American Express
Why the LOWEST PRICE
is not necessarily the BEST VALUE
When comparing prices, it's important to realize the entire picture. We recommend clients should be looking for the best value, not necessarily just for
the lowest price.
Critical steps for comparing proposals
1. Get everything in writing with details
2. Compare all the bids "apples-to-apples"
3. Sort all the bids by price
4. Ask the lowest bid why the price is lower than the others
5. Ask the highest bid why the price is higher than the others
6. Compare companies - visit website
Look very carefully at any bids that are way out of line. A bid that is higher than the rest could mean that this particular contractor picked up on something that the others missed, such as something necessary to bring the project up to code.
Now, look at any that are much lower than the rest. Be particularly cautious of these. Why does this one cost less? Are they using inferior materials or just lower prices? Don't be afraid to call the contractor and ask any questions that you have about his bid.
There are three ways for a contractor to lower their cost:
1. Spend less time
2. Do less work
3. Use less materials/Use lower-grade materials
Keep in mind that selecting the best bid is all about tradeoffs. You will want to select the bid that is the best tradeoff between price and quality of work.
