Boost your revenue and reputation with prestige pricingIf 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:
- Will customers pay a premium price for this product or service?
- Are there already several companies using prestige pricing for this product?
- Does prestige pricing match the company's short-term and long-term financial goals?
Make sure there's a high enough customer demand for prestige pricing
Determine if your target audience can and will pay the higher rates of prestige pricingNo 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.
Hire a consultant for prestige pricing adviceA 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.
- 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.
Copyright © 2014 Business.com, Inc. All Rights Reserved.