This is a complex question. Overall, you need to prepare for this process beforehand. Based on our experience and the best practices, we suggest the following preliminary steps to be taken, in order to achieve the desired result:
1. Evaluate your company’s capabilities and qualifications
The very first thing to do is to estimate your goals, strengths, weaknesses, available resources. Before you pursue your GSA contract, you should convince the government that you’re enough of an expert to be awarded. And before that, you need to figure this out for yourself.
Evaluation includes, but is not limited to:
- $100,000 a year in revenue, for the last two years on the commercial market.
- Pricing rivalry is not the only strategy.
2. Develop a strategy
A decent competitive strategy will allow you to stay ahead of the crowd and enter the government market already knowing what you need to do, and how.
Typically you or a hired agent should analyze the range of your products, current commercial prices, discount practices, delivery terms etc. to develop a strategy that allows selecting an appropriate Schedule that best fit your business, identify optimal pricing strategy that will both fulfill the GSA’s requirement for the “MFC pricing” and remain profitable for you.
Often, a strategy would require pursuing certain set-asides. This may require your company and offered products to be within requirements of that particular set-aside.
3. Prepare and submit the GSA Proposal
Once you have set up the basis, you can start preparing your offer and submit it. Our experience shows that this part is the trickiest. That is why we provide full assistance to companies with getting onto the GSA Schedule. We closely collaborate with them to mitigate any risks that may either hinder prompt review of the offer, or lead to rejection of the offer. This includes everything from setting goals and developing the strategy to prepare documents, file forms or negotiate discounts.
What are the potential pricing issues and relevant strategies, when submitting a GSA proposal?
A general rule regarding GSA pricing is that the government must be your Most Favored Customer. The MFC principle is often read as “the government always chooses the minimum price among offers”, but in fact, the cheapest offer does not guarantee you will be awarded. Moreover, we’ve seen many cases when a company signed up for very unfavorable MFC prices, and ended up operating at a loss.
The best pricing strategy involves a lot of competition analysis and writing a justified price narrative that would prove your prices are fair and reasonable. A preliminary research of the current offers and prices also helps in developing the best pricing strategy when submitting a GSA proposal.
What are the most common errors when developing a GSA pricing strategy?
Here are three errors that negatively impact your chances of winning a GSA Schedule contract.
- . When first submitting your offer, you try to match the MFC prices requirement (which is wise), and set your prices low (which is not wise). If your initial offer is approved, there is a stage where price negotiation starts, and the procurement officer attempts to negotiate even more discounts. And since you had already started low, you simply cannot continue.
- . Price negotiation is crucial, but it would be a wrong tactic to just push your desirable prices, without many arguments justifying your position. Argue: your price is higher because you have better quality (specify quality?), or your price is higher because you can ship more than competitors and do it faster. Or you can provide better prices under some specific conditions, where other offerors would simply fail, etc. If you know your strengths (and you should), you can negotiate very favorable prices while staying within the MFC price range.
- price lists. This is a common error. You may think, if I set my prices lower I will win. But the truth is: lower prices do not always win. The better idea is to research your competitors to learn not only their prices, but also their product value, pricing strategy, volume discounts etc. Fighting your competition with lower price only, will not win you this war.
What is the most challenging thing in price negotiations?
Before the GSA initiates price negotiations, it performs a deep competitive analysis. There are multiple factors in this analysis: the aggregate volume of anticipated purchases, terms of delivery, volume discounts, warranties, maintenance already included into the main price, ordering practices and so on. Hence, the most challenging thing in negotiations is to convince the GSA from the start that your prices are fair and reasonable. Everything matters: the pricelist itself, how you communicate with the procurement officer, terminology, how you present your counter-offers, and more.
What are the specific demands around sustainability?
There are no specific requirements to being “green’ in most GSA Schedules. However, many federal agencies prefer environmental-friendly products and are actively seeking sustainable solutions. Having your products certified as “green” may lend a helping hand, and result in winning a bid when everything else is on par with competition.
