Subcontracting vs. Referral Fees: How to Handle Excess Electrical Work

It's a good problem to have: you have more work than you can handle. You are booked out for a month, but the phone keeps ringing. If you just say "no," you are throwing money away. The two main ways electricians handle excess work are subcontracting it out, or referring it for a fee. Let's look at the maths and the stress involved in each.

The Subcontracting Model

When you sub out a job, you act as the middleman. The customer is yours. You quote the job, the subbie does the work, you invoice the customer, and you pay the subbie.

The Pros:

• Brand control: The customer stays "yours" on paper.
• Potentially higher margins: If you quote a job at $5,000 and the subbie agrees to do it for $3,000, you make $2,000.

The Cons (The Hidden Traps):

• Liability: If the subbie does a bad job, burns the house down, or steals from the client, you are liable. Your name is on the invoice.
• Cash flow risk: You have to pay the subbie, usually within 7-14 days. If the customer delays paying you for 60 days, you carry the debt.
• Admin heavy: You still have to quote the job, manage the subbie's schedule, chase the invoice, and handle callbacks.

The Referral Model

When you refer a job, you completely wash your hands of it. You pass the customer's details to another electrical company. They quote it, they do it, they hold the liability, and they invoice the customer. When it's done, they pay you a finder's fee.

The Pros:

• Zero liability: You hold no legal or warranty risk. If a downlight flickers 6 months later, they don't call you.
• Zero admin: You don't quote, you don't chase invoices, you don't deal with the customer's complaints.
• Pure profit: A referral fee (like the payouts we offer) is 100% margin. No fuel, no material costs.

The Cons:

• Lower ceiling per job: You won't make a $2,000 margin on a $5,000 job. You might make $750. But it took you 30 seconds of effort.
• Trust required: You need to ensure the referral partner is professional so they don't reflect badly on your recommendation.

Which One Should You Choose?

It comes down to the type of work.

If you land a massive commercial fit-out and need extra hands, use subcontractors under your supervision. You want to control that project.

But if the work is annoying, out of scope, or out of area? Refer it. If a customer calls you at 10 PM for an emergency in Sydney and you don't want to get out of bed, do not try to sub it out. Refer it. Pass the headache, keep the relationship, and collect the cash.