'Price Based Selling vs Value Based Selling'

Price based selling:   The seller's botheration is about the Profit he is going to make.

Value based selling:  The seller's botheration is how to improve the benefits to customer.

Most companies in today's software and services market focus on price based selling vs. value based selling. The typical sales cycle starts with suppliers initially quoting the price for their software or service to customers with good margins. By the end of the sales cycle, or end of the quarter in a lot of cases, sales people and company sales leadership begins to offer deep discounts in order to close the deal within the quarter or other pre-determined time frame.

The message that sends to the client is fairly clear, hold out until the very last minute and we will get major discounts. However, it also sets a precedent for all future deals with that particular client. The end result of this selling method is a reduction in margins over time and an eroding of professional credibility. In a lot of cases, suppliers find themselves with long-standing, low margin relationships with clients that does not help either party. The client sees your product or service as more of a commodity (Price down over time) and the supplier does not strive to deliver wow through service due to the dropping margins.

You see this a lot in publicly traded companies. Company executives make promises to the street and then turn around and tell the organization to meet those goals no matter what the cost. This is a fundamentally flawed practice that sets up a cycle that is very hard to break.

Yet we have all seen certain companies that can demand a high price for their product or service and get away with price increases across the same client over time. These same companies have a lot of credibility in the marketplace and are generally well respected within their particular industry vertical.

How did these companies get there? What makes their product service superior? How can they charge that much? Why are they so trusted in the industry? How do they get the C-Level audience?

The solution to this problem starts with the company executives. At it's core, the job of any CEO is to set the vision for the company in the near term and long term. This vision needs to communicated clearly down within the organization and then expectations set so the employees can deliver on that vision. The employees also need to be empowered to deliver on that vision.

It is then incumbent on the sales leadership team to hire and train a sales force that understands the difference between selling the functions of the product or service and selling the value of said product or service. It is also critical to understand that there is some business you do not want. The company needs to be willing to walk away from deals that are not within its clear ability to deliver wow through service.

Value based selling starts with clearly and specifically identifying the vertical market you wish to go after and the potential clients within that market. Once the clients are identified, robust and thorough research needs to be done on each client within the identified market. This research is vital to understanding the client’s needs at an executive level and then specifically positioning your product or service to meet those needs. One key item to note here is that once you have done the research it becomes more clear how you can help the client in the near term and long term.

C-Level executives get many calls from widget sales people daily. They have armies of assistants to field and direct those calls to voicemail. The only way you will stand out from the crowd is to sell the true business value of your product or service. Once you have an audience with senior executives you need to write proposals based on what they asked for but also on what you know they will need in the future. This comes from doing the up front research on the clients market and specific business.

Most C-Level executives want suppliers that understand what they are dealing with and have the knowledge and creativity to help solve those problems now and going forward. Once you have earned the attention and respect of the senior executives, price becomes a distant second in the business relationship.

Additionally, once these relationships have been established based on real value your credibility within that particular market goes up due to the senior level recommendations you will begin to receive. Your reputation of delivering key value will begin to go before you and the selling cycle and process gains velocity and your margins begin to go up.

The answer VENKITARAMAN KRISHNA MOORTHY VRINDAVAN

Concise and useful

Achieving the Profit Potential of each vehicle requires dealers to move from Price-Based Selling to ValueBased Selling.

Value-based pricing is an approach in which you establish prices based on the amount you believe customers are willing to pay for products and services.

Price based pricing places the emphasis on establishing a cost basis for your product or service. Taking into account production or acquisition costs, as well as fixed costs from operations and marketing, you come up with a per-item cost basis. From there, you determine an ideal markup for pricing.

Price based is selling away usually the high prices services or products  and focusing on how much turnover and margin you will make .

Value based will come once you understand your client needs and selling them the best match for it rather than selling them high price products and services .

Value based is more important for gaining repeated customers and wining margins as well .

Both have its own target audience . Both has its set principle & as a Product Sale - Profit Is its basic reason for which its produced . Calculation is based on : Product Cost + Variable Cost + Profit 

In price base selling company think about quantity of the goods or turn over of the sale and by that it may aim also to cover the market, where as value base selling is focus upon quality of the goods or quality of the customer and to make brand differentiate from other.

Endorsing answers given by other experts

Price base if it is worth to sell with a higher cost.  And about for Value if it is long lasting or easily expired