What Is Prestige Pricing?
Prestige pricing, which is sometimes also known as image pricing or premium pricing, is a pricing strategy where an organization purposely puts a product or service at a higher price point. This is usually to provide the consumer with the idea that the product is of higher quality.
By and large, this is a pricing strategy used by companies and organizations that are already recognized within the market for having a higher quality product than their competitors.
It’s often strongly connected to the consumer’s brand perception of that company or organization. It can also be heavily tied to the quality of a product or the added value that they bring to a consumer’s life.
A Prestige Pricing Example
Apple is one of the most common examples that is to demonstrate the concept of prestige pricing. Apple has shown that by pricing their products higher than their competitors and having a strong brand identity, they can increase profits.
Apple takes home around 60% of all smartphone profits – yet they only have 24% of the smartphone market.
While prestige pricing is not the only reason for Apple’s success, it accounts for a large chunk of it.
What Prestige Pricing Strategies Are There?
There are many ways to create a prestige pricing strategy for your business. Here are a few of the most common ones.
This is very common on the internet, especially with SaaS products. By creating pricing tiers and showing the advantages and features that come as an extra for the higher tiers, you will tempt consumers to buy into the more expensive tier of your product.
This is a strategy that companies like Nike employ all the time. With a chain of celebrity endorsements and a strong brand identity, organizations like this can sell their products at a higher price than many of their competitors.