The moment that separates good salespeople from everyone else
"We got a lower bid." Five words that make most business owners either cave on price or mentally check out of the conversation. Both reactions cost you money, just in different ways. Dropping your price to match teaches the customer that your original number was inflated. Walking away leaves revenue on the table when you might have been the preferred choice all along.
The reality is that when a customer tells you about a lower bid, they're usually still talking to you for a reason. If price were the only thing that mattered, they would have already hired the cheaper company and you'd never hear from them again. The fact that they brought it up means they want you to give them a reason to choose you anyway.
What not to say
Before the right response, let's clear out the wrong ones because these come out reflexively under pressure.
"I can match that." Instant margin destruction. You've just told the customer your pricing is negotiable, which means every future interaction starts with them expecting a discount. You've also made price the only variable in the decision, which is exactly where you don't want the conversation.
"You get what you pay for." This sounds condescending, even though there's truth in it. Nobody likes being talked down to, especially when they're making a major purchase. The customer isn't stupid for getting another quote. They're being responsible.
"That company uses cheap parts / hires unlicensed guys / won't be around next year." Trashing a competitor you may know nothing about makes you look insecure. Even if it's true, the customer didn't ask for your opinion on their business. Speak to your own value instead.
The response that actually works
The best response does three things: it acknowledges the customer's concern without panic, it creates curiosity about scope differences, and it reframes the conversation around total value rather than line-item cost.
Start by staying calm and genuinely curious. "That's good, I'm glad you're doing your homework. Can I ask what's included in their quote?" This is not a trick question. You genuinely want to know, because the differences almost always tell the story.
Most of the time, the lower bid is missing something: warranty coverage, permit costs, disposal fees, a post-install inspection, specific equipment brands, or insurance documentation. When the customer starts listing what the other company quoted, you can point to the gaps naturally rather than aggressively. "I noticed they didn't mention pulling a permit. That's usually a R350-500 cost that some companies skip, but it also means the work isn't inspected by the city. That's something to ask them about."
Then tie it back to their situation specifically. "Based on what we found during the assessment, I quoted the 50-gallon high-recovery water heater because your existing gas line and venting can handle it without modifications. If they're quoting a different unit, it might need additional work down the road that isn't reflected in the upfront number."
When the bids really are apples-to-apples
Sometimes the scope genuinely is the same and the other company just charges less. That happens, and pretending it doesn't will make you sound delusional. In those cases, the conversation shifts to what else you bring beyond the installation itself.
Response time matters. Warranty service matters. The fact that you answered the phone, showed up on time, and presented a thorough assessment matters. Multiple industry surveys, from shared lead platforms, and shared lead platforms, consistently show that a clear majority of residential customers will pay a premium for a contractor who was responsive, professional, and clearly explained the work, even when a cheaper option was available.
You might say something like: "I respect that. If the scope is truly the same, the difference comes down to who's standing behind the work after it's done. Here's what our warranty covers, here's how our scheduling works for service calls, and here's what our reviews say about what happens when something needs attention after the install."
The follow-up that wins jobs other companies lose
If the customer doesn't decide on the spot, which they often won't, your follow-up becomes the tiebreaker. Send a short email within a few hours summarizing the scope differences you discussed. Keep it factual, not salesy. Something like: "Here's a side-by-side of what I quoted versus what you described from the other company, so you can compare directly."
A 2024 field-service software report showed that contractors who provided written comparison follow-ups closed 31% more competitive-bid situations than those who just waited for a callback. The customer already did the hard work of getting multiple quotes. Making the comparison easy for them is a service, and it tilts the decision toward the company that made the process simplest.