r/consulting • u/GiveMyRegardsToDavy • Aug 10 '21
What percentage should a subcontractor get of what is billed to the end client?
I'm just starting out freelancing and expect to take on some jobs as a subcontractor, as well as dish some work out to my own subcontractors from time to time. What is a fair / reasonable percentage to get of the final bill? This is for ERP software consulting and development.
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u/milo_peng Aug 10 '21
You should know what are your own rates. That is the basics for T&M work. If you are worth 5 grand a day, then it is 5 grand a day, regardless of how much the main contractor/prime is making.
That said, what you are suggesting sounds like a fixed price deal. If I was you, I would still work out that billable amount based on the number of hours you are going to expend on the project, instead of some random percentage on the prime's fixed cost. You don't want to be selling yourself short.
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u/JohnDoe_John Lord of Gibberish Aug 10 '21
People don't get as much as they deserve - but as much as they agreed.
Market defines the numbers.
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u/Davidpr16 Aug 10 '21
The most common splits I have seen is 70/30 or 65/35. The sub does often need to give up some % because they didn’t have to do the marketing and sales needed to get the client or the account management needed to keep the client.
I am not saying these numbers are the right numbers or the “standard” numbers, just the ones I see the most. I also think it is a good practice to let your subs know exactly what the client is paying…
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u/kuznetmatrican Aug 10 '21
This is an odd way of thinking of this problem. Have you ever worked in consulting?
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Aug 10 '21
As much as you can get!! However as a guide somewhere between 10% and 30% is acceptable in the UK market.
You don't want the rate your charge for the sub to look silly against what the client could get a similar skillset themselves from the open market.
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u/[deleted] Aug 10 '21
Completely irrelevant what client is paying original sale, only matters what you can get.
ERP is lower margin so I'd expect a higher amount but again it's unrelated.
I've seen subs get more than the client was paying before.