What is good fee to be paid as sub-contractor?

What is good fee to be paid as sub-contractor?

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I am considering doing this and will be approaching a company this afternoon who are seeking a sub-contractor...

I just wondered what a good rate would be. I'm not too interested in negotiating but I would have thought something along the lines of £15.00 per hour is a good rate.

Replies (13)

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Teignmouth
By Paul Scholes
27th Jul 2012 12:31

Depends on what you can do

Hi Andrew - I've paid anything from £8 to £40 per hour over the years but I'd say £20 - £25 for someone who can produce a decent set of accounts & tax return, and who can deal directly with the client on my behalf.

If it's more the case that the s-c is just given the books to do the accounts and bring them back for me to review/correct deal with client over queries etc then I'd not pay any more than say £10 - £12, to be honest, after some bad experiences I'd probably not do it at all now as it's easier to do it myself.

The value to the accountant is not in the pure compliance, number crunching but in getting a completed job where s/he then has the time to review and give added advice, ie a better use of their time.

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Replying to Marion Hayes:
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By mackthefork
27th Jul 2012 23:32

If I was in this kind of relationship

I would expect to get paid £20-£25 per hour if you were happy with the work, and as little as zero depending on how and why you were not happy with it.

MtF

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By noradh
27th Jul 2012 13:02

Skills?

I used a subcontractor to prepare a report on a client's tax problem. I agreed £60 an hour (this was a few years ago), but it turned out that he could not type or use computers, so the 10-page report was in manuscript, and I had to type it out myself. I told him that he could halve his fee, or he would never work for me again. He refused to halve his fee, and threatened litigation, although fortunately he never took that course.

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Replying to Duggimon:
By andrewjohnevans
30th Jul 2012 09:15

That is...

...quite shocking!!! Its crazy to think there are people like this out there!

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By User deleted
27th Jul 2012 14:55

We pay ...

... a %age of the fee

This has been discussed in depth on here.

This way both share the risks of jobs that take more than they should, and share in the benefits of the dream jobs. It also makes the employed/self-employed position less grey.

If you compare with the cost of employing someone, you would be looking at £20ph (inc Er's NI) for someone competent, certainly in this area, and factor in you're paying non-productive time too would be more like £30ph for the actual work produced.

The way I look at it I am gaining F x (p-1)/p I don't have capacity for, not losing F x 1/p of something I couldn't do otherwise. (where F = fee and 1/p = the % as a fraction) 

As long as you have the right fee for the job, and give the subbie a fair spread (not just the crud) this works well - especially if the contract is they get paid when the client pays.

If the subbie is good, he may be earning £75ph, great, that means I am earning £75 x (p-1) ph!

But to answer your question, I think you said elsewhere you are near Cardiff, and worked in finance in the public sector, so yes, £15 is a good rate, but be sensible, don't bill every minute you spend if those minutes are spent because you don't have the knowledge or experience - the contractor will know how long a job should take and if you are 50% over every time you won't last long - play the long game, you need to get experience first.

It works both ways, as good quick subbies will bill what the job is worth, not what they have spent, which is why we favour a percentage! Otherwise why bust a gut to do a job in 4 hours for £60 when you know it is being billed out at £600?

 

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Replying to Marion Hayes:
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By noradh
27th Jul 2012 14:57

Old Greying's post

What happens if your client does not pay up? Does the subbie get nothing?

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By User deleted
27th Jul 2012 15:17

Depends ...

... contractually, yes nothing, but in reality you will discretionally pay them for the goodwill benefit. However, that rarely happens, if as a good accountant you "know your client", as you need to for MLR compliance you will ensure you get paid up front where client at risk, although again, a mature practice will hopefully have weeded out the C and D clients long ago and have as many as possible on a monthly payment plan!

It is all about being a mature civilised person, paying a fair whack for something, not [***] the last penny you can out. Basically, if the subbie did no work for me i would not have that income, so if I have to rob Peter to pay Paul I am still ahead of the game. If you play fair you will get trust, respect and loyalty.

EDIT, although, as alluded to in first post, if they get paid a fixed rate for every hour worked are they really a sub-contractor? If they don't have any business risk then you are well in the grey area!

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By noradh
27th Jul 2012 15:39

Business risk

If they have the business risk of not being paid if the client is dissatisfied or goes bust, as well as if the contractor goes bust or is unhappy with them, there must be a strong case for self-employment. Personally, I would find it hard to accept that situation if I were the subbie; after all, the subbie has no say in deciding who you take on as a client.

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By User deleted
27th Jul 2012 17:38

No ..

... but they do have a say on which jobs they take on, if not, again, an indication of employment.

But, like I said, the reality is I would pay them. What is the difference between what I say and a subbie electrician/plasterer/plumber working for a main-contractor?

It's a tough world, and getting tougher - I have weekly plea's from talented people offering to work for free, business is risk.

Do you really think a contracting accountant wouldn't pay? If they didn't they wouldn't have a sub-contractor long. I would also pay after a reasonable period if the client took longer than expected to pay for the same reason!

Like I say, it is all about trust, respect and loyalty. At the end of the day if your subbie is worth looking after, you look after them.

Ask yourself, how glutted is the accountancy market, I have rent, PI, IT and software expenses, why should I take the all the risk when there are more accountants than jobs and a widening gap. I may as well sell my soul to the devil and ship all the work out to India! It is about time people wised up and realised you have to give as well as take, we have had too long of nine to five, four weeks holiday and paid sick leave. the country is going to hell in a hand cart and you have to adapt with it.

Would you rather earn £500 a week, with the remote possiblity you might only get £300 every now and then, or earn nothing? Don't forget, on this basis you might be earning £1000 a week, if you are good, that's the trade off.

What is they say, wake up and smell the coffee - you are talking like you would go bankrupt, not just loose a few hours pay. A good subbie could easily knock out 10 jobs at £500 pw, at 25% that would be £1250 - if say even one a week went bust you're still earning £1125, hardly a big risk, and it is unlikely it would be more than one a month where that happened, I 'd be gutted if that happend more than that across my practice, let alone one subbies portfolio!

EDIT, Do you really think a professional accountant would take on a client thinking doesn't matter if they are rubbish, won't cost us anything because we won't pay the subbie? That is crass and naive at best and downright insulting! If that is your experience of accountants then God help you!

 

EDIT 2, Shoe on the other foot, what if the client is dissatisified because of the utter bollix made by the subbie, as indicated in an earlier post - like I say a business relationship works both ways. And don't say you should have checked the work, what if they are on the clients premises and say something or do something inappropriate. It is all about trust, and that goes up the line as well as down.

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By David Winch
01st Aug 2012 22:04

Why have a rate at all?

Presumably the company seeking a subcontractor needs some work done.  They will derive a certain value from having this work done, otherwise why get it done.  Ask them what the value is then quote them your fixed-price for completing the work to their satisfaction (get the definition of satisfaction written and agreed before you start!) within the required time-frame, based on a fraction of that certain value -  regardless of how many or how few hours you put in to complete it.

If they choose to calculate an effective hourly rate afterwards, they can.  But priced this way they will be paying for the result and not the effort.  If they ask you for your hourly rate, say you don't have one.  If they insist that everyone else has quoted their hourly rate, say you don't work that way.

Hourly rates are the route to win-lose.  Value based fixed fees are the route to win-win!

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Replying to stevebev2:
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By mackthefork
01st Aug 2012 23:58

Only if you are not a monkey...

David Winch wrote:

Presumably the company seeking a subcontractor needs some work done.  They will derive a certain value from having this work done, otherwise why get it done.  Ask them what the value is then quote them your fixed-price for completing the work to their satisfaction (get the definition of satisfaction written and agreed before you start!) within the required time-frame, based on a fraction of that certain value -  regardless of how many or how few hours you put in to complete it.

If they choose to calculate an effective hourly rate afterwards, they can.  But priced this way they will be paying for the result and not the effort.  If they ask you for your hourly rate, say you don't have one.  If they insist that everyone else has quoted their hourly rate, say you don't work that way.

Hourly rates are the route to win-lose.  Value based fixed fees are the route to win-win!

N/M

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By User deleted
01st Aug 2012 22:55

Which is ...

... pretty much what I said!

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Teignmouth
By Paul Scholes
02nd Aug 2012 09:05

Flexibility

Even though I currently pay an hourly rate to my sub-contractor we have worked for so long together and share work back & forth that I am happy with the average annual cost as a % of my fees.

If, however, I was taking on a new subbie I would ask them to quote.  This can be as simple as taking their hourly rate and agreeing that the work will take no longer than X hours.

As more of us move away from time billing then, if subcontractors value the work, they will have to show some flexibility in being able to mix & match.

For any sub-contractor looking to build their own client base getting into the habit & practice of quoting for sub-contract work is a good training ground.

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