I used to run my business the way most contractors do: I'd visit potential clients, review the plans their architects had drawn, agree to bid against a group of other contractors, and then spend 10 to 100 hours estimating the work. When the bids were opened, I would feel discouraged if I wasn't the low bidder. Or, if I was the low bidder, I'd wonder where I had made the mistake that allowed my price to be lower than everybody else's.

Having to compete with so many other contractors was bad enough — but then, when the bids came in, the homeowners often found that even the lowest bid was way beyond their budget. At that point they had to make a choice: find a way to come up with more money, reduce the scope of work and spend money to redesign the job, or — worst of all —...

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