How to Pay Crews on a Percentage
To pay crews on a percentage without a spreadsheet fight, do the same seven steps for every job, in the same order, and add the results per person at the end of the week. The two mistakes behind most disputes are an unstated base and forgotten cash. This is a worked week with four jobs and two crews.
How to Calculate a 60 40 Split: The Order of Operations
- Write the job total: the quote, or what came in if that is more.
- Write the parts and who bought each.
- Pick the base the crew agreed to: the total, or the profit after parts and card fees.
- Work out the cut on that base.
- Add the parts that crew bought, in full.
- Take away any cash that crew collected from the customer.
- Add up each crew's jobs. One number per crew, positive means you pay.
A Worked Week
Made-up round numbers. Crew Dan is on 60% of the total. Crew Sam is on 50% of the profit. No card fees.
| Job | Crew | Total | Parts | Cut | Parts back | Owed | Cash held |
|---|---|---|---|---|---|---|---|
| 1 | Dan | $900 | $100, Dan | $540 | $100 | $640 | $0 |
| 2 | Dan | $600 | none | $360 | $0 | $360 | $600 |
| 3 | Sam | $1,400 | $200, you | $600 | $0 | $600 | $0 |
| 4 | Sam | $500 | $50, Sam | $225 | $50 | $275 | $200 |
Job 3 cut: profit is $1,400 minus $200, which is $1,200, and 50% is $600. Job 4 cut: profit is $500 minus $50, which is $450, and 50% is $225.
Dan: owed $640 plus $360, which is $1,000. He holds $600 from job 2. You owe him $400.
Sam: owed $600 plus $275, which is $875. He holds $200 from job 4. You owe him $675.
You pay $1,075 in all, in two payments.
The Two Mistakes That Cause Most Disputes
1. The Base Was Never Said
"Sixty percent" means $540 or $480 on job 1, depending on whether parts come off first. Say which, in writing, before the job. Check it: ask each crew, separately, what the percent is a percent of. If the answers differ, you have found the dispute.
2. The Cash and the Parts Are Left Out
Dan took $600 in cash on job 2. If you pay him his full $1,000 you have overpaid by $600. And if Sam is not paid back for his $50 of parts, he will notice. Check it: for every job, write who took the money and who bought the parts.
What to Do
Do this on paper for one week. Then try the numbers on the Subcontractor Split Calculator. In HeadHoncho you set each crew's cut once, under Team, and each job's Money tab prints the working. Close balance lists what you owe each person, or what they owe you, with You owe them and They owe you. Walk through it in How to Close a Balance. The full explanation is in the pillar, How to Pay a Subcontractor on a Split, and the rules are on Finance, Splits and Payouts. A short overview of the app is on HeadHoncho for the Solo Operator.