Why Do Contractor Bids Vary in Price (And How to Choose the Right One)
If you’re a homeowner comparing contractor bids and wondering why the prices are so different, you’re not alone!
It’s very common to receive estimates that vary widely for what appears to be the same project. Most of us assume the low bid must be “missing something” and the high bid must be gouging us. Often times, we will just pick the middle one because we don’t know what else to do. Sound familiar?
Understanding WHY those differences exist can help you choose the right contractor next time and avoid surprises once construction begins!
Why are contractor bids priced so differently?!
POV: You received 3 quotes for the same exact project and all of them are a vastly different price. Frustrating and confusing right? We get it! But not all bids are created equal. Here are the 5 most common reasons you’ll see price differences:
1. Scope of work is not the same
Many times, contractors are called out to quote projects that have no drawings and no defined scope of work. Without a written defined scope of work, the contractors are left to interpret what the homeowner is envisioning and this leaves a lot of room for variance. One contractor may include demolition, protecting existing floor coverings, permits, cleanup, and project management, while another may leave those items out or include them as additional costs later. A lower price often means less is included.
Talk in detail to each contractor to understand exactly what is included. And if they don’t have it written on the quote, NEVER ASSUME IT’S INCLUDED. As you get into your project, the last thing you want to hear is “we didn’t have that covered, it’ll be another $5,000 (or more!) to add that”. Especially when you thought it was included all along.
2. Material selections and finishes vary
Pricing can change significantly depending on the brand & quality of materials being used. Siding, windows, floors, tile, cabinets, fixtures and all other finish materials come in a wide variety of grades and prices. Cheaper materials may lower the initial cost but can impact durability and long-term performance. This takes us back to the scope of work. If you’re doing a full remodel, you can never truly compare apples to apples if you don’t have your material selections defined. Most of the time materials selections won’t be defined this early in the project and that is okay. A good contractor should be able to provide material allowances for any finish items with their quote. It is a good practice for any homeowner to request this when comparing quotes if it is not clear from the beginning.
3. Experience and project management
Established contractors with experienced crews, licensed trades, and a clear project management process often charge more. That price reflects coordination, scheduling, communication, and accountability throughout the build. It also reflects how they react when something goes wrong during the project, or even after the project is completed and in the warranty stage. Contractors that charge accordingly ensure that their business is properly equipped to handle issues that may arise which takes the added stress completely off of you.
You’re not just paying for labor, you’re paying for a professional to complete your project on time, on budget and free of headaches.
4. Insurance, licensing, and safety
Proper insurance, licensing, and safety practices all factor into pricing. Contractors who cut corners in these areas may offer lower bids, but that risk often falls on the homeowner. Always verify that your contractor has General Liability Insurance and Workers Compensation Insurance. Any above board contractor should be happy to provide a copy of their builder’s license and certificates of insurance.
5. Timeline and availability
A contractor who is booked out and managing multiple projects carefully may price differently than someone trying to fill their schedule quickly. They are less likely to make the mistake of missing something because they are rushing to get a quote out or lowballing the number just to get the job. Lowest quote that can start a large remodel right away often screams that corners might be cut, items may be missed, and risks the finish project being subpar.
So how do I choose?
The lowest bid is not always the best value. Here’s what to look for instead:
1. Look for clarity, not just cost
A good bid clearly outlines the scope of work, materials, timeline, and payment structure. You should understand exactly what you’re getting and what to expect throughout the project.
2. Ask how changes are handled
No project is ever 100 percent predictable. Unfortunately, the construction industry hasn’t perfected x-ray vision allowing us to see rot and damage hiding behind existing finishes. Ask how change orders are managed, priced, and communicated so there are no surprises later.
3. Pay attention to communication
If communication is slow, unclear, or inconsistent during the bidding phase, it usually does not improve once the project starts. If you are struggling to get ahold of a contractor and get answers when your trying to give them money, imagine how hard it will be to resolve issues once they already have your money. Clear communication early on is a strong indicator of a smooth build.
4. Consider the full experience
You’re trusting someone with your home, your budget, and a major investment. Experience, reliability, and transparency often matter more than saving a small percentage upfront. More times than not, those savings end up costing more in the long run with failure to meet quality expectations or incomplete work that you have to correct or handle after the project is complete.
Our approach at Timbercrest Construction Co.
At Timbercrest Construction, we believe a well-priced bid reflects an honest scope of work, quality materials, and a reliable building process. We take the time to explain your options, answer questions, and make sure expectations are clear before any work begins.
If you’re comparing bids for a custom home, addition, remodel, or other project, we’re always happy to walk through them with you.
Proudly serving Michigan homeowners across Lapeer, Genesee, Oakland and Macomb Counties.
