Performance-based and functional contracting in value-based solution selling

Johanna Liinamaa, Mika Viljanen, Anna Hurmerinta, Maria Ivanova-Gongne, Hanna Elina Luotola, Magnus Gustafsson

Research output: Contribution to journalArticleScientificpeer-review

36 Citations (Scopus)

Abstract

Solution sellers increasingly use value-based selling and pricing strategies to market and monetize their offerings. Performance-based contracts constitute a key component of value-based pricing strategies. The present study explores solutions to the challenges solution sellers may encounter while developing value-based selling processes and implementing value-based pricing. The research design builds on the explorative action research methodology. While our study confirms earlier research on barriers to value-based selling and pricing, we also identify legal-technical contract design issues as an important but previously unknown barrier. We further identify integration as the appropriate theoretical framework for conceptualizing the barriers. Finally, we identify functional contracting as a solution for value-based sellers to overcome the barriers arising from deficient precontractual integration. The study highlights the role of contracts as barriers to be overcome by legal sales efforts when implementing value-based selling and pricing strategies. Further, the study stresses the utility of functional contracting in pre-contractual integration.
Original languageUndefined/Unknown
Pages (from-to)37–49
JournalIndustrial Marketing Management
Volume59
DOIs
Publication statusPublished - 2016
MoE publication typeA1 Journal article-refereed

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