Hi
We are In California, Lately we are getting a lots of invitation to bid on public and commercial projects, so I found only one person in our area which I contacted him to work with us and help us estimating and bidding for leads he can get from either my email mail box or his own contacts.
he will not be internal hire, but he wants to work in commission he is an independent estimator office, which he is experienced at public and commercial cabinetry and counter tops.
His price is really makes me scratch my head and I can see it is kind of extreme, he is asking for 10% of gross!!!
that means he will get paid percentage on material, labor and tax!!
for example if we landed project values 50K, assuming profit at 9K after material, parts labor and tax, his commission will be 5K and My shop will take home 4K?? this does not sound realistic at all.
I started asking around me fellows cabinets shops (some big and some small) NO ONE is hiring external estimator and all other shops doing it internally and done by one of the partners or full time employee to guarantee privacy .
I was told the going number is 3% of the net and never of the gross, is this a fair commission

What is the fair pay rate or commission for estimator in California.
Thank you.

I don't know anything about California. But, how do you bid jobs now? How would someone outside of your group know how to bid a job for you? Would they know your material costs, your labor costs, your overhead cost? If you do not know these costs, how can you possibly did a job?

Keep it in house. Also, 10% to bid a job is way too high, 3 to 5% would sound more reasonable, but paying on a percentage of the gross sales number is an invitation to a disaster. Try to tie the pay to a net margin. The problem with paying on the top end is that there is no concern for the bottom end. Everyone should get paid like the owner, on the bottom end. Of course, it doesn't always work like that either.

Commission and estimating are two different skills. One is sales based and the other is based on your shops methods and skill of how to build to plans and how to price to make money.

Is a sale commission worth 10% if they bring in a deal, price it at a price that makes your company money and help mange the customer and project.

What method is the person going to use for getting sales that insures you will make a profit?

The last thing you need is someone making sales at unit prices that they know will sell and have nothing to do with your pricing or costs. Sometimes sales people know what people will pay and price accordingly or "goal seek".

Cost needs to be determined first, then price is set based on market, capacity, desire, and risk.

If I was going to pay someone 10% of the gross I could afford 4-5 full time estimators.

Jobs listed on public exchanges are the easiest to find, the most competitive to price and can be the slowest to pay.
I would guess that the majority of these project would not have an additional 10% margin in them.

If you aren't a Minority owned or Woman owned or other preferential bidder you are already at a 5% or 10% disadvantage.

I guess I see this at a different angle. Their charge doesn't have to be usual or customary. It's what they want to charge, very simple. You either want to pay that or look for someone else. I think we've all have bid jobs we preferred not to get, and can bid accordingly. This sentence makes it sound like he could be bringing in work from his existing contacts, making it a sales job. "help us estimating and bidding for leads he can get from either my email mail box or his own contacts. "

10% of gross profit only, not 10% of gross sales if he is an estimator and not a salesperson. If he's a salesperson selling set product at a predetermined price than 10% commission wouldn't be out of line. For example we pay Amazon a 15% commission on all sales on that platform. If you pay an estimator gross commission there's a chance he'll lowball bids so he can get an easy skim of 10% off the top. If his pay is tied to profitability he'll be much more careful with the numbers he comes up with.