I recently started doing some contract work as a web developer and have picked up some work that will require me to sub-contract part of it (some photography work).
I happen to know a decent photographer, so I intend on sub-contracting the work to him, but I have some questions.
Obviously I organise the quote from the photographer… but is it expected that I add some commission on top of that quote? How much? What %?
Or do I just pass on that cost directly, adding no commission for myself?
Also, the photographer will need to come in to direct contact with the client. This means it’s possible that the client could directly ask the photographer how much the photographer quoted me, and then piece it together to work how much, if any, commission I have charged. Would such a conversation between those two be considered unprofessional?
Any advice here would be greatly appreciated. Thanks.
We always marked up subcontractor work (usually by 15% although sometimes less.) We went to the trouble of finding the sub, guaranteeing (as it were) their quality, and more importantly, we paid for it out of our pocket. The markup was our service fee and helped protect us a little when the client paid late.
On the other hand, we also told our clients upfront about our fees, we showed them the subcontractor’s invoice (along with all the other expenses we had incurred) and told them if they wanted to save money, they could contract with their own subcontractor and make their own payment arrangements. And we would be happy to recommend a list of qualified people if they didn’t have their own.
In my experience, the client only cares about how much the total job is going to cost. If I charge $1,000 and pay the photographer $500 or $900 is no concern as long as the bottom line is $1,000.
Whatever you do, be honest with your client. The one thing you do not want to do is create the suspicion that you’re throwing work to buddies, or worse, charging the client AND getting a kickback from a subcontractor.
Is it an accepted practice to ask for any sub-contracted expenses from the client to be paid upfront? As in, “Hey, Mr Client. I’m subcontracting the photography work to another contractor, so can I please ask that you pay for that expense upfront”?
I sub-contracted a photographer once for a Web project. He did a good job, we didn’t mark up very much (if at all). The next time the client needed photography, he called the same guy directly. It was no skin off our nose - any less time we have to spend dealing with the client is a good thing It happens, and if you like the photgrapher it’s no big deal. It’s only a big deal if this photog turns out to be someone you don’t want to work with in the future. If that happens, tell the client after the job is done that you would not recommend hiring that person again.
It would be uncouth to ask for the photographer’s fee upfront, IMHO. Your contract obviously states that you will take care of the photography, so you gotta take care of it whether you do it yourself or hire someone else to do it. You CAN ask for a downpayment on the project and come up with that amount knowing how much you have to pay the photographer. But keep that to yourself - just tell the client there’s a downpayment and don’t say how you came up with the number.
I don’t add any markup for my subcontracting, but usually it’s surveying work and takes very little of my time to arrange.
I do like to ask my clients to please pay the surveyor promptly. If they can’t/won’t, and it isn’t a great amount, I will pay him myself, then collect from the client later.
I’m not sure if I’d characterize this as unprofessional - do you mean on the subcontractor’s part? Perhaps. On the other hand, if the client isn’t in the position to arrange for subcontractors himself, it’s not his business how much you pay them, as long as he’s okay with the total fee. In other words, what kunilou said.
Is this really correct, and accepted across-the-board? What if I sub-contract $20,000 worth of work (which I pay out of my own pocket), and then the client doesn’t pay? That has the potential to ruin a business.
If I’m not paying the subcontractor up front, I put a charge on my invoice for him. After the client pays, I pay him. It’s called “pay when paid”. A lot of the engineering companies I subcontract from do it this way.
“Pay when paid”, this looks alright to me. I’d imagine something like this would be common for contractors who provide more service-based things (ie, invest their time) as opposed to contractors who have to go and purchase goods, right?
For this “pay when paid” scenario, this would be something I negotiate with my sub-contractor, yes? The “client” is not involved in this process?
Yes, you do. After all, you do charge a % on your own material costs, don’t you? I can’t tell you what % would be appropriate in your case, not knowing the specific market.
Extremely unprofessional. That doesn’t mean it doesn’t happen (it can be interesting to find out how much your middleman is getting), but for the client to reveal how much you’re charging, or for the photographer to reveal how much he’s charging, is a definite no. The majority of “middlemen” consider it quite gauche to let it be known that you’re not an employee of the middleman but a subcontractor, at least in the consulting business. As the last link in the chain, I consider it quite gauche in turn to distinguish between “my people” and “subcontractors.” The business-speak is that the subcontracting should be “transparent,” the client shouldn’t notice any difference between re-subcontracted and not-re-subcontracted work.
In some sectors (construction, engineering, consulting), these chains of subcontracts keep whole families fed. I’ve had cases where there were five levels between me and the final client.
You negotiate the terms of payment with the person with whom the payment is taking place. Payments to your subcontractor, with the subcontractor. Payments from the clients, with the clients. NinetyWt, if the surveyor is paid by the client directly, you’re not subcontracting the surveyor, merely arranging for his services. You’re a broker and could get a broker’s fee, but you’re not the surveyor’s client.
We have a number of different ways of handling this.
If I quote for the “finished product” then the fees the photographer is charging would never be mentioned to the client. I may specify a cost for photography in the contract, but that’s a quote to the client, not a promise to pay. We would consider it a firable offence to mention fees to the client in this situation
Other times we will quote a management or consultancy fee. In which case we will organise a photographer to the clients specs. Client will choose but we then “manage” and pay. In this case we charge a 17.65% mark-up. This is totally transparent - its actually written into the contract that we will show invoices. This method is most often employed where services are not generic, and there is a wide range of cost / skill options (eg: for celebrity EmCees). We often also use this method for printing costs. i.e - our charge is for copy / design for an 8pp newsletter. But there will be many paper quality options that we can’t account for - so we just list a blanket 17.65% markup on any third party quotes
Third way is that we simply give a list of options to the client and they then go do their own negotiations
some markup is expected. Other estimates posted here seem reasonable.
the markup isn’t much, it basically pays for your time in setting up the arrangement. And of course you are responsible to your client for the results.
I wouldn’t expect such a conversation between your sub and the client, but it happens. Simply make sure at the beginning of your discussions with your client that he/she understands that there will be a markup applied but that you are the one responsible for the quality/output of the sub. If you bring it up early enough you can say, if asked, that you haven’t settled on an exact amount yet.
But if both your client and your sub are professional and want to do business with you in the future, they won’t attempt to abuse any information they may discover while working together. It shouldn’t impact the relationship and if it does, that is a factor to consider in future dealings.
Yup, and it’s been the cause of bankruptcy for many businesses. Some years ago there was a rather spectacular failure of a client that stuck its advertising agency with a bunch of unpaid bills. Media didn’t get paid, printers didn’t get paid, free-lancers didn’t get paid, the agency had to close its doors. One of the agency’s owners summed it up with “the business was supposed to be my retirement fund.”
Well … typically at the beginning of talking to the client, I might say “I’m planning to use XYZ Geotechnical Engineers to do the soil borings, are you OK with using them?”. I would be asking from a standpoint of quality of work, not cost. So if they don’t like XYZ Geotechnical’s work I might use someone else.
In government contracting, subcontractors are used all the time and a “pass through” fee on services is always applied to cover the administrative cost of dealing with their invoices, issuing checks, serving as an intermediary between them and the client, etc. Rarely is this greater than 10%, however, as contrary to popular belief, the government is very cost conscious. Clients also interface with subcontractors all the time, but rates and pay is never discussed, and it is considered very bad form. I have seen circumstances where a government client has told a subcontractor they like to move to a new contractor because they think the pass through fee is too high or they dislike the contractor’s services but like the subcontractor. In these cases, the new contractor is all but told they need to hire the specific subcontractor in question if they want to win and/or keep the work.
This subcontractor wouldn’t like it at all. It’s not my problem when you get paid; I expect my invoice to be paid within 30 days, regardless of your cash flow management or lack thereof.
Utilities and landlords aren’t going to respond warmly if you tell them you’ll get around to paying them when it’s convenient for you, or when your paycheck comes. A bill is a bill; I am a business, and I expect you to pay my bill same as any other.
Now if your subcontractor agrees to wait around for payment, that’s his/her choice. But if you tried that on me, I wouldn’t work for you a second time.
This is probably very different for different industries. I’ve no idea if it’s the norm for photography stuff. I know that it is the norm for civil engineering contracts here.
Just thought I’d check back in. My sub-contractor was happy to accept “pay when paid” terms. He cited our good relationship when we used to work together at the same company, the fact that he is still establishing his photography business (and hence wanting to drum up work), and also that he only stands to lose his time if he doesn’t get paid. I was very thankful.
It happens, and if you like the photgrapher it’s no big deal. It’s only a big deal if this photog turns out to be someone you don’t want to work with in the future. If that happens, tell the client after the job is done that you would not recommend hiring that person again.