How to bid commercial work: reading, pricing and submitting bids

Commercial bidding punishes guesswork in both directions. Bid high and you never hear back. Bid low and you win a contract that loses money every week for a year, with a customer who expects the same price at renewal. The companies that bid well read the documents, know their costs to the hour, and say clearly what they are and aren't including.

This guide walks through a commercial bid from the first look at the package to the post-job review. It applies to property managers, facility managers, associations, general contractors and public agencies. Public bids add legal rules, which differ by agency and by state, so follow the instructions in each solicitation over anything general here.

What kind of bid is the buyer asking for?

The name on the document is a strong hint about how the buyer will choose.

• Invitation to bid (ITB or IFB). The buyer defines the work in detail and picks mainly on price. Federal sealed bidding is the formal version: under FAR 14.101, bids are opened publicly and award goes to the responsible bidder whose bid conforms to the invitation and is most advantageous to the government, considering only price and price-related factors. Bids are evaluated without discussions.
• Request for quote (RFQ). Usually smaller or simpler work. Price matters most, but the buyer may ask a few questions.
• Request for proposal (RFP). The buyer weighs your approach, staffing, past performance and price together. In federal negotiated buying, FAR 15.101 describes a best value continuum: when the requirement is clear and the risk is low, price can dominate, and when the work is less defined or riskier, technical factors and past performance can carry more weight.

Federal RFPs show which end they sit on. Under FAR 15.101-1, a tradeoff process is used when it may be in the government's interest to award to someone other than the lowest-priced offeror, and the solicitation has to state how non-price factors compare in importance with price. Under FAR 15.101-2, a lowest price technically acceptable award goes to the acceptable proposal with the lowest evaluated price, and tradeoffs are not permitted. Private buyers rarely spell this out, so ask: "How will you compare proposals?"

A note on the federal rules quoted in this guide: the section numbers come from the FAR on Acquisition.gov as of October 2026. Under the Revolutionary FAR Overhaul, agencies have been adopting rewritten versions of Parts 14 and 15 by class deviation, and those versions renumber the same rules. In the overhauled Part 14, sealed bid award sits at 14.307 and bid rejection at 14.306-3; in the overhauled Part 15, the debriefing request deadline sits at 15.301-1. The solicitation tells you which version applies.

Should you bid this job at all?

Every bid costs you hours of reading, a site visit and pricing time. Run a quick check before you start:

Ask the buyer why the work is being bid. "The contract term ended" and "we're unhappy with service" are very different openings. If the honest answer is that they need three numbers for the file, decide how much effort that is worth.

How do you read a bid package?

Read all of it before you price any of it. Mark these items as you go:

• Scope and specifications. What, where, how often, to what standard. Note any brand, product or method that is required.
• Site maps or drawings. Areas included and excluded. Measure them yourself rather than trusting the stated quantities.
• Schedule. Start date, hours you may work, blackout dates, response times and completion deadlines.
• Bid form. The exact format for your price: lump sum, unit prices, alternates, per-visit rates. Use their form, filled in completely.
• Insurance and bonding. Limits, additional insured wording and any bid, performance or payment bond. Our surety bonds guide explains each bond.
• Contract terms. Indemnity, termination, payment terms, retainage, change order process and, on subcontracts, whether you get paid only when the general contractor gets paid. How enforceable those clauses are depends on state law, so read them with your attorney on large jobs.
• Wage rules. Prevailing wage requirements on public work (more below).
• Addenda and deadlines. The last day for questions, the pre-bid meeting and whether it is mandatory, and the submission deadline and method. Watch for addenda until the deadline, and acknowledge each one on the bid form if asked.

Write your questions down and submit them through the channel the bid names, in writing, before the question deadline. Rely only on written answers. In federal sealed bidding, FAR 14.208 says information given to one prospective bidder that others need in order to bid goes to all of them as an amendment, and that a change mentioned at a pre-bid conference still needs a formal amendment. Other public buyers explain their own question process in the bid instructions. A side conversation with the facility manager doesn't change the bid documents.

What should you check on the site walk?

Go, even when it is optional. The site walk is where you find out whether the documents match the property, and every bidder who skips it is pricing from paper.

• Measure the areas that drive your price: square footage, linear feet of curb, number of entrances, stairwells or windows.
• Note access: gates, keys, loading docks, parking for your trucks, water and power for your equipment, where snow can be piled.
• Look at the current condition. Neglected work costs more the first month, and that cost should be visible in your price or your assumptions.
• Photograph everything, with time stamps, and save the photos to the bid record in your CRM so the person pricing can see what you saw.
• Listen to the facility staff. Their complaints about the current vendor tell you what the scope doesn't.

How do you build the price?

Start from cost, not from what you think the competition will charge. You don't know their costs, their mistakes or how badly they want the work.

1. Labor. Estimate crew hours per visit or per task from your own past jobs, multiply by visits, and price at your loaded labor rate: wages plus payroll taxes, workers' compensation, benefits and paid time off. Our job costing guide explains the loaded rate.
2. Travel. Drive time and vehicle cost to and from the site, for every visit.
3. Materials and consumables. Salt, chemicals, fuel, parts, disposal fees, with your markup.
4. Equipment. An hourly or per-visit charge that pays for the machine, its maintenance and its replacement.
5. Supervision and admin. Site checks, reports, invoicing in the buyer's system, certificate requests and meetings. Commercial accounts eat office time; price it.
6. Overhead and profit. Your share of rent, software, insurance and the owner's time, then the profit margin you need. How to price service jobs covers margin versus markup.

Then add the costs that commercial work brings with it:

• Insurance requirements. Higher limits, additional insured endorsements or an umbrella policy you don't carry today. Get the cost from your agent before you bid.
• Payment terms. Net 45 or net 60 means you finance the buyer's account. Retainage, where part of each payment is held back until the end, stretches that further.
• Bonds. The premium on any bid, performance or payment bond.
• Prevailing wage. On federal service contracts over $2,500, the Service Contract Act requires paying covered service workers at least the prevailing wages and benefits the Department of Labor sets for that particular contract. Davis-Bacon wage rules apply when a federally funded or assisted contract above $2,000 pays for building, altering or repairing a public building or public work, and the DOL counts painting and decorating as part of that work. Public construction paid for by a state or town may fall under a state law instead; the DOL's state table (last updated January 2023 when we checked) shows how widely the thresholds differ. Price labor at the required rate, plus the office time for payroll reporting. On Davis-Bacon work, covered contractors submit certified payroll records to the contracting agency every week, according to a Labor Department fact sheet.
• Site rules. Night or weekend work, badging, safety training, escorts and restricted hours all change crew efficiency.

When should you use unit prices, alternates and allowances?

A single lump sum works when the quantity is known. When it isn't, protect yourself with the right structure, as long as the bid form allows it:

• Unit prices charge per measurable unit: per plow event, per inch range of snow, per unit turned over, per extra mowing, per hour of emergency call-out. The buyer pays for what actually happens, and so do you.
• Alternates price options separately: a higher frequency, an added area, a premium material. They let the buyer adjust scope without asking everyone to rebid.
• Allowances set aside a stated amount for an unknown, such as repairs found during the work, with a clear rate for anything beyond it.

For multi-year contracts, include an annual adjustment clause tied to something both sides can check, or price each year separately. A fixed price for three years absorbs every increase in wages, fuel and materials that happens along the way.

What goes in the bid besides the price?

A commercial bid is a sales document, a scope document and a future contract exhibit at once. Include:

• a short cover letter that restates the job and your understanding of it;
• the completed bid form, signed, with every addendum acknowledged;
• inclusions and exclusions, item by item;
• assumptions, such as site access hours, quantities you measured and conditions you saw;
• the crew and supervision plan, and who the buyer calls;
• proof you can do the work: comparable sites (with permission), references, and a sample of the visit log and photo report you will send;
• insurance details or a sample certificate, licenses and bonds as required;
• how long the price is valid.

Be careful with exclusions and conditions on public bids. Under FAR 14.301, a federal sealed bid must comply in all material respects with the invitation to be considered, and FAR 14.404-2 requires rejecting a bid whose bidder imposes conditions that would modify the invitation's requirements or limit the bidder's liability. Its examples include protecting against future cost increases when the government's total possible cost can't be determined. State and local buyers set their own rules, so read the bid instructions for their version. If you can't live with a term, raise it during the question period instead of rewriting it in your bid. On private bids you have more room, and clear exclusions are often what separates a profitable contract from a dispute.

Make proof easy to believe. Sample reports pulled from real jobs, with timestamps and photos, show the buyer how the account will run. A custom CRM that records visits as they happen gives you those samples without a weekend of assembling them, and a website with a commercial services page gives the buyer somewhere to check you out before the bid opening.

What happens after you submit?

• Public bids. When bids are opened publicly, attend or request the bid tabulation. Seeing every bidder's price on a job you priced is the best pricing education available.
• Private bids. Follow up once, a few days after the deadline, to confirm receipt and offer to answer questions. If the buyer calls a scope review, bring the person who priced the job.
• If you win. Read the contract against your bid before signing. Make sure your exclusions and assumptions made it in, then set up the account: contract dates, renewal notice period, scope, site contacts, insurance requirements and invoicing rules.
• If you lose. Ask for a debrief: who won, roughly where your price landed, and what would have made the difference. Some private buyers will tell you. On negotiated federal awards, FAR 15.506 says an offeror whose written request reaches the agency within 3 days after it was notified of the award shall be debriefed on the basis for the decision. The clock counts from when the notice reaches you, and your request has to arrive inside it, so send it the day you hear.

How do you track bids and get better at winning?

Keep a bid log, in your CRM or at minimum a spreadsheet. For each bid record the buyer, the scope, the due date, your price, your estimated margin, the result, the winning price if you learn it and the reason you won or lost. After a dozen bids you will see patterns: the buyers who always pick the low number, the services where you are consistently high, the job sizes you win.

Then close the loop on wins. Compare the hours and materials you bid with what the job actually used, month by month. If the first quarter runs over, you know before renewal, and the next bid for similar work starts from real numbers instead of the estimate that lost you money.

Which bidding mistakes cost the most?

• Pricing from the buyer's quantities without measuring.
• Missing an addendum or a mandatory pre-bid meeting.
• Leaving out the cost of insurance changes, bonds or payment terms.
• Bidding a multi-year price with no adjustment.
• Vague exclusions, which turn every extra into an argument.
• Winning work that doesn't fit your routes or your crew's capacity.
• Never asking why you lost.

Invitations to bid go to vendors the buyer already knows about. If you want more of them, our guides on working with property managers, HOA contracts and government contracts cover each buyer, and our free system quote shows how your site and phones look to a buyer checking you out.

Frequently asked questions