If you want to elevate the status of your product or service, the answer may lie in what you charge, specifically through the use of prestige pricing, which sets a high price for goods based on their image. Prestige pricing uses psychology to influence customer behavior: By charging a higher price than other similar products, it suggests to consumers that the brand is superior to others--and they respond by choosing it over less expensive competitors.

Before using prestige pricing, ask yourself:

1. Will customers pay a premium price for this product or service?
2. Are there already several companies using prestige pricing for this product?
3. Does prestige pricing match the company's short-term and long-term financial goals?
   

Action Steps
The best contacts and resources to help you get it done

Make sure there's a high enough customer demand for prestige pricing

Pricing is only one of many variables that determine what consumers buy and what price they're willing to pay. Before you raise the price of what you offer, examine what's worked in the past and what hasn't. This can tell you what role price played in previous success or failure, and if you have the foundation for premium pricing.

I recommend: Hire a consultant, such as Demand Planning, that's knowledgeable in demand planning to supplement your prestige pricing consulting efforts. Or, train your staff to conduct customer demand planning assessments, through training such as John Galt's Fundamentals of Demand Planning class.

Determine if your target audience can and will pay the higher rates of prestige pricing

No matter how high-quality your product is, if your target customer doesn't have that kind of budget, or isn't likely to spend money on luxury goods, you may not have the leverage to charge a premium price. Find out as much as you can about your customers: How old are they? How much disposable income do they have? How much value do they place on status and reputation? Simple demographics can give you all of this info, and more, helping you determine if your customers will pay more--or shift their loyalty to a less expensive competitor.

I recommend: GeoLytics can help you profile your typical customer, including their spending habits and lifestyles, or get this information straight from your customers, through customer surveys administered by a service like SatisTrack from Insights Research Group.

Hire a consultant for prestige pricing advice

A prestige pricing expert is usually your best source of prestige pricing information. They can help you compare the many types of pricing strategy, determine if your product or service can command a premium price, and advise you on the most effective ways to encourage customers to pay more for your offering.

I recommend: Capture Profits offers pricing consulting for small businesses, and Mimiran offers in-person and online seminars and workshops in strategic pricing.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you want to use prestige pricing for a product or service you already offer, you'll need to improve the quality, appearance or promise to justify the higher price in the minds of consumers. Even with that, they may be leery of a sudden price job, so it's usually more effective to use prestige pricing from the outset.

The higher the price tag of your goods and services, the more customers will resist paying it, no matter how much they want or need it. Product positioning is important because it creates a perception that a product is a necessity. When designing a product positioning strategy, consider:

1. Whether you know how and where your target market buys your kind of product, or uses your type of service
2. If there are innovative ways that you could deliver your product or service that would be less expensive, more effective or easier for your customer.

Action Steps
The best contacts and resources to help you get it done

Define your image

Branding — the name and description you select for your product or service — is critical to keeping yourself on top of your buyers' minds.

I recommend: Sign up for a course in Guerrilla Marketing at NitroMarketing.com. Get real-world advice from a marketer who is required reading in many top MBA programs.

Narrow your focus

The more defined your market, the fewer competitors you will have and the more customers will seek you out.

I recommend: Software, reports and advice from Niche Marketing Research Center will help you select the right niche and reach it effectively. Duct Tape Marketing is a great resource for hands-on marketing ideas, including books and CD Rom instruction.

Be a big fish in a small pond

Consider advertising in specialized publications that are read by target audiences defined by demographics, lifestyle or need. It will increase the chances of your ad will be noticed by people actually in the market for what you have to offer.

I recommend: Read up on Entrepreneur.com's Creative Brainstorming Techniques, then find ways to market big ideas on any budget.

Research your audience

It's worth the investment in market research to find out what people think of your area of product or service. And if your business is already established, what do they already think of you?

I recommend: Biz360 offers a guide that will help you to monitor industry media trends for positioning your product or service within a new market.

Repetition, repetition, repetition

The most successful positioning statements are easy to understand and are repeated over and over and over.

I recommend: Stop worrying about your written materials. Clear Copy Solutions offers copywriting services to help you stand out from the crowd.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  A good publicity strategy helps to grow your reputation as an authority in your field.
• •  Don't compare your product or service to something similar; compare it to what's on the next level, such as private consultation or custom manufacturing.