Just the facts maam.

[pistol pete]

To keep opinions open minded I would like to pull a dragnet a tell a story but change the names. Frank who runs Big Pine Tree Service see's a yard-sign for Jim's Tree Service and asks for a free estimate. Upon arrival Big Pine explains they want a bid for their client to trim a few trees. Jim walks around, works up a bid and hands it to Big Pine. Big Pine gives Jim the go ahead and asks for a 20% cut off every job he gives to Jim from now on. While Jim is working he has his company truck out front, a neighbor see's it and comes over and asks for a estimate. Jim works up an estimate and gets the job.
Now does Jim owe Big Pine 20% of the job he got from the neighbor, if not how much of a %. Does Jim owe Big Pine anything at all, what about any job he might get from another neighbor that comes over or calls while on the new job.

 

[rfwoodvt]

Well, that depends....

We have a clause built into our contracts. Both for when subs work for us, AND, when we work as a sub.

Article 4. Confidential Information
Section 4.01 SUB shall hold all Customer/Job information and other operational and trade secrets SUB may become privy to in strict confidence. Such information shall be used by SUB only for the purpose set forth in this Agreement, and for the benefit of RFW.

Article 5. SUB Responsibility
Section 5.01 SUB agrees to keep RFW updated as to all material Customer/Job issues, including Customer/Job complaints, praises, questions and the ike.

Section 5.05 SUB will not take any actions in order to attract any Customer/Job from RFW during the term of this Agreement or for a period of twelve (12) months following the termination or expiration of this Agreement ("Term"). In the event that a Customer/Job chooses to cancel an agreement with RFW during such Term, and SUB desires to contract with such Customer/Job, then, prior to contracting with such Customer/Job, SUB shall pay RFW a sum equal to 20% of the total price set forth in each related Attachment A in effect for said Customer/Job at the time of cancellation by said Customer/Job, or two hundred fifty dollars ($250.00), whichever is greater.

Section 5.06 SUB shall have a fiduciary duty to inform RFW of any opportunities for additional work that SUB is made aware of as a direct result of the work performed under this agreement. RFW shall have the first right of refusal to bid on such opportunities, If such bid is turned down, then SUB shall be free to pursue such opportunity without further duty to RFW.

If we are subbing for another outfit it is understood that If someone comes up and asks for an estimate, we immediately refer them to the outfit that hired us. If they are on-site we send the customer to the contractor, if not we give them His phone number.

We expect our subs to do the same.

So far there have been no problems. Part of the reason is that we hire subs for areas where we are weak and they hire us for areas they are weak. That makes it a complementary relationship and it makes no sense to shoot our selves in the foot. One job stolen is still not worth losing 15% to 25% or our regular income stream.

We try to remember that when we sub for someone, they are our customer and we have a duty to meet thier needs first.

On the other hand, we've had problems with subbing out work we just don't do, like spraying, they are all very reluctant to sign a contract with a Fiduciary Duty clause.

Hope this helps!

 

[Tree Machine]

What TreeCo said. I think 20% is high. Consider it this way. 20% for the commission, 10-20% for labor, 33% for Uncle Sam and 25% for fuel, maintenence, food, gear. Tell me, where is the profit? I often find that my profit is all in the last 20%.

The person paying the commissions needs to price the jobs 20% higher just to cover the commission being paid out, meaning you client eats it. For anyone who has deliberately charged 20% over what they felt the job was worth, at the end you come out having charged exactly what the job was worth. The only person who REALLY wins is the guy getting the 20% for his minimum of input.

I've offered commission arrangements over the years because of overabundant work. One thing that seems to always have rung true is that it's painful for the tree worker who has to eventually fork over the commission. It's like a tax. Not saying it can't work, but 20% to the referrer and 30% to Uncle Sam should say something right there.

RFWood seems to have it nailed down. I've lost thousands over the years because sub has paid me in excuses. I work on a handshake agreement, casual, personal, but lousy business. Without a contract, SUB can formulate his own agreement. Reciprocal arrangements, like RF's, are beneficially mutualist and are relationships that will work in the long run.

 

[trimmmed]

Yes, he owes him his cut. Not legally, but it would be wrong not to cut the guy in who put them there. It's what I call a "no overhead sale"

I've been in both guys positions, albeit in a different line of work. 10% is the norm in my world.

 

[trimmmed]

TM, I don't take tax consequence into consideration. I feel that comes with what you make and that however either party fades their actual tax bill is up to them and me, individually. Bottom line, we all pay tax on income.

I would strongly review how profitable it was though, or how far under my typical hourly rate I was falling. And then go by that.

Plus when you are entering a contractor/subcontractor relationship, sometimes getting your foot in the door at a low price is good. You then create dependency, which enables you to raise your numbers.

 

[John Paul Sanborn]

I ahve an agreement with a real estate firm that provides me with leads. If I close I pay 12% of net in finders fees. So far it has been a nice small part of my income.

They state that they are not interested in income from referalls or walk-ups, but that that client is thier client and all future work should be concidered a referal weather the client calls me first or not.