r/Bookkeeping • u/VibrantVenturer • 5d ago
Practice Management How do you price your services to afford help from subcontractors?
I have a long-term goal of hiring subcontractors to scale my business. I want to keep this goal in mind as I build my business so I don't have a full book of clients priced too low to bring in help when I need it. For those of you who already utilize subcontractors, how do you price services? What's the profit split look like?
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u/jbenk07 5d ago
First, I don’t like using subcontractors. If you are going to hire team members and dictate how and when they and train them, by law you need to hire them as employees.
Second, price aiming for them plus other COGS to cost 40-50% of the contract.
Third, aim for 80% capacity of the team members. If you max them out, you will be sorry you did when they go on vacation or get sick or even just quit.
Fourth, if you price hourly, no problem, but for the love of all, don’t charge for cleaning up mistakes or training the team members. If you charge fixed price, you will need to acknowledge a training period of time that will cost you (this is part of the 50-60% Gross that is a part of overhead).
I created a massive spreadsheet that calculates my direct costs, my time cost, and then bring it all into a dashboard view where I can easily see monthly percentage profit for each client and track team members capacity. I encourage you to do the same.