The premium price is nothing but the product with the highest price in a product category.
The products and brands that are market leaders, command the premium price.
In essence, this pricing is applied to these products because consumers consider them unique and irreplaceable compared to competing products.
Therefore, if a consumer is willing to pay a higher price for a certain product, it means that they perceive the product itself as having quality and uniqueness.
How to apply the premium price
To apply the premium price to every product there is a need for a distinct strategy for each one of them.
It is based on a particular technique: pricing.
It involves setting a selling price higher than the competition in the market.
Companies use their brand to apply higher prices for the same products that competitors sell at lower prices.
They place great emphasis on the perceived value of their products.
When the company has achieved a good level of customer loyalty, it is able to sustain a premium price for its products so as to avoid competition based on price.
The Advantages of Premium Pricing
Premium pricing, when used with proper planning can be very beneficial for a company and can bring several advantages, which include:
- Increased profits: the company can earn, even from the sale of a single product, almost the same profit as it would from selling multiple products at a lower price;
- Competitive advantage: by choosing to implement premium pricing, the company gains a competitive edge over its competitors. Most consumers judge the quality of a product based on its price. Therefore, if the product is priced higher, customers perceive it as a high-quality product;
- Increased brand awareness: the premium pricing strategy helps to enhance a brand's awareness, elevating a product's reputation in the eyes of the customer.
In conclusion, premium pricing allows for significant visibility of products, encouraging customers to purchase even if the price is higher than necessary.
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