Quoting a job
A Socratic walk-through of quoting a job — reasoned out one step at a time, not lectured.
The question we started with
THE QUESTION #Why will a tradesman name a firm price before anyone has looked behind the wall?
A plumber stands in your bathroom for four minutes, taps a tile, and names a number he will hold you to. Behind that tile could be sound timber or forty years of slow leak. He has not looked, and he commits anyway.
The usual readings are that he is bluffing, that experience has made him a good guesser, or that the number is padded so heavily he cannot lose. Each is worth testing, because if any were right, quoting would behave in ways it does not.
Reasoning it through
REASONING #Take the padding story, since it is the most popular. If a firm price were a guess with a fat margin bolted on, then the more uncertain a job, the firmer and fatter the quote should get. Watch what happens as uncertainty rises and you see the opposite. Ask that plumber to quote "find out why the drains smell" and he will not give you a number at all; he will charge a call-out and an hourly rate, and quote the repair once he can see it. Major civil works where the ground conditions are genuinely unknown are likewise let on cost-reimbursable or target-cost terms rather than lump sum, because nobody will price a hole nobody has dug. Firm pricing is not what people reach for when uncertainty is high. It is what they reach for when uncertainty is bounded.
So what is being fixed? Not the job — the scope. Read a real quote and the interesting text is not the figure but the paragraph around it: what is included, what is excluded, and the line saying that anything found once the wall is open will be priced separately. The trade absorbs the variance he can predict and carves out the variance he cannot. His skill is not seeing through plaster. It is knowing where to draw the line so that what remains inside it has a distribution he has seen a hundred times.
Why absorb any variance at all? Consider the alternative. On a day rate the customer bears every hour — and the one thing a customer cannot observe is whether an hour was slow work or hard work. On a firm price the trade bears the hours, and the hours are what he controls. Each contract form hands the exposure to whoever can do something about it.
Neither form is clean. A firm price gives the trade a live incentive to economise on everything the customer will never see — the thin bed of adhesive, the isolating valve omitted — and to earn back a keen quote through variations. Price goes firm and scope goes soft. A day rate gives the opposite incentive. There is no arrangement without a failure mode, only a choice about which one you can police.
One more piece makes the number possible. Within his defined scope the estimator does not need this job to come in right. He needs the average across many similar jobs to come in right, with no single one large enough to sink him. That is why firm prices cluster on repeated, bounded work and evaporate on one-off work.
Finally, when several trades quote the same job, whoever wins is disproportionately whoever read the hidden risk lowest — so the winning quote is a biased sample of the estimates rather than the average of them. That selection effect has its own file in this collection, under the winner's curse; here it explains something narrower, which is why the cheapest quote and the most confident quote tend to be the same quote.
The analogy
THE ANALOGY #Think of a taxi offering a flat fare to the airport. The fare is not a prediction about tonight's traffic. It is a price for carrying the traffic risk, offered only on a route the driver has run a thousand times, with the destination named precisely — ask him to stop on the way and the flat fare stops applying. Take him somewhere he does not know and the meter comes back on.
the taxi's uncertainty is visible to both parties once the journey ends, whereas neither you nor the plumber may ever learn what the job "should" have cost — so the customer cannot audit the outcome even in hindsight, which is why the boundary has to be written before the work rather than argued after it.
Clarifying the model
THE MODEL #A firm price is three things stacked in one figure: a price for labour and materials, a premium for carrying bounded variance, and — doing most of the work — a boundary defining which variance is bounded. Strip out the boundary and the other two cannot be set.
That corrects the natural misconception that a confident tradesman quotes firm while a hedging one is evasive. Often it is the reverse: an exclusion clause is the sign that someone has thought about what could be behind the wall, and the unqualified round number offered without a look is the one to distrust.
Separate this, too, from the familiar problem of hidden quality where a seller knows something the buyer does not. About your particular wall both parties are genuinely ignorant; the asymmetry is over base rates — he has opened a thousand walls like it and you have opened none. Which is why naming a price is itself a signal: it asserts a claim about the size of his sample, not about your house.
One honest limit: the words carry legal weight in many places, a quotation and an estimate being treated differently, but the rule varies by jurisdiction and often turns on how explicitly the scope was written, so the label alone should not be relied on.
A picture of it
THE PICTURE #How to readThe parent class at the top is not a contract but three questions every pricing form must answer, and each form below answers them differently — read each box top to bottom as who carries an overrun, what neither party can check, and how that form characteristically fails. Nothing here says one is better; every form is exposed somewhere, so choosing between them is choosing which exposure you can watch. The firm price and the day rate sit at opposite ends, and the two middle forms exist because most real jobs need part of each.
What became clearer
WHAT CLEARED #The firm price is not a prediction, and it is not bravado. It is a price for carrying variance, made possible by a boundary drawn tightly enough that the variance inside it is familiar — and it works because the estimator is pricing a portfolio of similar jobs rather than this one. That reframes what to look for in a quote: not whether the number seems high, but whether the scope is written well enough for the number to mean anything. A firm price with a vague scope is not a firm price. It is an opening position.
Where to go next
ONWARD #- How variations get priced once the wall is open and the customer has no competing quotes left.
- Why retentions, staged payments and warranties exist — they allocate the risks a quote cannot bound.
Key terms
TERMS #| Term | What it means |
|---|---|
| Firm price (lump sum) | one figure for a defined scope, with the contractor carrying overruns inside it. |
| Provisional sum | an allowance for work that cannot be priced until it is exposed, reconciled against actual cost later. |
| Cost-plus (day rate) | payment for hours and materials as incurred, with the customer carrying the variance. |
| Variation | work outside the quoted scope, priced separately once the job is underway. |
Every term the collection defines is gathered in the glossary.