As a professional landscape designer I always urge my clients to hire a licensed contractor for 3 main reasons. The first being that a licensed contractor is legally allowed to perform construction work of any size (assuming he/she has the man power). Secondly the contractor is bonded, insured and has workmens compensation. This means that if anythings happens to the contractors crew you are not liable.
This third reason is that each contractor itemizes his/her bid. Breaking things down from the demolition and killing of the grass, to the installation of planting (materials + labor) plus all the other aspects, this bid is thorough and gives you a detailed estimate of all the costs involved. There is also some legal mambo jumbo that protects both you and the contractor from getting screwed.
The picture shows a sample bid (you will have to click to enlarge image). This is actually a bid that a contractor prepared for one of my clients in the city of Orange (for privacy reasons the contractors and clients names have been blacked out). In this case the grass had already been killed/removed and most of the existing hardscape had also been removed. As you will notice there is a line item for each aspect of the project. This client knows exactly what she is getting and there is no beating around the bush. No hidden fees or funny business.
I am curious have you had some experiences getting bids? If so then I would love to hear about them. Do share!