A contractor bidding 25–35% below the market rate almost never does the same job for less. They do a different job: thinner materials, no insurance, skipped permits, or change orders waiting once the walls are already open. I see this play out with nearly every homeowner comparing bids: three quotes, two in the same range, one a lot lower. The temptation is real (you could save $800, maybe more), but in my experience, you don’t keep that money. You spend it twice.
Where Does the Money Go When the Price Is Too Low?
A contractor who bids 25–35% below the market rate for a job isn’t doing the same job for less. They’re doing a different job. It looks similar until something goes wrong.
Here’s where that margin disappears:
Cheaper materials swapped in. The plan calls for 30-year architectural shingles. The low bidder installs 25-year 3-tab, a thinner, shorter-lived shingle. The plan calls for a polyaspartic floor coating. They use epoxy, which costs less and does not hold up as well. The plan calls for pressure-treated UC4A lumber, the ground-contact rating for deck posts, beams, and joists. They use standard framing lumber that rots in the dirt. You won’t notice right away. You’ll notice in five years (I’ve torn out enough of these five-years-later jobs to know the pattern by heart).
Uninsured labor. A contractor without general liability insurance bids lower because they’re not paying for that coverage. Then something goes wrong. A worker drops a tool through your window. A ladder falls against your car. A fire starts during welding. With no insurance, that damage becomes your problem, because there’s no policy to pay for it. Your own homeowner’s policy may cover some of it, but you’ll pay the deductible and your future rates may go up after the claim.
Skipped permits. Permitted work costs more because the contractor charges for pulling the permit, preparing the paperwork, and scheduling inspections. Skipping a required permit saves that cost, but it hands the risk to you. Work done without a required permit tends to surface when you sell, during the buyer’s inspection. It can void your homeowner’s insurance coverage. And you may have to tear the work out and redo it, at your own cost, to bring it up to code.
Scope reduction. The low bid wins the job, then the change orders start. A change order is a mid-job price add for work the estimate didn’t cover. “We opened the wall and found a problem.” “The surface underneath wasn’t what we expected.” “That’s not covered in the original estimate.” Each one may be honest, because conditions really do change once a job is opened up. But contractors who win on price and make their money on change orders know which surprises they’re likely to find, and they leave those out of the first estimate on purpose.
No warranty. A contractor who already cut the price to the bone has no money left to come back and fix problems. Written warranty or handshake promise, a contractor working on almost no profit simply can’t afford to honor it.
What Is the Change Order Trap?
The trickiest version of the low-bid play is the loss leader. The contractor bids low on purpose, knowing they can’t make money at that price, just to get the job started. Once work begins, stopping gets expensive and hard to do. Walls are open. Materials are already bought. You’re committed.
That’s when the change orders appear. Each one, on its own, seems reasonable. Added together, they push the total cost up to what a fair bid would have been, or higher.
The defense is a detailed written scope of work before the job starts. Not just a price, a scope. Every material named. Every finish listed. Every exclusion spelled out. A contractor who gives you that level of detail upfront, whatever the price, is being straight with you. A contractor who won’t put the scope in writing is keeping their options open.
Why Do Three Bids Matter, and How Do You Read Them?
Get at least three bids for any project over $2,000. Then read them correctly.
Compare scope, not price. Lay the three estimates side by side and check that they describe the same work. Same materials. Same permit handling. Same cleanup and disposal. Same warranty terms. Differences in those things explain differences in price, and they show you what each contractor is really offering.
Set aside the outliers. If two bids land in the same range and one is far lower, the low one is almost always doing something different. Ask them plainly: what are you doing that lets you charge this much less? A clear, specific answer is reassuring. A vague one is a warning sign, and honestly, I’d rather lose a bid than dodge that question myself.
Verify insurance. Ask each contractor for a certificate of insurance, the document that proves their coverage is real. Then call the insurance company to confirm it’s still active. This takes five minutes and rules out a risk most homeowners never think about until they’re stuck with it.
Check permit handling. Confirm who pulls the permits and who pays for them. A bid that leaves out permit fees looks lower on paper but can cost more in the end.
What Does Fair Pricing Actually Look Like in Colorado Springs?
In Colorado Springs, licensed and insured handyman and contractor work is priced to cover the real costs: materials, skilled labor, insurance, licensing, day-to-day overhead, and enough profit to keep the business healthy enough to honor its warranties.
That price is usually not the cheapest option out there. It’s also usually not the most expensive. It’s the price where someone can do the work right, stand behind it, and still be in business next year when you need them again, and that’s the number I try to land on with every estimate I write.
A bid 30% below that range is telling you something. Listen to it.
Jonathan Shea is the owner of The Colorado Handyman, serving Colorado Springs and the Pikes Peak region. Every project gets a detailed written estimate with flat-rate pricing before work begins. Licensed and insured with $2M general liability coverage.
Get a free written estimate: Contact The Colorado Handyman or call (719) 243-9718.
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Flat-rate written estimate, no hourly surprises. Serving Colorado Springs, Monument, Fountain, Woodland Park, and the Pikes Peak region.