This way the contractor can determine if it is even worth it to bid on the project if he cannot make a reasonable profit.
The contractor must behave ethically when it comes to pricing. This means that experienced workers should be used even though they may cost more than a worker who is not necessarily experienced or hasn't worked on many projects. The contractor should also be careful of how material is marked up. Even though they may get a good deal on material from their supplier, they still should pass on some type of savings to the customer. If they discover from the customer that there are several other bids being considered that more reasonably priced than what they are offering, they should not cut corners on any factors required for completion of the project.
Contractors should know that their reputation is always on the line and that not every bid for a project will turn into actual work. If another bid which is lower is chosen, the contractor can always...
This does not mean badmouthing the contractor that was chosen to do the job, but many times a bid may come in at a lower price because the material used is inferior or the laborers used are not experienced and therefore will work for a lower salary. It is considered ethical behavior if the contractor points this out to the customer and try to persuade the customer to accept their bid.
A fair and reasonable price is whatever the contractor and the customer have agreed upon. In order to get to this point, the customer must feel like he is getting the best deal possible and the contractor must be satisfied with the profit margin expected. A fair amount of negotiation will more than likely take place before both parties are satisfied and contractors should always provide the customer with the best labor and materials that the customer can afford so that both parties can walk away satisfied.
