How Can They Do It For That Price?!

Words: Corey Adams

Spring is a weird bid season. Estimates are coming in all over the place. It seems like everyone has tightened their belts to land what they can as we come out of the election cycle slowdown. We are no exception. Lowering margins is a temporary solution, and better suited for another article. In this one, I want to focus on what I have heard, not only from our estimators, but from every owner I talk to: How can they do it for that price?

Some of the winning bid amounts seem unreal right now. Single-digit markups are ruling in the early days of 2025. But are they really? The answer to the question is yes and no. Figuring out which answer it is, is the tricky part.

Construction is an industry not much different than the medical industry. After you get done rolling your eyes, stay with me a second. Doctors that handle general medicine tend to average less income than those with very specific specialties; think neurosurgeons. Construction follows this same path. If you are trying to do every service out there with no specialties, you tend to have lower margins than a company with a clearly defined niche. For example, GC margins can range from 2-10%, depending on size, whereas a self-perform concrete flatwork company can often get close to 20%. But wait, there is a trick to this as well.

The specialty concrete company isn’t charging more, they are more efficient. When we do the same thing over and over again, we get faster and better. We can outfit our companies to do the same. Fine-tuning every aspect until we are so efficient that we can charge good margins and still beat the pants off the competition. In this case, yes, they really can do it for that price.

The no answer is where companies get in trouble. Cutting your margins just to “buy” work is not a sustainable business model. It may keep the lights on short term, but using up all your resources on low to no margin work is a quick way to run yourself out of business. This is the race to the bottom mentality that kills a business.

So now to ask the real question, what price can you do it for? This is what I ask in every bid review we do. What can we do it for, and what is an acceptable margin for the risk? For you, just like us, you will find that the answer could be yes or no. We have certain aspects of this industry we excel in. We can do it faster and better than most. In these situations, we can cut margins to keep the lights on. We also have some aspects that we just cannot compete with low to no margin bidders. Where we all have to be honest with ourselves is which answer is true.

Complaining about someone “buying” a job and there is no way you can compete is a cop-out. OK, maybe they are leaving money on the table, but they also may be darn good at that type of project and in reality, cheaper than you.

In times where work is slow, your focus should be twofold in estimating. What can you do cheaper than anyone, and what are you willing to do it for? If you are the most efficient at thin brick veneer, target those jobs with lower margins. You know what you can do. More importantly, you should know what you can’t.

Stop trying to arbitrarily lower margins to win work. Determine your strengths, and attack those with lower margins. It might surprise you how much you can still make when you “buy” that next job. The best part is all your competition will be asking, “How can they do it for that price?”

How Can They Do It For That Price?!

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