Understanding Estimates vs. Fixed Bids

Contracting 101 · April 05, 2024

Receiving three different quotes with three wildly different prices is confusing. Often, the difference isn't just margin—it's the type of contract being offered.

The "Estimate" (Time & Materials)

An estimate is an educated guess. The contractor is saying, "I think it will cost about $10,000, assuming nothing goes wrong." If they open the wall and find mold, you pay for the remediation. If the price of lumber spikes, you pay the difference.

The Fixed Bid

A fixed bid is a guaranteed price. The contractor is taking on the risk. They might quote you $12,500 for that same job, but if it takes them an extra week, you don't pay a dime more.

            "The lowest initial number is rarely the final number. A fixed bid gives you peace of mind that your budget won't explode mid-project."
        

Which Should You Choose?

For small, well-defined jobs like replacing a door, estimates are fine. For complex renovations or new construction where "unknown unknowns" are likely, a fixed bid contract protects you from financial disaster.