Price-based selling

Price-based selling is a specific selling technique in which a business exclusively reduces their price in attempt to close the sales cycle. Price-based selling clearly exists in businesses such as: commodity sales, auto sales, hospitality, and even some retail stores. However, it is only recommended that commodity items like petroleum be sold exclusively by price. Selling on price is even more apparent now in the current US economy as most businesses make the switch to the lowest price approach in attempt to attract more consumers. Car insurance companies like Progressive Auto Insurance advertise specifically with their price, as they promote the amount of money that can be saved by making the switch.

Price-based selling may result in a good or service becoming a commodity and a commodity by definition is a product or service that has no differentiating qualities or characteristics from competing products or services in its class. A survey of Canadian consumers by Wishabi in 2009 finds that only 10% of shoppers see price as the only factor, but a 2007 Shopzilla survey of 2000 shoppers showed that 49% of consumers feel that price was the most important factor in their buying decision. Thus it can be seen that while pricing is not the only factor that matters, it is probably the most important.

Most businesses sell their items, whether they are expensive automobiles, or inexpensive services based upon price. They do this not because it is the most profitable, but because they believe it is the easiest way to attract customers. Consumers and Business-to-Business buyers alike may be easily enticed to buy based upon price. Consumers are always hunting for the best bargain and price has a direct impact on whether or not they will buy a product or service. Businesses know that offering the lowest price gives them a competitive advantage against other similar products the customer may be looking at. Big chains like Wal-Mart and Target have the most control over the pricing in their industry. However, to be able to sell at the lowest price, these chains are continually pushing, if not demanding, that their suppliers give them the lower prices as well.

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