How to Price Your GSA Services

Overview of GSA pricing principles

Is there the best way to price your GSA Schedule?  How to price your products and services so that your Schedule brings you the most profit and allows you to outrun competitors? In this article we will review the main principles of the GSA Schedule pricing, and explain how you can utilize the GSA CALC tool and the GSA pricing tool to define the optimal pricing strategy.

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Overview of GSA pricing principles

GSA Schedule Contracts are government contract vehicles that the government uses to procure various services, products and expendables. To do this, the government publishes a solicitation (see: “Solicitation types”) and then selects contractors that offer maximum value for the best price. And how does the government determine which prices are the best? Here are the basics of the GSA pricing evaluation.

1. Prices must be fair and reasonable

A common misconception about how the government buys products via the GSA Schedule is that GSA contractors are obliged to provide the lowest possible prices. That is not so. The GSA just wants to make sure that your prices are adequate to the given market, and various specifics of your offer. Here are some factors the GSA considers when reviewing your price proposal:

For products, a GSA contracting specialists evaluates the following:

  • Quantity or volume of supply. Apparently, the government prefers bigger quantities for the same price.
  • Delivery terms. How fast you can deliver the product. For many agencies this factor is crucial, but overall the GSA prefers contractors with faster delivery for the price.
  • Warranty. The product needs maintenance and repair, so the more warranty you offer, the better for the government.
  • Return and restocking policy. A GSA specialist will review your policy on returns to make sure an agency can effortlessly restock or return a product if something goes wrong. That’s a huge advantage.
  • Indices: Consumer Price Index, Producer Price Index, Export Price Index, Import Price Index

For services:

  • Consumer Price Index. Indicates how your prices to customers change over time. The lower CPI is, the better.
  • Wage Determinations. The GSA determines wage rates for various classes of laborers and decides whether they are fair and competitive 
  • Geographic region. The GSA may compare your pricelist with respect to regional market prices.

For labor:

  • Functions. What exact functions will your employees perform?
  • Education and experience. Surely, high-priced specialists should have better education and wider experience in the given field.
  • Certifications, licenses, diplomas, etc. Are your workers certified for work at heights? Do they have training in computer science? Any documents confirming skills and knowledge of your specialists are an important factor for the GSA, when it considers your Schedule pricing, and compares it with your GSA competitors.
  • Other vital factors. Security clearances, Wage determinations, Employment Cost Index, Consumer Price Index

2. Government is the Most Favored Customer

When you build your pricing for a GSA Schedule, you should treat the government as one of your MFCs – Most Favored Customers. An MFC is a customer you are willing to offer your biggest discount to. The GSA specialist will conduct the market research, inspect your commercial pricelist and determine the MFC prices you have. Then, the GSA will negotiate the same MFC prices/discounts on the same conditions.

3. Price reductions

Price reduction principle is simple: you cannot sell your products or services on the commercial market cheaper than you do on the federal market. Whenever your commercial prices are reduced for any reason, and become lower than the GSA Schedule prices, the GSA should automatically benefit from such price reductions, according to the FAR 552.238-81 Price Reductions clause. You should notify your assigned GSA contracting officer yourself within 15 calendar days from the price change. Failing to do this in time may result in termination of your GSA contract.

4. Price adjustments

Sometimes you may want to increase prices – whether because prime costs have increased, or because your transport costs are now higher, or simply to reflect the current economic situation. You can do this using the Economic Price Adjustment (EPA) Method. You cannot do this often; only up to three times a year, and you cannot do this during your first contracting year. But still this is a great opportunity to increase prices. How big can such a price increase be? Up to 10% for all categories, except Human Capital (4%), Travel (5%), and Professional Services (5%).

Annual Escalation is another way to increase prices based on the Clause I-FSS-969 of the FSS MAS. The amount of escalation is based on the commercial market and is generally between 2.3% to 2.5%. This is an option for contractors offering mostly services.

If your prices are dependent on the Market Index, you can also use Clause I-FSS-969.

How to price your Schedule

Ok, where do you start from, if you need to set prices for your GSA contracts? In this part we will review a number of tools that can help you determine price levels of your GSA competitors on GSA Advantage and GSA eBuy platforms. Then, we’ll explain how to prepare your price proposal properly, to maximize the chances of your offer being accepted.

How to analyze competition

Before you actually prepare your price proposal, you should analyze competition on the federal market. Exorbitant prices may jeopardize you chances of securing a contract. On the other hand, exceedingly low prices may render your contract profitless. Take a look at the federal market within your niche, and see what prices existing GSA contractors offer. This way you too will be able to offer competitive pricing.

Here are the tools you can use to estimate competition and prices for products and services on the federal market:

  • GSA CALC Tool. The Contract-Awarded Labor Category tool allows you quickly and effortlessly evaluate ceiling rates for a number of labor categories. Using the tool is easy: select the labor category you need, click the “Find” button, and almost instantly see average, lowest and ceiling rates for the given labor category. You can also set a number of filters (like clearances, work sites etc.) to further refine the search results.
  • GSA Advantage. The GSA Advantage! platform also allows you to analyze competition. Make a search for specific keywords to find other contractors within your niche, then open their offers and compare their rates with yours. While the CALC tool is definitely faster and more convenient to use, analyzing competition with GSA Advantage is also worth mentioning.
  • The Schedule Sales Query Plus (SQQ+) tool. This tool helps you investigate competitors’ sales in various product categories. Also, you can see geography of sales, trends, contract performance, and other information. OK, but how does this help pricing your own GSA Schedule? Simple: combine the SSQ+ data from your own competition pricing analysis, and see which contract pricing performs the best. Apparently, conducting such an analysis is not exactly what you can do during your coffee break, but it is a must.

How to set prices for your GSA Schedule

  • Make a Price Proposal. When you submit an offer for a solicitation, you must provide your Pricing Proposal among other documents of your package. Use the information obtained during the competition analysis to compile the Pricing Proposal. The format of this document is different depending on whether you offer services, products or training, but the idea behind it is simple: you present your pricelist to the GSA. The Price Proposal contains items, SINs, descriptions, commercial prices, MFC prices, the amount of discount for the GSA, and warranty terms, along with some other information.
  • Supply a Price Narrative. Aside from the pricelist you must also provide a basis for your prices. The corresponding document is called a price narrative. The idea of the price narrative is that you should give an explanation and substantiate your prices. You must provide a rationale for the price you propose, and back it up with arguments. Price narrative is extremely important, because it helps a Contracting Officer to determine whether your prices are fair and reasonable.
  • Formulate Commercial Sales Practices. The goal of the government is to receive the best prices. But that doesn’t mean the GSA is ready to sacrifice quality. The Commercial Sales Practices document allows a Contracting Officer to compare products and services you offer on the commercial market, to the ones you sell to the government and decide if you really offer the best price for the GSA.

Overall, your pricing strategy depends on multiple factors including your product characteristics, shipping terms and conditions, warranty, experience and skills of your workers, and of course on your competition. By properly putting all the pieces of the puzzle together, you can develop a pricing method that will end up being profitable, while looking fair and reasonable to the GSA.

Conclusion

Pricing your GSA Schedule is a complex task that needs some preliminary preparation. Failing to set prices properly is a common reason for offer rejection. That is why we recommend asking GSA professionals for advice, or even hire an agency like Price Reporter to help you with your GSA Schedule pricing. Not only does this allow you to avoid many pitfalls during the offer submission, but also saves you a lot of time.

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