Many people often assume that a high price or cost is proportional to high quality. In addition, people generally have a tendency to believe that a business places high costs on a product or service for a specific reason.
That mentality is the basis for a pricing strategy known as prestige pricing. This is a tactic that businesses use to shape the perception of a premium brand by charging a premium price.
Understanding Prestige Pricing in Marketing Products
Prestige pricing, which can also be called premium pricing or image pricing, is when a company sells a product or service at a high price to give consumers the impression that the product is of high value. In most cases, businesses do this to attract consumers who are interested in projecting a high status or prestigious image.
This strategy is often closely related to brand perception. Companies that take this approach often have products that are recognized for their superior quality or value that they add to the lives of customers. The pricing method is based on the assumption that consumers will feel more value at a higher price so that high-priced products are commonplace.
Prestige pricing strategies may vary depending on the brand's objectives and the company's offerings. If you want to implement this strategy, take a look at the competitors in your market and see how they are pricing products that are similar to your business. With a unique value proposition that differentiates your product from the competition, you will be able to justify a higher price point.
Pros and Cons of Prestige Pricing
Although it is often perceived as something commonplace, prestige pricing is also a pros and cons in its application in the marketing process. In its implementation, there are various opinions that arise regarding the reputation of the business to the customer's response.
- Pros: Increased Revenue
The most obvious advantage is increased revenue. Successful prestige pricing can also improve your business' reputation in the marketplace, especially if customers are willing to post about your brand on social media. This type of organic marketing is very valuable, because it comes from customers who have experience with your product, not the company's internal marketing team.
- Pros: Brand Differentiation
Prestige pricing can also help differentiate your brand from other brands that may be trying to capture the same target market. Done right, prestige pricing can help differentiate and group your brand from similar offerings effectively.
While there are slightly lower priced items that may be similar to your own, prestige pricing can set a different level of product for the brands and products you offer.
- Cons: Higher Marketing Cost
Disadvantages of initial marketing costs, where you have to spend on consistent and comprehensive marketing to establish your business as a premium brand and convince buyers that your product is worth the cost. If other, similar brands had more success with this approach, you might end up spending a lot of that for minimal results.
- Cons: Decreased Sales Volume
Sales volume is another possible loss. Because your product has a higher base price point, your overall target consumer or customer shrinks because you are targeting a smaller segment of high-end buyers.
As a result, it is critically important to find price points that generate sustainable income based on specific market demographics, and develop ways to expand into new territories or buyer segments to ensure revenue is not monotonous.
What is a Prestige Pricing Strategy?
Prestige pricing strategy focuses on how to convince potential buyers that the product or service you offer is worth the price offered. For prestige pricing to be effective, businesses need an approach that supports the value of prospective offerings.
The simplest way that is usually applied is to adjust the customer's subconscious perception of what to give from a prestigious product. The following are four key elements of a prestige pricing strategy that a company will implement:
1. Forming an image or image
It is important to build a brand image that sets you apart from the competition and positions your product or service as a highly valued option in the marketplace. One example is a brand has an image or image that is known for its usability and durability.
This allows the company to charge significantly higher fees than its closest competitors, despite the fact that many similar brands share similar features. This means the company is spending time and money to shape its brand image.
Brand image or brand can be formed through websites, social media, and sales channels. All these means must position their products as products used by the target market and want the best so that customers are willing to pay for it.
The same strategy applies to building your brand if you want to do prestige pricing. First, find a specific niche or target market: which product or service range do you focus on?
Next, define a set of target customers and create a consistent brand image and experience across all your channels. Finally, provide a product that meets initial expectations and gets people to talk about your brand, which in turn can strengthen your image.
2. Increase perceived value
Next you need to increase the perceived value of your most popular offerings by creating a targeted pricing strategy. You can consider psychological pricing by taking advantage of consumers' perceptions of a product's value based on its price.
The psychology of the number nine (9) offers the clearest example: a product priced at Rp. 19,000 instead of Rp. 20,000 is often perceived as more affordable and of slightly lower quality.
If you want to create the impression of a premium product, round numbers are the right choice. While limiting your pool of potential buyers, it subconsciously creates a greater sense of value among customers and sets your brand apart from competitors.
3. Make the best choice
The choice of users or consumers is very important in building a premium brand. The goal is to provide the user with a set of choices that naturally lead to your preferred option. This concept is sometimes called “Magicians Choice” where the user is given a choice that always leads to the same result.
A similar choice strategy can be applied to prestige pricing by offering different price points for different product categories. Naturally, you can divert buyers to the highest revenue generators and also capture high-end customers.
4. Limit supply carefully
Limited supply is also a key component of an effective prestige pricing strategy. At first glance, it makes more sense if a product is available to everyone who wants it and can afford it. This short-term income often outweighs the long-term benefits of generating excitement for a product that is not widely available.
By carefully limiting supply to increase demand, you can also raise prices and create more consistent interest in your brand. Remember not to take this situation too far, otherwise if no one can get your hands on your product, then customers will be lost to competition.
Implementing a prestige pricing strategy is not an easy thing to do, but it has the potential to provide good profits if successful. Therefore, it is important for companies to understand the basic principles that form the basis for determining pricing strategies that company professionals can learn through the Marketing Pricing Strategy program.
Many people often assume that a high price or cost is proportional to high quality. In addition, people generally have a tendency to believe that a business places high costs on a product or service for a specific reason.
That mentality is the basis for a pricing strategy known as prestige pricing. This is a tactic that businesses use to shape the perception of a premium brand by charging a premium price.
Understanding Prestige Pricing in Marketing Products
Prestige pricing, which can also be called premium pricing or image pricing, is when a company sells a product or service at a high price to give consumers the impression that the product is of high value. In most cases, businesses do this to attract consumers who are interested in projecting a high status or prestigious image.
This strategy is often closely related to brand perception. Companies that take this approach often have products that are recognized for their superior quality or value that they add to the lives of customers. The pricing method is based on the assumption that consumers will feel more value at a higher price so that high-priced products are commonplace.
Prestige pricing strategies may vary depending on the brand's objectives and the company's offerings. If you want to implement this strategy, take a look at the competitors in your market and see how they are pricing products that are similar to your business. With a unique value proposition that differentiates your product from the competition, you will be able to justify a higher price point.
Pros and Cons of Prestige Pricing
Although it is often perceived as something commonplace, prestige pricing is also a pros and cons in its application in the marketing process. In its implementation, there are various opinions that arise regarding the reputation of the business to the customer's response.
- Pros: Increased Revenue
The most obvious advantage is increased revenue. Successful prestige pricing can also improve your business' reputation in the marketplace, especially if customers are willing to post about your brand on social media. This type of organic marketing is very valuable, because it comes from customers who have experience with your product, not the company's internal marketing team.
- Pros: Brand Differentiation
Prestige pricing can also help differentiate your brand from other brands that may be trying to capture the same target market. Done right, prestige pricing can help differentiate and group your brand from similar offerings effectively.
While there are slightly lower priced items that may be similar to your own, prestige pricing can set a different level of product for the brands and products you offer.
- Cons: Higher Marketing Cost
Disadvantages of initial marketing costs, where you have to spend on consistent and comprehensive marketing to establish your business as a premium brand and convince buyers that your product is worth the cost. If other, similar brands had more success with this approach, you might end up spending a lot of that for minimal results.
- Cons: Decreased Sales Volume
Sales volume is another possible loss. Because your product has a higher base price point, your overall target consumer or customer shrinks because you are targeting a smaller segment of high-end buyers.
As a result, it is critically important to find price points that generate sustainable income based on specific market demographics, and develop ways to expand into new territories or buyer segments to ensure revenue is not monotonous.
What is a Prestige Pricing Strategy?
Prestige pricing strategy focuses on how to convince potential buyers that the product or service you offer is worth the price offered. For prestige pricing to be effective, businesses need an approach that supports the value of prospective offerings.
The simplest way that is usually applied is to adjust the customer's subconscious perception of what to give from a prestigious product. The following are four key elements of a prestige pricing strategy that a company will implement:
1. Forming an image or image
It is important to build a brand image that sets you apart from the competition and positions your product or service as a highly valued option in the marketplace. One example is a brand has an image or image that is known for its usability and durability.
This allows the company to charge significantly higher fees than its closest competitors, despite the fact that many similar brands share similar features. This means the company is spending time and money to shape its brand image.
Brand image or brand can be formed through websites, social media, and sales channels. All these means must position their products as products used by the target market and want the best so that customers are willing to pay for it.
The same strategy applies to building your brand if you want to do prestige pricing. First, find a specific niche or target market: which product or service range do you focus on?
Next, define a set of target customers and create a consistent brand image and experience across all your channels. Finally, provide a product that meets initial expectations and gets people to talk about your brand, which in turn can strengthen your image.
2. Increase perceived value
Next you need to increase the perceived value of your most popular offerings by creating a targeted pricing strategy. You can consider psychological pricing by taking advantage of consumers' perceptions of a product's value based on its price.
The psychology of the number nine (9) offers the clearest example: a product priced at Rp. 19,000 instead of Rp. 20,000 is often perceived as more affordable and of slightly lower quality.
If you want to create the impression of a premium product, round numbers are the right choice. While limiting your pool of potential buyers, it subconsciously creates a greater sense of value among customers and sets your brand apart from competitors.
3. Make the best choice
The choice of users or consumers is very important in building a premium brand. The goal is to provide the user with a set of choices that naturally lead to your preferred option. This concept is sometimes called “Magicians Choice” where the user is given a choice that always leads to the same result.
A similar choice strategy can be applied to prestige pricing by offering different price points for different product categories. Naturally, you can divert buyers to the highest revenue generators and also capture high-end customers.
4. Limit supply carefully
Limited supply is also a key component of an effective prestige pricing strategy. At first glance, it makes more sense if a product is available to everyone who wants it and can afford it. This short-term income often outweighs the long-term benefits of generating excitement for a product that is not widely available.
By carefully limiting supply to increase demand, you can also raise prices and create more consistent interest in your brand. Remember not to take this situation too far, otherwise if no one can get your hands on your product, then customers will be lost to competition.
Implementing a prestige pricing strategy is not an easy thing to do, but it has the potential to provide good profits if successful. Therefore, it is important for companies to understand the basic principles that form the basis for determining pricing strategies that company professionals can learn through the Marketing Pricing Strategy program.
