Appropriate stump grinding sub-contractor fee

[arbor pro]

Sorry if this is duplicate thread.

For you tree guys who subcontract stump grinding and for you grinders who do the subcontracting, what is a reasonable percentage of the take to give as a 'finder's fee'?

For example, a tree service subs $500 worth of stump grinding to a stump grinding business. The $500 price is based on what the sub would have bid the job if he had landed it by himself. It is not a reduced rate for the sake of this example.

1) How much of that $500 would the tree service profit if they both sold and billed the job under their business name but used the sub to do the work?

2) How much would the tree service profit for just referring the job to the sub who both bids and bills the job himself?

Thanks for your input.

 

[kai2139]

For tree pruning/felling I will give my bid directly to the refering company and not the client. They in turn add on another 20% and bill the client. I don't do stump grinding but this should be similar as far as billing goes.

 

[arbor pro]

Kai,

So, to clarify - are you saying that you would bid the sub job the same $ as you would had the customer called you directly and then the referring company adds 20% on top?

Using my $500 job as an example: you bid at $500, referring company marks it up by $100 and bills to client at $600

OR

Do you reduce your normal rate by 20% so that the referring company can bid the job at the same rate as you would have if the client had called you direct?

Using my $500 job as an example: you bid at around $415, referring company marks it up $85 (20%) and bills to client at $500.

My thought is scenario number two where the final cost to client is still $500 so that the referring company can keep competetive with other companies who might do the work themselves for $500.

 

[StihlRockin']

Years ago I had to contract my stumps out and it worked out good. The sub-contractor knew it was I who brought him the job and in turn, he gave me a decent lower price for the work I brought him. The client would pay me for the work done and the sub would get get paid by me. I would keep all except the sub's take... his asking price for the work. Normally though, I would have a walk through to make sure I don't get burned on excess stump charge, but in the end I started to trust I got a consistent lower price and worked from there.

StihlRockin'

 

[kai2139]

I make the same no matter if I am going to the client directly or subcontracting. So the client would have paid less if they would have called me first and not gone through another company. It sounds like a raw deal for the customer but my bids are generally about 30%-40% lower than any other company around here.

 

[gr8scott72]

I am prone to take less from a tree service company to grind stumps than I am from the customer because I have a steady supply of work coming from the tree service company.

I tell him what I will grind the stump for and I could care less what he charges the customer. I think it's a win-win-win. The tree company makes some, I get consistant work, and the customer probably feels like he got a good deal as it was a "package" deal instead of having to hunt down a stump grinder by himself.

 

[arbor pro]

gr8scott,

If the tree service company does not sub the job to you but simply refers the customer to you (ie. you bid it, do it, bill it yourself), do you give a referral fee or is just a professional courtesy between you and the tree service since you probably refer tree work their way I presume?

So, here's why I'm asking the question. I have been trying for 2 1/2 years to get the local tree services to sub out stump grinding to me. Currently, they all do it themselves so they can offer the 'full package' to customers.

Well, just yesterday, I had two of those local tree services call me (within 10 minutes of each other) to discuss the possibility of sub-contracting stumps to me. The general agreement that I have developed and am thinking about pitching to them is such:

1) If they bid a stump job (including grinding, cleanup and dirt fill), I give them 25% of the take. So, for a $100 job, they take $25 for bidding and billing the job and giving me the work.

2) If they only refer the job and i do the bidding and billing, I get 100% of the take.

3) As a professional compromise, I refer to them any large tree jobs that I, as a one-person operation, am unequipped/unable to take on. I would not bid these jobs for them nor expect any part of the take for the referal. In return, they refer to me smaller pruning/removal jobs that they don't want to take on. They would receive no % of the take for such referals. The only time a % of the take would be paid is for stump work.

In this case, we would help each other out by focusing our efforts on the type of business that our businesses are best set up and qualified to handle. As the only certified professional arborist in our area, I get a lot of work sent my way by our city forester. As it is, however, I'm best set up to handle smaller tree jobs and stump grinding. That puts me in a position to help the other tree service out because I can send work his way that he might not otherwise get.

As the largest tree service in our area, the other company has plenty to do and really doesn't want to do stump grinding so, I can help him out.

I think it's a reasonable agreement. I'm wondering what listers like john464 think? Your infinite wisdom is called upon...

 

[gr8scott72]

gr8scott,

If the tree service company does not sub the job to you but simply refers the customer to you (ie. you bid it, do it, bill it yourself), do you give a referral fee or is just a professional courtesy between you and the tree service since you probably refer tree work their way I presume?

So, here's why I'm asking the question. I have been trying for 2 1/2 years to get the local tree services to sub out stump grinding to me. Currently, they all do it themselves so they can offer the 'full package' to customers.

Well, just yesterday, I had two of those local tree services call me (within 10 minutes of each other) to discuss the possibility of sub-contracting stumps to me. The general agreement that I have developed and am thinking about pitching to them is such:

1) If they bid a stump job (including grinding, cleanup and dirt fill), I give them 25% of the take. So, for a $100 job, they take $25 for bidding and billing the job and giving me the work.

2) If they only refer the job and i do the bidding and billing, I get 100% of the take.

3) As a professional compromise, I refer to them any large tree jobs that I, as a one-person operation, am unequipped/unable to take on. I would not bid these jobs for them nor expect any part of the take for the referal. In return, they refer to me smaller pruning/removal jobs that they don't want to take on. They would receive no % of the take for such referals. The only time a % of the take would be paid is for stump work.

In this case, we would help each other out by focusing our efforts on the type of business that our businesses are best set up and qualified to handle. As the only certified professional arborist in our area, I get a lot of work sent my way by our city forester. As it is, however, I'm best set up to handle smaller tree jobs and stump grinding. That puts me in a position to help the other tree service out because I can send work his way that he might not otherwise get.

As the largest tree service in our area, the other company has plenty to do and really doesn't want to do stump grinding so, I can help him out.

I think it's a reasonable agreement. I'm wondering what listers like john464 think? Your infinite wisdom is called upon...

If they bid the job, it's usually a "package" so I don't really know what the stump grinding part of the quote is but it doesn't matter as we just agree on a price of what I will do it for him and he pays me.

If he does just the tree and then sends the customer to me, then, just like you, it's all mine. I send customers to him for any tree work as I don't do any of that and I don't expect anything in return except for him to send the stump work to me.

 

[bigearl]

The couple of the tree companies that I grind for One I split 50/50 He kinda got me started So Ifigure one hand washes the other the other 70/30 and a couple the cut the tree then the refer me One of them is my cousin so depends If i get tree jobs i give them to him.

 

[randyg]

Time is MONEY

If that tree company is willing to size up the stump for you, deal with the customers with bidding ($ per inch that you tell them to bid etc.) bill them and give you the address and exact location, all you do is go there one time, do the work and leave. That is surely worth 25% I think. Bottom line here, is everybody happy? If you think 25% would be happiness for you, offer them 10 or 15% and let them talk you up to 15 or 20%. They feel like they got an extra 5 or 10% than original offer, and you get 5 or 10% to put in new teeth can.

A penny saved, is a penny earned.

 

[masterarbor]

what i do...

my sub charges $1.50 an inch (which i think is pretty cheap). Knowing this, i charge $2.50 and get $1.00 an inch for myself. this does 2 things: allows me to be a "full service" tree company and pays for the administrative end of handling the details.

 

[Aaction]

my sub charges $1.50 an inch (which i think is pretty cheap). Knowing this, i charge $2.50 and get $1.00 an inch for myself. this does 2 things: allows me to be a "full service" tree company and pays for the administrative end of handling the details.

Wow, that's cheap.
We charge $2.oo centimetre here ($4.50 per inch), although our timber is generally much harder.

 

[BC WetCoast]

my sub charges $1.50 an inch (which i think is pretty cheap). Knowing this, i charge $2.50 and get $1.00 an inch for myself. this does 2 things: allows me to be a "full service" tree company and pays for the administrative end of handling the details.

What a deal for your customers. They can get a 4' stump ground for under $150.

 

[gr8scott72]

What a deal for your customers. They can get a 4' stump ground for under $150.

Yeah, you can't quite use the per-inch method on the bigger stuff unless you have different per-inch quotes for different size ranges of stumps.

I just quote the bigger stuff individually AFTER I actually look at it.

 

[randyg]

Wrench In The Works

Yeah, you can't quite use the per-inch method on the bigger stuff unless you have different per-inch quotes for different size ranges of stumps.

I just quote the bigger stuff individually AFTER I actually look at it.

A 20 inch stump has 4 times more surface area (square inches) than a 10 inch stump.
A 40 inch stump has 4 times more surface area than a 20 inch.
An 80 inch stump 4 times the area of a 40.
:monkey:
Since you are grinding the ENTIRE surface of the stump, and NOT JUST ONE PASS across the widest part, why not measure the "area" and multiply that "area" by your $ figure?

HOW??? Thought you'd never ask. Pi = 3.1416 You'll have to trust me on that. You measure the distance across the stump as usual, and that is the "diameter". Divide the "diameter" in half, to get the "radius". {We're almost there} Now multiply the radius times the radius, and then multiply that answer times Pi and you have found the area. That can be expressed in "square inches" or "square centimeters" if you wish.
OK We have a stump 20 inches across. One half of that is 10. 10 times 10 equals 100. 100 times 3.1416 equals 314.16 right? Drop the (.16) and you have a surface area of 314 sq.in. (square inches)
How about a 30 inch stump? One half of 30 is 15. 15 times 15 equals 225. 225 times 3.1416 equals 706.86. Round up to 707 square inches.
Now if you use a figure like say, 15 cents per sq.in. that 20 inch stump comes out to just under 50 bucks, and the 30 incher is just over a hundred.
Never again will you be able to say "not sure why, but is seems that the bigger the stump, the more money I loose".

If you have rotten center, you can subtract that rotten area from total area easy enough right? OK Just 2 more things.

1. When grinding stumps, "the deader the better".
2. "People who understand MATH don't buy lottery tickets". Tom C.

 

[randyg]

I give all my stumps to a part time ground man who owns a grinder. So long as he does good work for a reasonable price, he makes money, and makes me look good too. He screws that up, I refer stumps to someone else who WILL make me look good. Keep it simple right?

 

[bigearl]

A 20 inch stump has 4 times more surface area (square inches) than a 10 inch stump.
A 40 inch stump has 4 times more surface area than a 20 inch.
An 80 inch stump 4 times the area of a 40.
:monkey:
Since you are grinding the ENTIRE surface of the stump, and NOT JUST ONE PASS across the widest part, why not measure the "area" and multiply that "area" by your $ figure?

HOW??? Thought you'd never ask. Pi = 3.1416 You'll have to trust me on that. You measure the distance across the stump as usual, and that is the "diameter". Divide the "diameter" in half, to get the "radius". {We're almost there} Now multiply the radius times the radius, and then multiply that answer times Pi and you have found the area. That can be expressed in "square inches" or "square centimeters" if you wish.
OK We have a stump 20 inches across. One half of that is 10. 10 times 10 equals 100. 100 times 3.1416 equals 314.16 right? Drop the (.16) and you have a surface area of 314 sq.in. (square inches)
How about a 30 inch stump? One half of 30 is 15. 15 times 15 equals 225. 225 times 3.1416 equals 706.86. Round up to 707 square inches.
Now if you use a figure like say, 15 cents per sq.in. that 20 inch stump comes out to just under 50 bucks, and the 30 incher is just over a hundred.
Never again will you be able to say "not sure why, but is seems that the bigger the stump, the more money I loose".

If you have rotten center, you can subtract that rotten area from total area easy enough right? OK Just 2 more things.

1. When grinding stumps, "the deader the better".
2. "People who understand MATH don't buy lottery tickets". Tom C.

THat was great thanks for the priceless info. I'm going to use that formula from now on. Thanks
Big Earl

 

[angry beaver]

Great, if they can do simple math.......

I also price my grinding jobs by the square inch of surface area! It's the only way to be sure you are making the same amount on each job regardless of the diameter. I also go one step further. I add an additional charge based on the amount of stump above grade. Normally I use a multiplier based on the height left above grade, ie...3" = X1.5 the diameter price .....6" = X2. In all actuality when we grind, we are grinding square inches of material and not surface area. I NEVER try to explain this to my homeowner customers.... they always want to cut the stump lower to save money. My subs are SLOWLY starting to understand this way of bidding. IN THE END.....TIME IS MONEY!

 

[Norwayclimber]

Sure using square inches or cm is the most correct method of pricing a stump, but it involves you have to go and measure the stumps physically and give a quote.

When people call me about stumps, I just explain we price on the diameter in cm. I dont come and give estimates on stumps only, just tell them to measure for themself, and that will give them an idea of the cost.

This way we make good money on small stumps and less on large ones, (but still good money) but we also save alot of time driving around giving free quotes.

 

[treeman75]

I charge 1.75 per inch to grind if they want it cleaned up double that. If they want it filled in and seeded thats extra.