The contractor money toolkit
Bid ROI calculator
A bid's expected value is the chance of winning multiplied by the contract's gross profit, minus the cost of preparing and submitting the bid.
See what it adds up to
- Expected value per bid, yourself
- $4,900.00
- Expected value per bid, Bid Team
- $5,500.00
- Break-even win rate, yourself
- 3.67%
- Break-even win rate, Bid Team
- 1.67%
- Yearly expected value, yourself
- $235,200.00
- Yearly expected value, Bid Team
- $264,000.00
- Owner hours saved per year
- 384 hours
Expected value is an average over many comparable bids. Owner time is an opportunity cost. The model assumes no change in win rate and keeps your review time in the Bid Team option.
Show your work
How the math works
Use the same math on a spreadsheet or a sheet of paper. Percentage inputs become decimals in the formulas.
1. Weight the profit by the chance of winning
Multiply contract value by gross margin, then by win probability. Revenue alone overstates what a win is worth.
Expected contract gross profit = contract value × gross margin × win rate
2. Subtract the cost of each option
For a bid you prepare yourself, count your time and bid expenses. With Bid Team, count its fee, your retained review time and the same bid expenses.
DIY EV = expected gross profit − (preparation hours × hourly value + other costs); Bid Team EV = expected gross profit − (fee + owner review hours × hourly value + other costs)
3. Find the break-even win rate
Divide each option's total bid cost by contract gross profit. A required win rate above 100% cannot break even under these inputs.
Break-even win rate = cost to bid ÷ contract gross profit × 100%
4. Scale to a year of bidding
Multiply value per bid by twelve times your monthly bid count. Multiply the owner hours saved on one bid by the same annual count.
Yearly EV = EV per bid × bids per month × 12; owner hours saved = (DIY hours − review hours) × bids per month × 12
The numbers on paper
A worked example
Bid Team works out to about $200 a bid for a company that bids every week. Use your actual effective fee if your volume differs. The contract's margin includes delivery costs and costs due only after an award. Yearly expected value is the total expected value of bids submitted in a year, not necessarily cash collected in that year.
| Input | Value |
|---|---|
| Contract value | $100,000.00 |
| Gross margin | 30% |
| Chance of winning | 20% |
| Hours to prepare it yourself | 10 hours |
| Owner's hourly value | $100.00 |
| Bond and other bid costs | $100.00 |
| Bids per month | 4 bids |
| Bid Team, about $200 a bid when you bid every week | $200.00 |
| Owner hours per bid with Bid Team | 2 hours |
| Result | Value |
|---|---|
| Expected value per bid, yourself | $4,900.00 |
| Expected value per bid, Bid Team | $5,500.00 |
| Break-even win rate, yourself | 3.67% |
| Break-even win rate, Bid Team | 1.67% |
| Yearly expected value, yourself | $235,200.00 |
| Yearly expected value, Bid Team | $264,000.00 |
| Owner hours saved per year | 384 hours |
Use the result to make the next call
Bid when expected gross profit covers the full bid cost and the job fits your capacity. Compare the two options using a realistic win rate and the value of the hours you could put back into the business.
Common questions
A few things to know
How do I calculate whether a bid is worth preparing?
Multiply contract value by gross margin and win probability. Subtract the hours to prepare the bid times your hourly value, plus bond and other bid expenses. A positive result means expected contract gross profit covers the modeled cost to bid.
What does Bid Team cost per bid?
Bid Team works out to about $200 a bid for a company that bids every week. The calculator lets you enter your effective cost per bid for your own volume. Your remaining review time and other bid expenses are added separately.
What does Bid Team prepare, and what do I still do?
Bid Team fills out forms, works the estimate with you using quantities, pricing structure and supplier quotes, tracks addenda and deadlines, opens portal accounts and assembles the packet. Rafael's team helps with insurance, bonding and notary paperwork. You make the final call on your number, sign and send.
Does the calculator assume Bid Team improves my win rate?
No. Both options use the same chance of winning and the same contract gross profit. The comparison measures changes in preparation costs and owner time. Enter your observed win rate for comparable jobs.
Why count the owner's time if it is not a cash payment?
Those hours could go to running crews, selling work or preparing another bid. Giving them an hourly value measures that opportunity cost. Set the hourly value to zero if you want a comparison of cash expenses only.
What happens if my win rate or gross margin is zero?
A zero win rate leaves a loss equal to the bid cost. With zero gross margin, there is no gross profit to recover that cost and the break-even rate is Not defined. A break-even rate above 100% also means the bid cannot recover its cost under the entered assumptions.
Put the bid work on Rafael's desk
Bid Team fills out the forms, works the estimate with you and tracks the addenda, portal accounts and deadlines. You make the final call on your number, sign and send.