Companies utilize various pricing strategies when marketing their products to customers and one of these pricing strategies is Prestige pricing. Pricing is one of the most important P’s of the marketing mix.

Generally, in order to identify the optimum price, marketers will take into account labor, production costs and advertising expenses. Once these costs are considered, then the company can keep a minimum profit mark up. However, several companies prefer to adopt a prestige pricing strategy, as they count on the idea that ‘’expensive’’ is perceived by customer as “high quality”.

Home » MARKETING MANAGEMENT » Prestige pricing and its application in MarketingPrestige pricing and its application in MarketingDecember 26, 2017 By Hitesh Bhasin Tagged With: Marketing management articles

Companies utilize various pricing strategies when marketing their products to customers and one of these pricing strategies is Prestige pricing. Pricing is one of the most important P’s of the marketing mix.

Generally, in order to identify the optimum price, marketers will take into account labor, production costs and advertising expenses. Once these costs are considered, then the company can keep a minimum profit mark up. However, several companies prefer to adopt a prestige pricing strategy, as they count on the idea that ‘’expensive’’ is perceived by customer as “high quality”.

Prestige pricing

For example – If the cost price of an Adidas product is X, then the market price might be X + 50%. Adidas can keep the price at X + 20%, but then the price range will be equal to Puma, which is a lesser reputed brand. Hence, to give the impression that Adidas is really premium and that its products will be premium too, Adidas keeps the price as X + 50%. The day Adidas drops prices, it will slowly start losing its brand image too.