How to Compare Contractor Quotes

What you need

Two or three written quotes, and the same written scope given to every contractor. The scope is the job in writing: what work, what materials, what finishes, what is included and what is not. Without it, you are not comparing quotes — you are comparing different jobs that happen to share a room.

Step 1 — Give every contractor the same scope

Write the scope once and give the same document to each contractor: the work, the materials and brands if you have chosen them, the finishes, and what is excluded. If one contractor quotes on a different scope — different tiles, no disposal, no waterproofing — the prices cannot be compared, and the cheaper one is usually the one that left something out.

Step 2 — Check what is included

Read each quote line by line: labour, materials, disposal, permits, warranty, timeline and payment terms. A quote that is missing disposal or permits is not cheaper — it is incomplete, and you will pay for the missing work later. Check the warranty too: what it covers, for how long, and whether it is in writing. A verbal warranty is not a warranty.

Step 3 — Understand markup vs margin

Contractors talk in markup, but many homeowners hear margin, and they are not the same thing. Markup is profit divided by cost; margin is profit divided by the selling price. The contractor profit calculator shows the difference: on a $20,000 job cost with a 20% markup, the selling price is $20,000 × 1.20 = $24,000, the profit is $4,000, and the margin is $4,000 ÷ $24,000 = 16.67% — not 20%. A 20% markup is a 16.67% margin. Knowing the difference stops you misreading a quote and stops a contractor hiding profit in the gap between the two.

Step 4 — Compare and decide

With the same scope and the same inclusions, compare the prices — then check the things the price cannot tell you: references from recent jobs, insurance, and a licence where your area requires one. Call the references and ask whether the job finished on time and on budget. Agree staged payments tied to completed work, and never pay the full amount up front: a contractor who needs all the money before starting is a warning sign, not a bargain.

Worked example

A job that costs the contractor $20,000, priced with a 20% markup, sells for $24,000. The profit is $24,000 − $20,000 = $4,000, and the margin is $4,000 ÷ $24,000 = 16.67%. Those are exactly the numbers the contractor profit calculator gives you. The $20,000 is the calculator's example figure, not a market price — use your own job cost when you compare real quotes.

Common mistakes

• Comparing quotes with different scopes. Different work, different materials, different exclusions — the prices are not comparable, and the cheapest one is usually the one that left the most out.
• Confusing markup and margin. A 20% markup is not a 20% margin. The difference is real money, and it is where misunderstandings — and disputes — start.
• Choosing on price alone. No references, no insurance, no written warranty: the saving disappears the first time something goes wrong.

Safety

This guide contains no market prices — the $20,000 figure is the calculator's example, not a rate for any real job. Always check that a contractor is licensed and insured where your area requires it, and get everything in writing: scope, price, payment stages, timeline and warranty. A quote that exists only in a conversation is not a quote you can rely on.

Try these calculators

• Contractor Profit Calculator — markup, margin and selling price.
• Labor Cost Calculator — labour cost with overtime and burden.
• Material Cost Calculator — material cost with wastage and tax.