How to Offer Competitive GSA Prices Without Losing Your Shirt
You have finally made the decision, after the business-government buying season, to sit down and get your GSA Schedule done. Well, wait, not so fast —there are a few things you need to know about GSA Schedule pricing.
One of the toughest issues I see consistently from my clients when they are a service-based business is preparing the proper pricing structure. Section three (3) — the Pricing Section of the GSA solicitation requires companies to either provide them with a “standard” commercial pricelists, market-based pricing model, or at the very least some sort of standard labor pricing. Well if you are a service-based company, like us, you typically offer your prices based on a very defined scope of services and translating that kind of pricing model to government can be very tricking if you don’t have a good handle on your costs within your organization. Whether you offer a standard pricelist or you offer market-based pricing, as a GSA offeror, it’s imperative for you to know your direct costs (labor, materials, etc.), indirect costs (cost pools and bases), and profit factor.Without knowing your pricing basics, there is no way to know whether you are offering GSA your… Click To Tweet
So with that said, I am going to show you how you can properly price your GSA Schedule offer AND keep your profitability.
First, before you can even start preparing your GSA cost proposal spreadsheet you first need to understand what you are offering in terms of services, types of labor, levels of effort, skill-set and expertise. Once you have done that you need to have a thorough understanding of your indirect costs associated with your labor, materials or equipment. Play close attention to the prevailing market wage rates for salaries and the benefits related to the labor. Also, don’t forget the supplies and equipment related to each of those people. One other thing you may want to consider when offering your pricing to GSA — is you may want to consider only offering a predetermined group of personnel/staff for each position you are proposing; that way you add an element of realism to your pricing decision making process. That way, you have more ‘control’ of your pricing outcomes.
Second, have the intention of negotiating a standard set of terms and conditions that specifically satisfy the needs of the government without compromising your real value. This will ensure that your initial GSA price reflects circumstances where your requirements, customers, and volume have been considered. You are not negotiating blindly and have taken into consideration every labor category, product or service being offered. One size terms and conditions do not fit all.
Thirdly, don’t offer your entire labor force without understanding your profit objectives. Offer substantiated rates (rates with an invoice) that have a strong margin, where a percent or two lost during negotiations will not hurt your overall profit goals. Keep in mind that GSA wants your lowest commercial prices, but doesn’t guarantee purchases under your contract, so you need to be prepared to counter that negotiation with solid justification. Be mindful of your current pricing practices and if you have a good offense early, it will become your best defense when you submit your offer. Meaning, if you are going to be offering deep discounts to your commercial customers, be mindful of how that will impact your pricing objectives when you decide to prepare your GSA Schedule offer. Your commercial relationships will be evaluated by GSA and have a direct impact on your negotiating power. Be selective about what you plan to offer and start 12 months before you even begin your Schedule offer, that way you are prepared when negotiations come around. You have heard the saying “the best defense is a good offense”, apply that methodology to your GSA schedule preparation practices.
REMEMBER: When pricing for a GSA Schedule contract, the government is looking to enter into contracts with the intent of achieving the “most favored customer” pricing/discounts that a contractor would offer a commercial customer — taking terms and conditions into consideration. In order to ensure this, agencies are encouraged to seek further price reductions before placing an order, be mindful of this practice before you settle on your price offerings with GSA.
The government is sure to do their research on your company before entering into a contract with you; make sure you do the same.