Make Money Managing Subcontractors

Implement a standalone management fee as a separate line item in your budgets, rather than solely relying on markups, to accurately account for and profit from your time managing subcontractors.

Recognize that traditional markups (even up to 40-50%) often don't cover the full scope of time spent on site visits, coordination, problem-solving, and administrative tasks associated with managing subs.

Understand that the management fee covers direct project management activities like site meetings, quality control, and problem-solving, while the markup covers administrative costs, risk, and access to your vetted subcontractor network.

Budget specific hours for subcontractor management on each project, and track your time against these budgeted hours to identify inefficiencies and justify change orders if additional time is required due to unforeseen circumstances.

Transparently communicate the value proposition of both your markup and your separate management fee to clients, explaining exactly what each covers and why it's essential for project success and quality.

Adjust your marketing and sales strategies to attract clients who understand and value the comprehensive management services you provide, rather than solely focusing on the lowest bid.

For small contractors, higher markups and dedicated management fees are crucial because you lack the economies of scale that larger companies have, ensuring profitability on smaller, high-touch projects.