YOUR BID WIN RATE IS TELLING YOU SOMETHING. MOST OWNERS READ IT WRONG.
Bid hit ratio is total dollar volume of bids awarded divided by total dollar volume of bids submitted over 12 months. A healthy range is 20 to 35 percent. Below 15 percent means pricing is too high or relationships are too thin. Above 40 percent means underpricing. Win rate only tells the full story when it's tracked next to the gross margin on the work being won.
Most subcontractors track how many bids they win. Few track the margin on what they win, and that second number is the one that decides whether the year works. A 30 percent win rate at 18 percent gross margin produces a worse outcome than an 18 percent win rate at 26 percent, because more wins at thin margins burn more cash, put more labor on payroll, and put more equipment in the field for less return. The win rate is where the analysis starts. It's not the conclusion.
WHAT IT MEANS.
Bid hit ratio is total dollar volume of bids awarded divided by total dollar volume of bids submitted over 12 months.
The ratio has to be counted in dollars rather than in bids. A $1.4M commercial sitework win and a $35K patch repair aren't equal events, so counting heads instead of dollars tells you very little about where your pricing is competitive. Pull the last 12 months, sum every bid submitted, sum every award, and divide the awards by the submissions.
Most owners who see a low win rate assume the fix is to lower prices, and most owners who see a high win rate assume things are going well. Both assumptions are usually wrong. A low win rate is almost always an overhead rate problem or a relationship problem rather than a margin problem, and cutting margin to win bids on cold relationships speeds up the cash problem instead of solving it.
A high win rate is almost always an underpricing problem that hasn't reached the bank account yet. It reaches the bank account 12 to 18 months later, once overhead has grown, headcount has grown, and equipment payments have grown, and the margin that was always thin can no longer cover any of it. By then it looks like a cash flow problem. It was a pricing problem the whole time.
WHAT EACH ONE IS TELLING YOU.
Below 15 percent means pricing is too high or relationships are too thin
Losing more than 85 percent of your bids has two causes. Either your overhead rate is inflated and your cost basis is genuinely higher than your competitors, or you're bidding cold GCs who shop price while you hold no inside position. Start with the overhead rate. If it comes back correct at 12 to 15 percent, stop bidding GC relationships where you've never worked, because your hit rate with GCs you know should be materially higher than your hit rate with strangers. If it's not higher, the relationship isn't as strong as you think it is.
20 to 35 percent is healthy, but check the margin
Winning one in three to one in five bids is normal, and the question is what you're winning at. A 28 percent win rate tells you your pricing is competitive, and it tells you nothing about whether the work is worth having. If you're closing at 18 to 19 percent gross margin on jobs that should be bid at 24 to 26 percent, the win rate reads healthy while the business gets starved. Every hire, every equipment payment, and every overhead increase then gets made against a margin assumption that's wrong.
Above 40 percent means you are leaving money on the table on every bid you win
Winning too much means your number is the easiest one to beat. A win rate above 40 percent is a warning, because the market is telling you consistently that you're cheaper than everybody else. Either your overhead rate is lower than your spending requires, or your labor burden calculation is understated, or your markup formula doesn't reflect your true cost structure. The fix isn't to bid more work. The fix is to find out why you're the lowest number on 40 to 50 percent of competitive bids and correct it before the cash consequences reach year end.
WHAT IT LOOKS LIKE IN DOLLARS.
Take 26 bids submitted totaling $9.1M against 7 awards totaling $2.6M. Win rate by count is 27 percent and win rate by dollars is 28.6 percent. Now layer in the margin: if 5 of those 7 were bid at 19 percent gross margin and 2 at 26 percent, the average margin on won work is 20.8 percent. That last number counts for more than the win rate does.
THE FOUR NUMBERS THAT GO WITH IT.
The distance between what you bid and what the job delivered is your estimating accuracy number. Most clients find a 4 to 8 point spread when we start. Until that spread gets measured job by job, every new estimate repeats whatever went wrong in the last one.
Your hit rate with GCs where you have a working history should run 35 to 50 percent. Cold relationships should run 15 to 25 percent. If both come out the same, you aren't pricing the advantage you have, and you're spending estimating hours on work you were never going to win.
Municipal utility work and private commercial work are different competitive markets with different bidder pools. A blended win rate hides which one you're pricing correctly and which one you aren't. Split the number by market before you decide your pricing is the problem.
A win rate falling across four straight quarters means one of two things. Either overhead has grown without a matching bid adjustment, or a competitor has entered your primary market with a lower cost structure. Both are fixable and they get fixed differently, so the trend is worth reading every quarter.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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