Hold Margin or Sharpen? A Simple Decision Framework for Lowest-Bid Work

Hold margin or sharpen?

Most contractors decide this too late. The decision is usually made in the last hour before bid time:

    “Should we cut it a little?”

    “Should we take it down?”

    “How hungry do we feel?”

That is normal – and it is also where margin leaks happen.

A better approach is to make the decision based on inputs you can see:

• • Your floor (cost + minimum margin)
  • The market range
  • How crowded the bid is likely to be
  • How badly you want the job (backlog strategy)

This guide gives a simple framework that can be used in the real world.

Step 1: Define your floor (non-negotiable)

Floor = cost to build + risk + minimum acceptable margin

If the market range is below your floor, you do not sharpen.

You walk (or you change scope/means and methods).

This alone saves wasted pursuits.

Step 2: Locate yourself vs the market range

There are three common scenarios:

Scenario A: You are inside the market range

Default move: hold margin.

If you are already inside the likely win zone, your job is to not talk yourself into donating profit.

Scenario B: You are slightly above the market range

Default move: sharpen selectively.

This is where “win by a penny” matters – tighten only the handful of items that move totals.

Scenario C: You are far above the market range

Default move: do not chase.

If you are 10%+ above the likely market, the fix is usually not a last-minute haircut. It’s:

• • better pursuit selection
  • better comps
  • or acknowledging the market is structurally below your floor

Step 3: Adjust based on competition density

Competition density changes your acceptable tradeoffs.

• • Low density (2-5 bidders): margin behavior is often healthier. Hold more often.
  • Mid density (6-10 bidders): tighten intentionally if you want the job.
  • High density (11+ bidders): expect pressure. Bid only when the job fits your strengths and the market range still supports margin.

Step 4: Factor in backlog strategy (but do not let it break your floor)

Backlog matters.

So does cash flow.

But buying work below your floor usually creates a second problem (execution pain).

A practical way to think about it:

• • If you need backlog, bid more (increase volume of pursuits) before you cut margin below your floor.
  • Use job matching and market insight to find better-odds bids, not just lower-price bids.

Step 5: Decide with a simple scorecard

Use a 1-5 score on each factor:

1. 1. Market fit (are we in the market range?)
   2. Competition density (how crowded is it?)
   3. Strategic fit (scope and production strengths)
   4. Risk profile (unknowns, subs, schedule, site)
   5. Backlog need (how badly do we need the work?)

Then:

• • High market fit + low risk = hold
  • Slight miss + strong strategic fit = sharpen selectively
  • Low market fit + high risk = walk

Floor = cost to build + risk + minimum acceptable margin

Where PinPoint helps

This framework requires two things most contractors cannot get easily:

• • A real market range (comps at scale)
  • Competition context (who shows up, who wins, how aggressive)

For the first time in public works both market range and competition context can be easily acquired through PinPoint’s Bid Intelligence and Market Insights features.

See how PinPoint’s Bid Intelligence shows exactly how your estimate compares to the market — down to each line item.