This is a classic dilemma, one which pro contractors deal with pretty much every day... your competition is "lowballing" the bid. Generally speaking, lowballers are the bottom-feeding blood-sucking slopjockeys of the industry.
I must admit that I've learned these lowballers do have a niche market: some folks have absolutely no standards of quality and actually seek the least-skilled labor they can find, thinking that it saves them money - and in some cases, it actually
does save them money. I have relatives who fit this description perfectly, and I will not work for them for
any price.
In my opinion, your best bet is to enlighten your friend as to the adage "you get what you pay for" and let him make his own decision. Right or wrong, he'll learn what he needs to in the long run.