Contractor vs. Subcontractor: What’s the Difference?

Starting a construction or renovation project can be stressful for homeowners. But plenty of experts are out there to help you realize your dream. One common question homeowners have when planning their projects is the difference between contractors and subcontractors. Learn more about each type of pro, what they’re responsible for, and how they can help take the stress out of your home project.

What Are the Differences Between a Contractor and a Subcontractor?

The main differences between contractors and subcontractors are who they report to and are liable to, their responsibilities, the type of work they perform, and their licensing requirements. In a nutshell, contractors work with and report to the clients, whereas subcontractors work with and report to the contractor. Here are some key differences to keep in mind.

Contractor vs. Subcontractor: Main Contact

The main difference between contractors and subcontractors is who they report to. A local general contractor works directly with a client, while a subcontractor’s primary point of contact is the contractor. Clients hire contractors directly to manage their home projects, whereas contractors hire subcontractors to perform specific jobs as part of the overall project.

Contractor vs. Subcontractor: Responsibilities

Another difference between contractors and subcontractors lies in their responsibilities. A contractor must ensure the project is completed to the client’s specifications within an acceptable timeline. Subcontractors, on the other hand, are only responsible for a small part of the project. For example, a contractor might hire a subcontractor to complete electrical work in a newly constructed home.

Contractor vs. Subcontractor: Type of Work

Contractors oversee construction projects as a whole, acting as a project manager and ensuring everything goes according to plan. Depending on the contractor, they may also take on certain aspects of the project where they have prior experience. For example, a general contractor may have experience framing houses or installing roofs, so they could complete these parts of the project without hiring a subcontractor.

Subcontractors specialize in certain areas. For example, a contractor might hire separate subcontractors for electrical, plumbing, and HVAC work. These types of work require specific licenses due to the risk of danger.

Contractor vs. Subcontractor: Cost

When you hire a general contractor for your project, you’ll typically pay a daily rate to them. The contractor will then charge extra for each helper or subcontractor they bring on the job. The cost to hire a contractor is usually between $300 and $500 per day, and contractors often charge an extra $150 to $250 per day or $40 to $50 per hour for each subcontractor they hire.

However, you won’t pay the subcontractor directly. Instead, you’ll pay a pre-agreed price to the contractor, and they will distribute the funds between themselves, their employees, and their subcontractors. Many general contractors charge clients a percentage of the project price, usually 10% to 20% of the job total or an average cost of $4,000.

Contractor vs. Subcontractor: Liability

Construction sites can be dangerous places. If something goes wrong and the client sustains property damage or injury, it’s important to know who is liable. 

Generally, the contractor is liable for any mishaps on the job site. However, subcontractors are liable to the contractor rather than directly to the client. If the client sues the contractor for something a subcontractor caused, the contractor will sue the subcontractor for damages.

Contractor vs. Subcontractor: Licensing

The final difference between contractors and subcontractors is licensing. The exact licensing requirements vary by state, but a contractor needs a general business license or a general contractor license to work legally as a contractor.

Subcontractor licenses will depend on their specialty. A plumbing subcontractor will need a plumber's license, and an electrical subcontractor will need an electrician’s license. Whenever you hire someone to do work in your home, it’s essential to check that they have the proper licenses and insurance in place so you’re protected if there are any accidents, mishaps, or other issues.