Subcontractor vs. Contractor: What's the Difference?
Contractors and subcontractors are two professionals in construction and other industries that work together to complete a project. Though they might share similar responsibilities, there are some key differences between the roles. Learning about these two positions can help you decide if pursuing one might be right for your career path.
In this article, we compare the responsibilities of a subcontractor vs. a contractor, along with the advantages and disadvantages of each role.
What is a contractor?
A contractor is someone a business or individual hires for a specific project. Instead of working in-house as a full-time employee, the contractor is brought in via a contractual agreement. While contractors can work in any industry, the term is commonly used in construction to describe the person overseeing the job site, often called a general contractor.
What is a subcontractor?
A subcontractor is someone who gets their work from a contractor. Rather than going out to find customers on their own, subcontractors work with contractors to handle parts of their jobs. Subcontractors typically have a set of specific skills and network with contractors who need their area of expertise to complete a project.
Contractors and subcontractors exist in other industries too. For example, a company may hire a contractor to help them rebrand. The contractor might then hire subcontractors—such as a graphic designer, a web designer and a copywriter—to help with the project.
Subcontractor vs. contractor
Here are some of the key differences between subcontractors and contractors:
Contractors are responsible for finding clients and hiring reliable subcontractors. These subcontractors are responsible for completing the assigned contract successfully and on time.
Common responsibilities of a contractor include:
Negotiating contracts with clients
Providing the required materials and labor for a project
Hiring subcontractors for specialized projects
Monitoring the day-to-day of a job site
Monitoring a project's schedule, payments and cash flow
Common duties of a subcontractor include:
Comply with the terms of the subcontractor agreement.
Frequently communicate with the general contractor and customer.
Adjust to policy and procedure changes as needed.
Perform labor and complete construction projects by their due dates.
Stay within a set budget.
Type of work
Contractors perform mostly managerial work around construction sites, while the subcontractor handles the specialized labor needed to complete a project. Subcontractors may have more specialized areas of expertise, including:
Electrical work, such as installing light fixtures
Carpentry, such as replacing floors
The average salary for subcontractor and contractor positions can vary on type of construction, location and experience. The average base salary of general contractors in the United States is $121,492 per year. While subcontractors' earnings can vary by specialty and the amount of work they agree to, on average, subcontractors in the United States earn $71,736 per year.
Both contractors and subcontractors typically share a lot of the same skills in completing a project. These can include communication for project status updates, problem solving and critical thinking. However, subcontractors tend to have more specialized skills in some areas, while the contractors handle the overall project and management. Contractors, however, need to not only know about construction work but also about running a business. Contractors need to know how to market a business, plan out a budget, manage payroll and delegate tasks.
Contractors often have a contractor's license, though these requirements can vary by location. Though they may not require formal education, this can help build a strong network of other professionals. Subcontractors may require education or experience in their specific areas. For example, carpentry, plumbing or lighting subcontractor positions may require trade school credits, licenses or other certifications.
Advantages of the roles
There are several key advantages to working as a contractor:
Choose which customers you work with: Contractors can also choose which customers to work with. If a customer was pleasant to work with in the past and paid on time, the contractor can choose to work with them again. Contractors can also choose what type of work they want to do and where they want to work.
Set your own rates: Perhaps the biggest advantage of being a contractor over a subcontractor is the ability to set rates. Contractors get to decide how much they want to charge for a specific job.
Choose which subcontractors you want to work with: Contractors get to decide if they want to work with subcontractors and which ones they want to work with. They can therefore give more work to subcontractors they trust and whose rates are reasonable.
Spend more time managing rather than performing physical labor: In many cases, contractors send most of the work to subcontractors. When this happens, the contractor spends more time on managing and marketing rather than physical labor. This ability to oversee projects rather than work on them directly is very appealing to many professionals.
Similarly, there are several common advantages for working as a subcontractor:
Less customer contact: Some people would prefer to spend less time interacting with customers. Subcontractors do not need to negotiate rates nor follow up about payments. Most of the customer contact is through the contractor, meaning the subcontractor usually only needs to communicate with the contractor.
Steady work: If a subcontractor can properly network with contractors and provide a quality finished product, they should have a steady stream of work. Contractors turn to them more regularly, providing them with frequent job opportunities.
Independence: Subcontractors report to contractors during short-term projects but otherwise work for themselves. They can set their own schedules, hours and availability.
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