A new lawn care business owner brought up a very interesting question on the Gopher Lawn Care Business Forum. He had recently gotten his business going and was contacted by another lawn care business to do some sub-contract mowing work. He wrote “another lawn care business asked if I would sub-contract for them. What percentage would be fair? I am thinking me 80%, them 20%. I would have to use my own equipment. Yes, I am a newbie but not dumb! Any thoughts?”
I don’t think this question can just be answered with a simple % split. I think it’s less about the ratio and more about the actual dollar figures. First off, who is going to be bidding the jobs? You or them? If it is them, I bet they would love to lowball a job and then throw it to you and keep 20% of the income.
What would the average lawn be bid at? How long would it take you? What are your expenses to perform that job? How much profit would you make?
You have to take all these things into consideration before you agree to such a situation. The profit margin on lawn mowing can be very slight to begin with so the more businesses involved and the more percentages that are taken out to split with others, leaves less for the one performing the work. It’s quite possible this concept simply won’t work because at the end of the day there just isn’t enough money to go around after expenses.
There is a good reason you don’t see too many other businesses performing jobs under such agreements. To make it worth your while, you may find you have to increase your prices with the net result being your bid becomes uncompetitive compared to other lawn care businesses in your area. So run the numbers and think about it before you act.