# Does the lowest bid always win? Not quite

> In an invitation to tender or request for quotes, the lowest compliant bid usually wins, but only if it meets every requirement. In an RFP, price is one scored criterion, often 20 to 40 percent of the points, so a better proposal can beat a cheaper one. Very low bids can also be rejected or lead to losses that end a contract early.

By James DeGreef. Updated 2026-10-24. Facts checked 2026-10-24. Source page: https://crewbid.tech/articles/lowest-price-always-wins

"They always just take the cheapest" is the most common thing small contractors say about public work. Sometimes it's true. Often it isn't. Which one you're facing is written in the tender, and knowing the difference changes how you bid.

## When the lowest price does decide it

In an **invitation to tender (ITT)** or a **request for quotations (RFQ)**, the usual rule is that the contract goes to the **lowest compliant bid**. Two words matter there:

- **Lowest**, measured the way the tender says: total price, or a total calculated from unit rates and estimated quantities.
- **Compliant**, meaning it meets every mandatory requirement. A cheaper bid with a missing signature isn't the lowest compliant bid. See [nine ways good bids get thrown out](https://crewbid.tech/articles/why-bids-get-disqualified).

Even then, most tenders include a privilege clause that lets the buyer reject all bids, for example if every price is over budget. But a buyer generally can't skip the lowest compliant bidder and pick someone it likes better, unless the documents allow it.

## When it doesn't

In a **request for proposals (RFP)**, price is one criterion among several. The RFP publishes the weights, and on service contracts price is often worth something like 20 to 40 percent of the total, with the rest for experience, approach, staffing and safety. A common formula gives the lowest price full price points and others a proportion. [Inside the evaluation room](https://crewbid.tech/articles/how-public-bids-are-scored) shows the arithmetic.

With price at 30 points, a bid 15 percent higher than the cheapest loses only about 4 points on price. A clearly better proposal can easily make that up.

Some buyers also use:

- **Minimum technical scores**, so a cheap bid with a weak proposal never gets its price opened.
- **Pass/fail qualification first**, then lowest price among the qualified.
- **Best value** language that weighs total cost over the contract, not just the bid price.

## Why bidding too low is risky

Winning at a price that doesn't cover your costs is worse than losing:

- **You can't walk away.** In a formal tender, your bid may be binding once submitted, mistakes included.
- **You lose money every month**, for years if it's a multi-year contract.
- **Service slips**, the buyer notices, and your reputation (and references) suffer.
- **Some buyers check.** Unusually low bids may be questioned, and buyers can ask you to show your price is realistic before awarding.

## So how should you price?

1. **Read the evaluation method first.** Is it lowest compliant price, or weighted? What's the price weight?
2. **Build your price from real costs** and the profit you need. See [how to price a multi-year contract](https://crewbid.tech/guides/price-multi-year-service-contract).
3. **If it's lowest price**, sharpen it where you genuinely can: route density, equipment you already own, a crew already nearby. Don't cut profit to zero.
4. **If it's an RFP**, spend your effort on the proposal, where the points are, and price fairly.
5. **Check past awards** to see where winning prices landed.

## The bottom line

Price matters in every public bid. But "lowest wins" is only the rule when the tender says so, and even then only for compliant bids. Everywhere else, the bid that best answers [what the buyer is worried about](https://crewbid.tech/articles/what-public-buyers-worry-about) at a reasonable price is the one to beat.

## Sources

- [How the government buys (Government of Canada)](https://www.canada.ca/en/public-services-procurement/services/acquisitions/support-for-businesses/understand-procurement-process/how-government-buys.html)
- [Legal basics of competitive bidding and procurement in Canada (AHBL)](https://www.ahbl.ca/legal-basics-of-competitive-bidding-and-procurement-in-canada/)