Should A Subcontractor Go Direct To The Client?

Should a subcontractor go direct to the client? You can, in most cases - there is no law that says you cannot call a client and offer your services. The real question is whether you should, and the honest answer is: not unless you are ready to run a contracting business, because that is exactly what you are signing up for. Going direct is not a pay rise. It is a second job that you do at night, unpaid, while you are still doing the first one.

I have run construction arbitrage from both sides of this arrangement - as the operator placing subs, and before that as someone learning what each step of the chain actually costs. The subs who go direct and thrive are the ones who understood what they were taking on. The ones who regret it thought they were just removing a percentage in the middle.

What going direct to the client actually means#

The contractor you work for marks up your rate. That is not a secret. On a standard trade job the markup is somewhere between 15 and 40 percent depending on the job type, the client, and how much overhead the contractor is carrying. It feels obvious: cut out the middleman, pocket the difference.

Here is what that difference actually pays for.

The contractor finds the client, quotes the job, manages the expectation, issues the contract, carries the liability if something goes wrong, chases payment when the client is slow, and already has the next job lined up before the current one finishes. When you work as a sub, you show up, do the trade work, and get paid. The admin side - the quoting, the contracts, the payment cycle, the defect liability period - is someone else's problem.

When you go direct, it becomes yours.

You are not adding 20 or 30 percent to your rate. You are buying yourself the following at whatever rate you can negotiate:

• Quoting time - visiting, measuring, pricing, writing a quote, following up. For every three quotes you send, maybe one converts. That time is unbillable.
• Scope management - the client who agreed to a kitchen now wants you to look at the bathroom while you are there. The contractor handles this conversation; now you do.
• Payment chasing - residential clients are slow, sometimes very slow. You lose time, cash, and sleep managing it.
• Liability - if your work has a defect 18 months later, the client calls you. There is no contractor to share that call with.
• Insurance in your own name - public liability, employer's liability if you bring anyone with you, professional indemnity on bigger jobs. The contractor carried this before; now you carry it.
• Business registration and tax compliance - UK subs working direct need to be CIS-aware on their own account, and the VAT threshold is a real thing you now have to track. In the US the self-employment tax and quarterly estimated payments are not small.

The contractor you used to think was skimming 20 percent was actually spending 20 percent - or more - on all of the above.

The contract question: what your subcontract agreement actually says#

Before you approach a client you met through a contractor, read your subcontract agreement.

Many professional subcontract agreements - and virtually all of the ones used by operators running a proper construction arbitrage model - include a non-solicitation or non-circumvention clause. These clauses prevent you from directly approaching or working for the contractor's clients during or after the engagement, typically for 6 to 12 months after the job ends.

In the UK, non-solicitation clauses in contractor/sub agreements are enforceable provided they are reasonable in scope and duration. The courts have consistently upheld them where they protect a legitimate business interest and do not go further than necessary. Six to twelve months is the typical defensible range.

In the US the picture varies by state. California courts have historically been hostile to non-compete agreements, but non-solicitation clauses in business-to-business contracts - not employment - are treated differently and are generally more enforceable. In most other US states, a reasonable non-solicitation clause in a subcontract is binding.

If your subcontract has one of these clauses and you approach that client directly, you are in breach. The contractor can pursue damages - the lost revenue from the client relationship you took. Even without a formal clause, there is a tortious interference argument (US) or an economic tort argument (UK) if you actively poached a client while still engaged on their job. These are harder to prove but not impossible.

The practical risk that does not require a lawyer: every contractor in your area talks to every other contractor. One phone call and you are known as the sub who goes behind operators' backs. That reputation closes more doors than any court case would.

The client reality: one job every few years#

Here is the thing about the client you met on that kitchen job. They might have a bathroom in three years. Maybe. That is what you are getting.

The contractor you work for has 10 to 30 active client relationships at any one time, a pipeline being fed by marketing or referrals, and a system for turning enquiries into booked jobs. When you go direct to that one client, you get one relationship - and you have to do everything else yourself to build a real flow of work.

I built the business that eventually became construction arbitrage by starting with a 30-van operation and learning, step by step, what each layer of the chain actually cost. At the stage where I was still coordinating tradespeople on a day rate, the admin side of one 12-job week was a full second working week in itself - and that was with systems already in place. For a tradesperson picking up their first direct client with no infrastructure, it lands much harder.

The ones who made it work went in with their eyes open. They built a client base from scratch, not by poaching one job from a contractor. They registered properly, got insured properly, priced in the overhead, and treated it as a business from day one.

When going direct does make sense#

There is a version of this that makes complete sense - but it is not going around the contractor who gave you work. It is deciding to run your own operation.

If you want to be the one winning the jobs instead of doing them, the model is called construction arbitrage - and yes, a tradesperson is well positioned to do it. You understand the trade costs better than most operators, you know which subs are reliable, and you have credibility with clients. The progression I followed went from doing the work myself, to using one other trade, to subcontracting specific jobs, to subcontracting everything. A tradesperson who wants to climb that same ladder is starting from a better position than someone who has never picked up a tool.

But it is a different business. It requires its own clients, its own insurance, its own contracts. How to start a construction arbitrage business lays out what that actually involves.

Going direct to one client you met through a contractor is not that. It is a shortcut that costs you the relationship, potentially costs you legal exposure, and still leaves you doing night-time admin on top of day-rate site work.

The practical check before you do anything#

If you are thinking about going direct, run these three checks first.

Check your subcontract. Does it include a non-solicitation or non-circumvention clause? If it does, you are bound by it. Do not approach that client during the restriction period.

Price the overhead honestly. Take the rate you would charge the client and subtract: quoting time, defect liability risk, insurance cost, tax, and payment delay. What is left is closer to what you will actually earn.

Ask what your volume looks like. One client relationship gives you one client. What is your plan for finding the next ten?

If the answers hold up, building your own operation is worth doing. If they do not, staying as a sub on a well-run job is not a failure. It is a rational choice made with accurate information.

For the legal picture of what a contractor can and cannot require of a sub, see do you have to tell the client you're subcontracting. For how operators actually find and keep good subs, how to find subcontractors for construction arbitrage explains the other side of this arrangement.

The next step#

If the idea of running the contracts side - rather than just the tools side - actually interests you, that is the conversation happening in Construction Arbitrage Players on Skool. People who have made the shift from tradesperson to operator talk through what the transition actually looks like.

The full picture is in THE FAMILY SECRET - How Construction Arbitrage Really Works, coming soon.