GSA Schedule – 2 Successful Pricing Strategies

By: Admin
Date: 2019-07-04

This week I would like to go over low cost vs value priced offerings and which is the better strategy.  To do an analysis of this I spent considerable time going through the GSA Schedules of 25 firms on GSA Schedule 411-1 Ground Transportation Services.  I did this to make a determination as to what information I could derive from these firms pricing strategies.  (I remove ambulance and medical related transport for the purpose of this study to get an apples-to-apples comparison.)
The majority of the schedule Holders had the following hourly rate transportation service offerings:

 

Sedan

SUV

Van

Mini-bus

Mini-coach

Coach

Lowest Hourly Rate

48.88

58.85

44.94

64.84

74.81

89.78

Highest Hourly Rate

83.58

98.35

190.43

110.83

119.69

141.86

Average

67.62

81.68

83.26

84.56

99.26

120.89

As you can there is a great deal of deviation from the lowest cost provider to the highest.  In some cases the lowest price to the highest price can be double.  This seems somewhat surprising considering all of these firms are offering a similar product. 

Below is the data for the 25 firms:

Rank

Sales 2018 (thru June 2018)

Sales 2017

Sales 2016

Pricing Quartile

Service Area

1

2,667,828

3,627,836

5,064,762

2.00

 50 States

2

2,440,628

3,366,284

2,745,333

3.50

 DC-Beltway

3

2,299,111

           -  

      -  

 1.00

 50 States

4

 1,290,367

 2,162,832

 2,225,154

 3.00

 48 States

5

 747,000

1,695,745

 2,966,094

    2.67

 DC-Beltway

6

 603,750

 792,905

 779,400

   3.60

 50 States

7

   395,435

   250,924

90,577

    4.33

 48 States

8

  292,653

 178,889

         -  

  3.33

 48 States

9

  254,810

 322,870

324,467

 2.50

 48 States

10

 250,681

666,503

  813,949

 2.00

 DC-Beltway

11

228,580

 367,659

1,125,989

 4.50

 DC-Beltway

12

     213,193

  208,051

 162,114

     1.00

Southeastern and Midwest

13

     154,392

    6,760

    -  

   4.00

 48 States

14

  153,431

  169,167

    219,925

    2.25

 50 States

15

  152,256

  354,231

   258,106

   4.00

 50 States

16

 119,953

     -  

  26,222

  5.00

 DC-Beltway

17

   99,427

 293,360

 273,756

  1.00

 48 States

18

  94,287

   78,731

   93,192

  2.00

 DC-Beltway + NY,NJ,PA,DE

19

        79,635

  40,788

    269,615

   1.67

 DC-Beltway

20

  67,426

27,680

   276,379

 2.50

 50 States

21

 42,265

  125,087

   250,796

  1.80

 DC-Beltway

22

   10,457

    -  

        -  

 2.00

 48 States

23

  7,461

           -  

         -  

   1.50

 DC-Beltway

24

 3,080

        -  

        -  

    3.00

 DC-Beltway

25

        -  

    25,232

    19,550

    3.50

 50 States

Avg.

   506,724

   590,461

     719,415

   

Strategy 1 – Low Cost Provider
As you can see from the above data that the Number 3 firm on our list in sales did not have any sales in the previous two years. This is because this firm is new to the GSA Schedule System. They clearly have a low priced strategy and matching or beating all other firms on this schedule has led to this leap in sales. The results show that this firm was able to grab a very large piece of the business.  This demonstrates being the “low cost provider” can be an effective pricing strategy provide the firm can still make a profit at those rates. 

Strategy 2 – Superior Service Provider

Pricing Ranking (Low to High)

Average GSA Schedule Sales

1

870,577

2

43,120

3

530,740

4

771,746

5

210,123

*Rankings are based upon the quartile groupings below/over or between and this creates five groupings. 
Separating the firms into five groupings based upon pricing we can see the following.
Grouping 1 – Low Cost Provider, has the greatest amount of sales. However Grouping 1 firms sales are only 13% greater than Grouping 4 Sales.
Grouping 2 - Produced the least amount of sales.  This is what I refer to as “no man’s land” or “no woman’s land” because the firm isn’t the lowest cost provider however the firm cannot afford to complete with firms that have better or more tailored service offerings.  These firms even preformed worse that firms that were in Grouping 5 which in some cases had near double the pricing of Grouping 1.
Grouping 3 & 4 – These firms appear to have a good mixture of Price/Service mix to maintain health profit margins.  While reading through the schedule I found one firm in what I perceived as an attempt to combat their lower priced competitors took the additional step to breakdown their pricing by the age of the vehicle being provided.
Grouping 5 – I doubt this group expects to have a great deal of sales from their GSA Schedule however the sales they do have will be profitable.
Note:  To obtain a GSA Schedule your pricing must be vetted by the GSA meaning you have to prove you are providing goods and services at a fair and reasonable price.  However make sure if you are obtaining a schedule you have thought thru Service/Pricing balance or it could inhibit your overall success.            

Jumping Man