Sunday, January 24, 2010

Today's Good Marketing Tip: Premium Pricing

Pricing can have a significant impact on your sales.  But today we're not talking about discounting.  Rather, we're talking about raising prices.  I know, you're probably saying, "There's so much price competition that I have no option but to discount my product!"  This is pretty common but I'm here to tell you that many companies have been using premium pricing strategies and continually outshine others in their industry.

Take a look at a Bently or Rolex watches and you'll see what I mean.  Are these cars and watches really that much better than similar products in their niche?  They may have some advantages but hardly enough to justify the outrageous prices that accompany them.  This is because they are using a premium pricing strategy that works.

A great example is when you buy a bottle of wine.  Unless you've gotten a recommendation or stick with the same wine on a regular basis, premium pricing can play a major role in your buying decision.  Trust me, I've purchased expensive bottles of wine and they rarely justify the price.  I'm no wine expert but I know what drives buying behavior.  Two similar bottle, one costs $30 bucks and the other $7.99 and your gut says that the more expensive wine tastes better.

If you're struggling with moving products off your shelves or web site, consider a premium pricing strategy. Try testing the strategy with an aspect of your product line and tell potential consumers that it's very limited (scarce).  This should help you test the premium pricing strategy and see if it increases sales.


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