Contractors need to make a profit to stay in business and feed their families.  The contractor who is not business savvy enough to price their work correctly will turn into a headache. 1) They will be out of business is a short amount of time and will either not finish your work or not be able to honor their warranties. 2) When the budget on your job runs out the work will suffer. The contractor must pay any and all subcontractors for their work and materials and pay for his employees and materials. If your job was underpriced the money will run out and the work will slow to a halt and/or the contractor will take short-cuts to do it “cheaper.”