If you’ve ever enjoyed a microbrew beer instead of the “dollar draft” at your local watering hole, paid $5.00 for a coffee beverage at Starbucks, or bought a pair of designer jeans, you understand that sometimes a customer doesn’t always purchase the cheapest option. In some cases, the product is superior, and as such earns its higher price. In other cases, a marketing strategy called “premium pricing” is at work.
To explain this as simply as possible, premium pricing is the practice of setting a product or service’s price higher than the price of comparable products to give customers the idea that the product must have an unusually high quality or reputation. While this strategy isn’t always appropriate, it is certainly something you may want to keep in mind when you put together the marketing plan for your business. Keep in mind these tips and you may be able to get a higher price for your product or service.
- Define Your Value – This means you need to show your customers and potential customers what makes your product unique and worth a higher price. A microbrew may do this by emphasizing the use of all-natural ingredients, small batch brewing and advanced techniques. Determine what your company offers that is different from your competitors and emphasize these as added values.
- Emphasize Customer Service – Many brands that come to be known as premium do so through increased attention to customer service. If you are charging more for a comparable product to your competition, you need to use your customer service skills to win over potential customers.
- Don’t Play the Low Price Game – No matter what business you are in, someone is likely going to come along and undercut you on price. Stand your ground and continue working on building your image. If you are serious about building this premium image this can pay off in the long run.
- Focus Your Marketing – Remember, if you are charging a premium price, you are marketing to a different demographic than when you are selling a value-priced product. Keep your ideal customer in mind and make sure you are advertising to the right market.
- Build a Following – If you have a premium product or service, you need to focus on building a “tribe” of customers who are devoted to you. Hire freelance writers to start a blog, participate in social media and do everything you can to network with potential fans.
Remember, this approach can be a difficult one to follow and maintain. It requires you to look at the long term rather than the short term when it comes to building your business. When it works, you will have a higher profit margin and your company will develop a positive reputation—just like those fancy $8.00 microbrews.
Tracy S is a freelance writer available on WriterAccess, a marketplace where clients and expert writers connect for assignments.