GCs with their hands out

Status
Not open for further replies.
Think about it like this... What does each sale cost you? Every lead has a cost, and every sold lead has a higher cost. The GC's basically handing you a sold lead. I don't like the fact that he's more or less demanding payment, but you do have a lower cost associated with this work because you didn't have to generate this lead or sell this work. The GC did this work for you. I agree that it would be better if he just sold it himself and subbed it out to you (not sure why he wouldn't), but for whatever reason he didn't. What I'm trying to say is that you do have a little leftover on these jobs that just fall like manna from the sky to slide a little his way if you want to.
 
If the GC can sell the job then he can have you do it, and pay you, then bill the homeowner.

Our GC's mark-up all out work, for example an under counter light install they pay us $179 and bill the HO $350 install 6 recess fixtures they pay us $1200 and bill the customer $2400 200A service upgrade we get $2400 they bill HO $3400 no problems, everyone is happy. It sounds like your GC is loosing money, he only wants $200
 
Last edited:
romexking said:
The GC is entitled to something only if he performs a service to you, such as him paying you instead of the HO. Why should HO #1 get charged $200 more than HO#2 just because you were referred by the GC? You should not be marking up your price, just to give it to someone else. Give him the bill and let him: 1. pay you immediately when you are done, and 2. send the bill with his markup to the HO. Then he deserves his markup. The 10% of the job that he wants is probably more than your profit percentage for the year. Try this, ask him if you go and get leads for him, and he gets work from them, will he give you 10% of the job cost? See how well that goes for you! You are doing HIM a service by performing quality electrical work for his client, and in turn making him look good.
Click to expand...

Amen brother!!
 
Marc: If the GC is a regular customer, I give him a break on my price to begin with. Cheaper-by-the-dozen or quantity-discount type of thing. He's just asking to 'double-dip' by asking me to leave more money on the table.
 
480sparky said:
Marc: If the GC is a regular customer, I give him a break on my price to begin with. Cheaper-by-the-dozen or quantity-discount type of thing. He's just asking to 'double-dip' by asking me to leave more money on the table.
Click to expand...
Well, if you give a GC's referral the same break you'd give the GC himself, then you're leaving money on the table. The "GC price break" should only happen when you're subbing for the GC. In this case, the work is directly for a customer, who happens to be a referral of the GC.

I guess it's a matter of preference. I'll take the work however I can get it. I'd rather sub for the GC for less muss and fuss, but if it's just a referral, I'll do the work anyhow and slide him a little bit if I feel the need.
 
mdshunk said:
Think about it like this... What does each sale cost you? Every lead has a cost, and every sold lead has a higher cost. The GC's basically handing you a sold lead. I don't like the fact that he's more or less demanding payment, but you do have a lower cost associated with this work because you didn't have to generate this lead or sell this work. The GC did this work for you. I agree that it would be better if he just sold it himself and subbed it out to you (not sure why he wouldn't), but for whatever reason he didn't. What I'm trying to say is that you do have a little leftover on these jobs that just fall like manna from the sky to slide a little his way if you want to.
Click to expand...

Yes every lead has a cost attached to it, but $200 is not a good cost per lead. If a contractor wants to have a referral program, be my guest, but make it consistant. If it's $200, so be it, but pass that cost along to EVERY customer, not just one individual. Any referral fee should not be assessed to one particular customer. Would you want to be charged extra to have a new water heater installed just because your tile guy knows and referred you to the plumber? Tell the GC that when you present the cost to the HO, you will put a line item of $200 for "GC requested referral bonus" and see if the HO likes it and agrees to it. If they do, yippee for the GC

All GC's will try to make you think that they are doing you a favor by using you for their electrical work. It' is a mutually beneficial business transaction, and this scumbag should not be "asking" for anything.
 
This same practice of "asking" for $ gets a lot of politicians in trouble. There is no difference in asking for a kickback in order to stay in some GC's good graces. The relationship should be based upon quality work at a fair price for both parties, not kickbacks
 
romexking said:
Yes every lead has a cost attached to it, but $200 is not a good cost per lead. ... It' is a mutually beneficial business transaction, and this scumbag should not be "asking" for anything.
Click to expand...
I agree that 200 bucks is steep, but I was trying to address this matter in general and not get too specific about this particular one.

I don't think I'd call the guy a "scumbag" right off the bat. He may well be, but the "US vs. THEM" thing is a little bit juvenile. He might lack tact, maturity in the trade, or he might just be highballing to get a rise out of the electrician. He might also believe that this work is much more expensive than it actually is, and is totally clueless that a 200 dollar consideration is too much. Not a scumbag at this point.

Me, personally, I prefer to cultivate a network of other tradesmen who all refer work to each other with no special consideration. The "pay it forward" type of concept. It takes a little wisdom, however, to spot the one's that are best served with a few $$'s every once in a while.

I'm not trying to change anyone's mind on the matter. Do what works best for you. I was just offering my opinion and experiences into the mix.
 
romexking said:
The relationship should be based upon quality work at a fair price for both parties, not kickbacks
Click to expand...
That's the ideal, but I'll take them however they come. You can still make all the money you need on these types of deals.
 
Marc,

You are correct, he may not be a scumbag...well let's say I just can't prove it from here, and there is nothing wrong with a referral, but my point is it should be across the board and not added to one customers bill.
 
romexking said:
...and there is nothing wrong with a referral, but my point is it should be across the board and not added to one customers bill.
Click to expand...
Not every customer will pay the same price for identical work. That's just a necessary fact. Every job, while appearing identical, will have either adders or discounts based on other arbitrary factors, such as the perceived PITA adder. I'll even price a job real high just because I'm too busy to do it. I get those a good bit of the time anyhow.
 
romexking said:
Marc,

if you keep posting a reply, I will never catch up to your post count :grin:
Click to expand...
I'll bow out now then. I hope you realize that I wasn't arguing with you. I just find this to be an interesting topic to talk about.
 
So much to do about post counts - Is this a competion?

Anyway - while this type of 'referral' i.e. "kickback arrangment" may or may not be legal in most states for private work, (Being illegal in PUBLIC work...) it should be illegal IMO.
 
satcom said:
Our GC's mark-up all out work, for example an under counter light install they pay us $179 and bill the HO $350 install 6 recess fixtures they pay us $1200 and bill the customer $2400 200A service upgrade we get $2400 they bill HO $3400 no problems, everyone is happy. It sounds like your GC is loosing money, he only wants $200
Click to expand...


Holy crap. I think I'll just become a GC and hire you. Wow.
 
General Contractors need to make revenue out of each and every possible thing they can, just like we do, so I never begrudge them wanting a cut. If a general points me at a job, and then want's me to throw in $____ for him, what I do is give him my proposal to do the job, let him mark it up, let him chase the permit, let him be the ultimate responsible party. He can take my number and do any increase he likes with it, and pass it on to the customer. If the customer comes to me and complains about the cost of the job, I point out that *(fill in dept. store of your choice) pays probably $.50 cents for a pair of jeans made by some kid in China, and sells them to you for $50 bucks. Its how business is done.....
 
Status
Not open for further replies.
Top