.
Wish I'd have kept my shin guards from my catching days.
That is , if luka is on the other end.
Stay awake,
Stay alive.Remodeling Contractor just outside the Glass City.
Quittin' Time
Shin guards?
I saw you guys.
I'm bringing hockey equipment.
DP,
Sounds like you are providing everything but the labor on the roof itself. I'd start at 8% and start adding on. What is your OH? Mine is running at about 17% and we figure ours diffrently than most accountants like. We put 1 item up in the job cost area (above Gross profit). So basically our OH reads low.
Jerrald has some magic spreadsheet that lists OH items commonly used. But we have 21 items in OH. Don't forget to include owners salary in OH.
Brian,
I'd try for 15% on anything you are writing a check for after you figure your labor and OH.
And watch your hours too..........I usually end up putting in a few more than I figured. You know your gonna get a call or be running over there to put out a fire or to check up on something or two that you did not expect.
I'd say try the 15 or at least think about it. Sell them the value of you contracting the job for them. It's alot of legwork you're doing.
Good luck,
Eric
Don't forget if there is a warranty issue, phone calls, and site visits are gonna add up quick.
Eric
If I can't make 15%, it's not worth the time during the money making season. That is after everything except Taxes, Interest and Depreciation. If it's during a slow time... or if it is a "fit in" job (a job that is scheduled to fit in-between other larger jobs)... I might go as low as 10%, if I think I need to to get the job or I really want it for some reason.
Warranty work. I must be a meany... I make my sub provide a joint/transferable warranty for the homeowner and myself. Granted, I have a responsibility also... but the first place I go is to my sub to get the warranty work done. I have a reserve fund for warranty work... 2% of gross sale. That is high considering I have only had a minimal number of warranty calls.. but that fund can get depleted in a big hurry if anything major comes up (knocking on wood).
I agree about adding the cost of your labor... it is deceptive sometimes how much work we do when "only subbing" the work. Be sure to pay yourself.... nobody else will.
You are REALLY nice if you are buying materials and pulling the permit (man, I am beginning to really think I am an arse). I oversee it... but other than that... sub is the one that orders materials and pulls permit (unless there is a larger permit that I have already pulled that covers the scope of the work).
Dumpsters... I have my own dump trailer, so I do a charge-back to the sub for its use (I am getting a complex here).
**Time for me to go eat a puppy dog or two ... I always eat when I feel bad.
Edited 8/23/2004 4:31 am ET by Rich from Columbus
I mark every sub job up 20%. I don't think 8% will pay you much after you figure time to sell, order, a percentage for warranty and paper work. Not to mention O&P. Just my view. DanT
Maybe I wasn't clear.
The 8% (now 10%) is ONLY FOR pure profit, free and clear, and some coin to cover any potential warranty isssues.
Subs labor already factored in
Overhead already figured in
My office work already figured in
Materials figured in
If I used 8% for a total mark up, I would own money on the job.
OK, sorry I missed it. 8% net I think is an ok number. But 10 is better! :-) DanT
Right On!
rich.... your parameters are about what mine are..
it costs a lot of money to run a legit business and everything associated with this business is supposed to contribute to BOTH OVERHEAD & PROFIT....
on One-off deals that may or may not have a continuing relationship... i treat the sub contract that is being done thru my books just as if it were a sub-contract protion of one of our regular GC jobs.. ie: i mark it up A LOT... this allows me a couple of things... i can keep my in-house T&M labor rates lower, i can offer better wages to our employees, i can offer better benefits to our employees.. this is a hot market.. most do not understand that this is NOT the norm..
you have to make money now to weather the downturns, recessions and depressions which are the other part of the business cycle..
now .. if you have a sub that you can basically become an agent for.. then the mark-ups can be reduced...but not much... you are bringing great value to the customer and the sub..
value = compensationMike Smith Rhode Island : Design / Build / Repair / Restore