Premium pricing strategies refer to approaches used to set higher prices for goods and services perceived as exclusive, high-quality or luxury items. The goal is to increase revenue through a perception of elevated prestige and value.
Common techniques include:
- Exclusivity tactics like limited production/distribution
- Emphasis on craftsmanship, materials used in promotional messaging
- Setting prices significantly above average competitors’
- Anchoring techniques to make premium price seem justified
- Cultivating brand cachet through celebrity endorsements, events
Benefits are potential for higher margins and profits versus mass-market alternatives. Risks include price sensitivity deterring potential customers and increased costs to support premium marketing.
Ongoing brand management and product innovation sustains premium status. These strategies rely on cultivating an affluent target base seeking superior experiences versus value-based buyers.
Proper market research ensures premium pricing attracts those willing to pay for perceived high-end qualities rather than seem overpriced to mainstream consumers.