Developing a Subcontractor Payment Model

revenue-sharingSince I wasn’t able to post a video tutorial last week (and quite possibly this week as well), I thought I’d actually go old-school and write a blog again.

My goal for 2013 was to expand Endress|Analytics and begin employing the use of subcontractors. It’s been a bit of a bumpy road, but things are starting to settle and the going is smoother. Now I can’t, for obvious reasons, disclose what I’m paying my subcontractors, but I thought I’d post my thoughts on how I am approaching my current subcontractor payment model, and why I think it actually works really well.

Basically the way my model works is this – when I get paid by our client for the work we’ve done, I then turn around and pay my subcontractor. My subcontractors earn a percentage of what I’ve billed my clients. By not paying my subcontractors until I’ve been paid, eliminates the stress of having to pay money that I may not have. It’s basically a revenue-sharing model.

I know this model is hardly unique, but I didn’t do any research on the best practices of how to pay subcontractors. I came up with this model completely on my own and I just wanted to share this with anyone who is considering hiring subcontractors, but is struggling with the best way to compensate them for their time. The reason I go with a percentage based model, rather than a fixed dollar / hour amount is primarily because my rates vary based on the type of project, the toolset being used, and any number of other factors. I feel doing a percentage-based revenue share is more fair for all concerned.

Are you a consultant or sole-proprietor? How do you handle paying subcontractors for their work?

 

2 thoughts on “Developing a Subcontractor Payment Model

  1. Gabriele – do you have any Omniture Sitecatalyst consultants with you for a 3 plus months contract gig in San Jose. If you do have please feel free to reach me at 818 640 4103 at your earliest

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    1. Andy, I apologize – I don’t check my comments frequently because I generally don’t get them very often. In the future I’d recommend using my contact form. 🙂 Also I don’t have any consultants that would be willing to relocate for 3+ months to San Jose. We all work remotely out of our homes.

      Thanks for your inquiry.

      Like

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