You bid the job fair. Licensed, insured, permitted. Then it went to a guy working out of his garage, unlicensed, no overhead, half your price.
Why do unlicensed electricians bid so much lower?
They’re not carrying the costs baked into your number. No liability insurance. No license renewal fees. No workers’ comp. No warranty on the work if something fails in six months. Your price reflects a real business. His reflects a side job, because that’s what it is.
What’s actually in your bid that isn’t in his?
Run through it plainly:
- General liability insurance: $3,000 to $8,000 a year, built into every job you price
- Workers’ comp, especially with a crew doing panel work and rough-ins
- License renewal and continuing education, required to keep doing this work legally
- Permit fees and inspections, which he usually skips
- Warranty on the install. If his work fails, he’s gone. If yours fails, you’re back out there fixing it for free
None of that shows up as a line item. It shows up as the gap between his number and yours.
Should you just bid closer to his number?
No. Racing him down erases your margin without touching any of the risk you’re still carrying. You still have the insurance, the license, the crew, the warranty. You just stop getting paid enough to cover them.
Then why does the customer only ever see the price?
Because nothing in your bid shows them anything else. Whether the customer hears about the insurance, the permit, the warranty comes down to whether whoever’s presenting that bid happens to bring it up, and how well they explain it that day. Some days they do. Some days they don’t. The customer isn’t ignoring the difference. Nobody’s ever shown it to them.
What actually fixes this?
A standard way every bid shows the gap, built once and used every time, not left to memory. What’s covered under the warranty. What’s protected by the insurance. What the permit and inspection actually catch that a garage job never will. Written down, said the same way whether it’s you presenting or your newest estimator.
You didn’t lose that bid because your price was wrong. You lost it because nothing about the bid showed why it was different. Build that part once and it stops depending on who’s in the room. The guy in the garage isn’t going anywhere. He just stops being the only number the customer can see.
