Launching a product or service into the market requires many considerations.

Towards the top of the list is the pricing strategy.

This strategic decision should consider factors such as the target market, the positioning strategy and the brand’s perception, which the price of a product can greatly affect.

One brand may choose to lead with a low price strategy for early market penetration, while another brand might choose a premium pricing strategy for enhanced brand perception and long-term advantage.

In this article, you’ll learn what a premium pricing strategy is, how it works, the pros and cons of this approach, and some of the best premium pricing examples.

What Is Premium Pricing Strategy? (Pros, Cons & Best Examples)

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What Is Premium Pricing?

Premium pricing (or prestige pricing as it’s also known) is a pricing strategy used by businesses and brands to elevate the perception of the brand and increase their profit margins by pricing their products higher than the competition.

Higher prices are associated with higher quality and when this message is amplified through integrated marketing, it helps to shape the perception and reputation of the brand as a premium choice.

Why Use A Premium Pricing Strategy

There are many reasons a business might choose to use a premium pricing strategy when setting its prices in the market.

One of the most obvious is the association with quality.

As people, we’re still quite primitive and many of our buying decisions are made in our subconscious.

How the premium pricing strategy works illustrates our primitive nature which you’ll understand through your own buying experiences.