# working like sub



## hrufero (Feb 21, 2011)

hey guys.I just have a question:I'm going to to a tear off like a sub (wood shake tera off and install duration shingles in 12/12 pitch) with my ex boss and I need to know how much to charge,he pull the permit but I'm going to pay my own taxes and use my insurance for all my 7 guys and the job is in IL.
how much by sqr labor only? I was thinking 180 x sqr

thanks


----------



## Grumpy (Oct 29, 2008)

Oh man... Just... oh man...

If you are not a State of Illinois licensed roofing contractor YOU ARE BREAKING THE LAW. 


I just posted this elsewhere. I think it somewhat applies to your situation so I will copy and paste below...


There is really alot of grey area here guys. Are they paying their sub companies $45 a square or are they paying their independant contractors $25 a square. You and I and everyone reading this knows the tricks. 

Also waht does "a square" include. Is the tear off extra? Are the details extra? Or are they included in the per square price. It's the same thing when someone says to me, "I charge $x a square." At first glance it may seem low or high. What does it include? Are you basing your per square on pre-waste actual measurements or actual squares purchased? Does that per square price include anything or just the square? Are you charging extra for vents, leads, flashings, or is it included in the per square price... There is just alot of grey area when we are talking about the square. 


$25 for an "independant contractor" who is not providing trucks, tools or insurance, that's decent money on a 1 layer rip ez walk. It's $25 an hour for what is really just an improperly classified employee. 

$45 a square for a company who has trucks tools and insurance is insulting and impossible in my area. But the majority of those who subcontract work cheat their insurance and taxes so you CAN make money at $45 a square if cheating. I am not advocating cheating, but that's how it's done. 

These guys in the sub market are doing it to themselves. There is an element of "sales" involved when you are trying to sell yourself as a sub to another company. Just like in the retail side of things, those of us selling our services direct to the customer. Too often both on the sub side and retail side, mo-mo's think selling is offering a low price. It's a compound problem. I undercut you, the next guy under cuts me, and then you undercut the next guy... before you know it you have no choice but to cheat or not eat. 

I use both subs and employees. The way I look at it, when I am figuring out what to pay a sub, I base it on what I would pay MY employees, MY burdens and MY overhead. Since the only time I cheat is on accident (yes we all make mistakes), I think that what I pay my subs is fair compensation for them to install the roof to my standards and earn a buck at the same time, without cheating. 

In other words if we use the $25 a square example, in my world a square is an hour for the above described ez job. So we convert that $25 a square = $25 an hour for an employee. 

Based on the above described 1 square a day project a 4 man crew should easily be able to put 24 squares in an 8 hour day 3 roofers x 8 squares each = 24 squares. But where is the 4th roofer? Well he is an apprentice/helper and we can't forget his earnings. I usually start a guy out at $15 for a guy who knows nothing but is a hard worker. Let's call it $17 though. $17 x 8 hours = $136 a day, based on the 24 square a day = $136 / 24 = $5.67 per square.

Now we are up to $30.67 a square. 

Add on labor burdens (FUDA SUDA FICA), GL insurance, WC insurance, I roughly usually figure I need to mark up that $30.67 a square 75% so, $30.67 x 1.75 = $53.67 a square. 75% has some padding in it, it's not really 75% but what ever. Furthermore I suspect most guys will be much less than 75% because of IL's insanely high WC rate. 

Now you have vehicles, phones, gasoline, blah blah blah, everyone is different but somewhere in the 10% area seems to be the "going rate" of what someone working out of their house would have for an overhead variable so $53.67 * 1.10 = $59.04. Using this formula a sub would have to charge somewhere in the range of $60 just to break even, that means no profit. Since we know most subs the owner is usually the crew foreman, he has no idea what profit is and usually works for wages. But let's be fair, I expect a 10% return on my investment, I think it's only fair to also pay the sub 10% on his investment as well, we are now up to $66 a square. 

If we again use the 24 square a day example and say we are going to work for 10% or $6 a square you will see that the owner's profit is $144 a day. That really is kind of depressing. Then again like I said most sub owners work with their crew so if you take their per square earnings and add to their company profit you are up to $344 a day. Still kind of depressing but more than they'd be making if they were an employee for someone else. After you add up all the risk and head aches involved $66 a square still just doesn't seem worth it to ME to be a sub.


The problem with subs hurting themselves is most have no idea what running a business takes in terms of knowing their numbers or what it costs them. When ever I have asked a sub what they would charge for something unusual, most reply with how much am I offering. At first you may think they are shrewd business saavy individuals, but when you dig deeper you find out they are often clueles and are willing to work for what ever you are willing to pay. Some unscrupulous paper contractors will take advantage of these individuals. It just gets worse and worse. 



Having said all that... I want to point out that my numbers are not the same as your numbers. My WC is 41% of payroll. If your WC is less, you might not need to charge as much. My overhead may be more or less than yours. Can I legaly work for $66 a square? No. Could you? I don't know.


You really should also try reading this... http://hangupthebelt.com/2011/how-much-should-i-charge-for/


----------



## Roofmaster417 (Jun 7, 2010)

IMHO Great advice Grumpy........


----------



## hrufero (Feb 21, 2011)

THANK'S GRUMPY for that will help me a lot ,I relly apreciate that.


----------



## seoforu (Oct 27, 2010)

Grumpy has advised correctly.I will go with him..

Roofing waterproofing


----------

