Two Bidders vs Twenty: How Competition Density Changes Pricing Pressure

Two bidders vs twenty bidders: same job, different sport

If you have ever wondered why your pricing “stops working” in certain markets, this is usually why: competition density changes pricing pressure.

A 2-bidder job is not the same as a 20-bidder job, even if the scope is identical.

[Image: Hero – simple chart showing “bidder count” vs “pricing pressure”.]

What changes as bidder count rises

1) The market gets tighter

More bidders usually means:

• less room for margin
• tighter spreads between top bids
• higher risk of a hungry competitor going below market

2) Your win odds drop (obviously)

But the hidden impact is effort:

• you can burn weeks on a low-odds pursuit
• and skip a better-odds job that would have been profitable

3) Outliers show up

In crowded markets, you see more out-of-area firms, more aggressive pricing, and more volatility.

How to use bidder count as a strategy lever

When bidder counts are low (2-5)

Default strategy:

• hold margin more often
• avoid last-minute blanket cuts
• focus on execution fit and risk control

When bidder counts are mid (6-10)

Default strategy:

• validate market range on key pay items
• tighten selectively if you want the job
• know the usual winners and what they price aggressively

When bidder counts are high (11+)

Default strategy:

• be picky
• chase only the work that fits your strengths (production advantage)
• do not try to win everything by cutting margin below your floor
• use market signal early to avoid wasted bids

A simple “bidder density check” before you chase

Before you invest serious estimating effort:

1. What is the typical bidder count for this agency and scope?
2. Who typically wins?
3. Are bidder counts trending up recently?
4. Does the market range support your floor?

If you cannot answer these, you are guessing.