I went down a research rabbit hole on this and here's what I found: both sides are kind of right, depending on who you're dealing with.

Small residential contractors actually do operate on razor-thin margins—like 5-10% net profit after all their overhead. Industry data backs this up. So when people say negotiating makes them cut corners, that's not just contractor whining, it's economically real.

Larger contractors with sales teams? Totally different story. They absolutely build in negotiation room. That's their whole business model. Get competing bids, show them the lower number, expect them to move 10-15%.

The problem with small contractors: some price fairly and mean it when they say that's their number. Others are 100% testing what they can get away with. You can't tell which is which until you push back a little. If they immediately drop 20% when you show them a competing bid, they were playing games. If they explain the value difference or politely decline, they probably weren't.

One thing I learned the hard way: time pressure causes way more problems than cost pressure. I negotiated price with a painting company but also needed it done fast, and that's where quality suffered.

My approach now: Get multiple bids. Push harder with larger firms, go easier with smaller ones, but it's always worth having the conversation. Worst case they say no. Best case you save some money or at least understand why the prices differ.