When contractor bids are far apart, the usual explanation is not that one contractor is greedy and another is generous. It is that the bids describe different jobs. Before comparing the totals, normalize the bids: line up what each one includes, what it excludes, and which figures are placeholders. Only once the three bids describe the same work does the price difference mean anything.
Why are contractor bids so different for the same job?
Two contractors reading the same request can produce very different numbers without either of them being wrong. Each one is pricing an interpretation, and the interpretation is where the money is. A bid is a forecast of labor, materials, subcontractors, overhead, and risk, and every one of those inputs is a judgement call.
The usual sources of a wide spread:
- Different scope assumptions. One contractor assumed the existing floor stays; another priced replacing it.
- Different quality assumptions. Mid-range fixtures and high-end fixtures can both be described as "new fixtures".
- Different allowances. A placeholder figure for tile that nobody has chosen yet is not a price, and two contractors will pick different placeholders.
- Different risk appetite. A contractor who suspects hidden problems and cannot inspect them adds contingency; another leaves the discovery for a change order later.
- Different crew structure. In-house trades and subcontracted trades carry different costs and different coordination overhead.
- Different demand. A contractor with a full calendar prices work they do not particularly need, which is a real quote but not a competitive one.
None of that is visible in the total. All of it is visible in the breakdown.
What should you check before you compare prices?
Check that every bid is answering the same question. If each contractor worked from a separate phone call and a separate site visit, the bids will diverge before anyone gets to pricing. The fix is upstream: send everyone the same written description of the work — a renovation brief — and ask for quotes in the same structure. TrueBuild helps homeowners produce that description from a plain-English explanation of the project, with a summary you review and edit before anything is sent. See how TrueBuild works.
Then check three things in each document before you look at the bottom line. What is explicitly included, item by item. What is explicitly excluded, which is often the more revealing list. And which numbers are allowances rather than firm prices, because an allowance is a decision you have not made yet, priced with a guess. What belongs in a contractor's quote sets out the sections a complete document should carry.
Also check the contract model. A fixed price and a time-and-materials estimate are not comparable numbers at all: one is a commitment, the other is a projection. Fixed price versus time and materials covers who is carrying the risk in each case.
How do you compare bids line by line?
Build one table of your own — on paper, in a spreadsheet, however you like — with the work items down the side and the contractors across the top. The act of transferring the bids into a shared shape is what exposes the differences.
- List every work item that appears in any bid, not just the ones common to all of them.
- Fill in each contractor's price for each item, and write "not included" where a bid is silent. Silence is data.
- Mark every allowance clearly, with the quantity and quality it assumes.
- Add the exclusions to the bottom as a separate list per contractor, then price the ones you will actually have to pay for anyway.
- Note the payment schedule and the deposit for each bid on the same sheet.
- Recompute the totals on a like-for-like basis, adding your own estimate for whatever a bid left out.
By the last step, most wide gaps have narrowed considerably. The ones that have not are worth a direct question.
How do you ask a contractor to explain a gap?
Ask plainly and specifically, and ask about scope rather than about price. "Your bid does not include the electrical work the other two included — did you assume it stays as is?" is a question a contractor can answer usefully. "You are more expensive than the others" is not, and it invites a discount rather than an explanation.
A good contractor will often tell you why a rival's number is low, and the answer is frequently legitimate: a different sequencing plan, a material they buy at a better rate, a smaller crew working over more days. Sometimes the answer reveals that the low bid has left out something the job genuinely needs. Either way you learn something, and the way a contractor handles the question is itself information — see questions to ask a contractor before you hire.
Is the lowest bid ever the right choice?
Yes, when it is the lowest bid for the same work. A low number that survives a line-by-line comparison, comes from someone whose references check out, and carries the same exclusions as the others is simply a better price, and you should take it.
The lowest bid is a problem when it is low for reasons the document does not state. Missing scope becomes a change order at a price you will not be shopping around. An unusually thin allowance becomes your money later. A price that leaves no margin can turn into a contractor who deprioritises your job for a better-paying one, or who cannot absorb a single mistake without asking for more.
The practical test: if you cannot explain, in one sentence, why the cheapest bid is cheaper, you do not yet know enough to accept it.