Setting Your Rates: Direct Clients vs. Subcontractor Jobs for Solo Trades
As a self-employed tradesperson, setting your rates is key to survival. Your time, materials, and overhead interact differently when you get clients directly versus working as a subcontractor. What works for one job source might not work for another. Here's how to figure out your pricing so you make money from day one.
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The quick answer
Working for yourself means you choose your jobs. Getting clients directly (through referrals or your own marketing) usually means you keep more of the money. But you have to find those jobs yourself. Working as a subcontractor for a general contractor (GC) or a larger company means they bring you the work. You get paid less per job, but the work is steadier. Plan your rates so you can make a profit from both types of work.
Side-by-side breakdown
Think of your "cost" as your operating expenses plus your desired hourly wage before profit.
* **Direct Client Pricing**: You quote the full price to the homeowner or business. You manage everything: finding the lead, estimating, scheduling, performing the work, invoicing, and collecting payment. This often gives you the highest hourly rate after your costs. For example, if your true cost for a half-day plumbing repair (including your time, truck gas, tools, and insurance) is $250, you might quote $500-$700 to the client, aiming for a healthy profit. You absorb the risk of unpaid invoices and the time spent on marketing and estimates. * **Subcontractor Pricing**: A general contractor or larger plumbing company hires you to do a specific part of a job. They handle the client, marketing, and overall project management. You get a set rate, often hourly or per job, that is lower than what you'd charge a direct client. For the same half-day plumbing repair, a GC might pay you $350-$450. You trade a lower rate for less hassle, less marketing effort, and more consistent work flow. Your effective hourly rate can still be good, but the overall project margin is split.
When to prioritize direct clients
Focus on getting direct clients when you have a strong network (word-of-mouth, referrals from past employers, local groups), when you want to build your own reputation and client list, or when your specialized skills mean clients seek you out directly. The higher profit margins from direct work let you invest in better tools, professional training, or a newer work vehicle like a Ford Transit or Ram ProMaster. This also gives you more control over your schedule and job types.
When to prioritize subcontractor jobs
Take on subcontractor jobs when you're just starting and need to fill your schedule fast. This is also smart if you lack a strong client network, don't want to spend time on marketing, or need consistent income while you build your direct client base. For example, a new roofer might take on a few jobs from a larger roofing company to keep cash flowing while they get their own website and local ads running. Subcontracting can also be a good way to gain experience on bigger projects without the full responsibility.
The verdict
From the start, know your costs and target hourly rate so you can profit from both direct clients and subcontractor work. If your basic costs (truck, tools like a Milwaukee M18 Fuel Sawzall or a Rigid pipe threader, insurance, fuel) mean you can't make money even as a subcontractor, you need to adjust your business plan or specialize. Aim to get enough direct client work to thrive, but use subcontractor jobs to stay busy and cover your overhead when direct leads are slow.
How to get started
First, figure out your true hourly operating cost. This includes your desired wage, insurance, fuel, truck payments, tool maintenance (e.g., sharpening saw blades, replacing drill bits), and any licensing fees. Add a percentage for job-specific materials if you supply them. Then, add a profit margin (e.g., 20-30%) to get your direct client rate. For subcontractor work, estimate what GCs pay in your area for your skill and see if it covers your operating costs. If your target rates aren't competitive, you either need to specialize, reduce costs, or increase your efficiency.
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FREQUENTLY ASKED QUESTIONS
Do I need different pricing for Amazon vs my own website?
You typically cannot price lower on Amazon than on your own site per most retailer agreements, but you can price the same. Factor in Amazon's 15% referral fee and FBA fulfillment costs when calculating your effective margin on that channel.
What is minimum advertised price (MAP) and do I need it?
MAP is the lowest price retailers are allowed to advertise your product. It protects your brand value and prevents price wars between your retail accounts. Set a MAP policy before you have multiple retail accounts — it is much harder to enforce retroactively.
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