A prestige pricing is setting prices at an artificially high level to convey an image of quality. Prestige pricing is used particularly when buyers associate a higher price with higher quality. Standard product categories in which selected products are prestige priced include cars, perfumes, liquor and jewelry . Prestige pricing set retail prices that are high, relative to competing marks. The higher price suggests higher product quality, congruent with the strength of the price-quality association in consumers' minds. It can also provide the product with a measure of prestige or status relative to competing marks .
"The final category of pricing objectives, unrelated to either profitability or sales volume, is prestige objectives. Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers. Such objectives reflect marketers' recognition of the role of price in creating an overall image of the firm and its product offerings. Prestige objectives affect the price tags of such products as Waterford crystal. Alfa Romeo sports cars, Omega Watches, and Tifanny jewellery. When a perfume marketer sets a price of $400 or more per ounce, this choice reflects an emphasis on image far more than the cost of ingredients. Analyses have shown that ingredients account for less than 5 percent od a perfume's cost. Thus, advertisements for Joy that promote the fragrance as the "costliest perfume in the world" use price to promote product prestige. Diamond jewellery also uses prestige pricing to convey an image of quality and timelessness" .
Pricing of products
The pricing of products is mainly based on the following factors :
- What are customers prepared to pay
- What are the competitors charging
- What do the individual components of the products cost when added together
- Will the product make a profit
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Author: Gabriela Wojtaszek