The idea behind premium pricing strategies is that products offering more than the average also deserve top price. Luxury items are famous for their premium prices. The real question becomes are they worth the price? If business owners want to sell at premium prices, they need to explain them to the buying public. Luxury brands take advantage of brand perception. Items perceived as rare or special sell at higher prices. Consumers also choose products with premium price tags due to concrete differences in products.
What Makes a Product Premium?
Before choosing the price of a new product, manufacturers must consider several factors.
– Are there are any other products like it available?
– What does it offer that sets it apart?
– Is it a “luxury” brand offering?
All of these questions decide whether the product can make it as a premium item. Marketing is the key to generating a successful product launch. Part of marketing a premium product is focusing on the positives. Instead of discussing the faults of similar products, unapologetically phenomenal products market their own incredible features. This shows that they are comfortable as an industry leader and secure as a luxury brand.
Unique items and services can command almost any price. Couture fashion items sell for more than ten times their production cost on a regular basis, due to the limited numbers available. Pharmaceuticals also sell for incredibly high prices since they are patented and only available from one manufacturer. An item that is completely new to the market automatically qualifies for premium status, but branding is important.
Avoiding Branding Mistakes
A noted discount brand cannot successfully introduce a premium product without some intermediate marketing steps. Luxury and low prices are incompatible in the mind of the consumer. If a business has an established brand that deals with consumption quality goods, it may need to develop a new brand before introducing a top of the line product. Decide on the highest price before bringing a product to market. It is almost impossible to increase a price, but discounting it is always a possibility.
Before dropping prices, consider brand integrity importance. Devaluing a brand is permanent. A tough economy is tough for everyone, but when luxury companies drop prices to compensate, those price drops are permanent. Don’t play the pricing game with competitors. They will quickly find out the hardship that goes along with insufficient cash flow. Stand by the product and reinforce the traits that make it worth the extra cost.
Quantify the Return on Investment
With any product, a company must show buyers a reason to buy. Quantify everything that sets a product apart from any competition. For consumer products, building a brand identity is often enough to validate a higher price tag, but services need more. Customer service is one of the most commonly referenced justifications for premium pricing. Unfortunately, many companies don’t offer truly exceptional customer service. Service is about much more than a warm smile and friendly employees. Good service is encompassed by an ability to anticipate customer needs. Constantly looking for ways to improve customer experiences is an important part of offering the next level in service.
If a product is unique, a luxury item or backed by a superb guarantee of service it certainly deserves to stand as a premium offering. Build a marketing campaign to show off those distinctions, and launch the next big product today.