Prestige Pricing: Pros & Cons and Examples

I’m sure, at least once in your life, you’ve felt that big brands are trying to rip you off.

They’re trying to offer you products with tripled prices and false promises.

We get really angry about this. We write horrible headlines, statuses, comments and talk, how dishonest these brands are.

But, you know what?

No matter what we say, we always fall for the bait.

We want to be fooled, we still want to consume the product, we still want to be a part of that company.

We can’t imagine our lives without these premium prices.

There’s something really weird about prestige pricing and it has the potential to manipulate the human mind.

Just think for a second:

Do you really think that products of Nike, Adidas, Samsung, Apple, Starbucks, Nest and Arlo are so expensive to produce?

Absolutely, not.

They all use the perfect strategy of prestige pricing (also known as premium pricing and image pricing).

Here comes the question:

Why is premium pricing so effective?

It’s simple.

We just happen to like everything that’s expensive.

Why Does This Strategy Work?

The idea of premium pricing is to set higher prices and convince the buyers that the product has an added value compared to its competitors.

Image pricing has a psychological advantage that companies use to increase sales and product visibility.

It’s a strategy to lure niche customers that associate quality of a product with its price. These are those consumers that define their social status with the things they own.

People obsessed with premium priced products care less about the actual quality and core value.

The main objective of such customers is self-expression and the fact that not everyone can own the product they just bought.

For example, people love to buy overpriced wireless doorbells that have the same functions as those with a 10-20$ price tag.

A Perfect Illustration: How People Perceive Luxury Products 

Prestige Pricing Illustration

Companies That Use Prestige Pricing: Five Examples

The best way to understand the concept of prestige pricing is to analyze worldwide brands and their strategies.

1. Apple

Let’s start with world’s most valuable brand.

Do you remember iPhone 5C that was released in 2013?

Yes, I know you do.

But, We don’t remember it because it was innovative or something mind-blowing.

We remember it because iPhone 5C was a total disaster.

This what Huffington Post had to say about the product:


And a cheap iPhone? Seriously, Apple?

In 2015, Apple kills the 5C production.

Where are we trying to get with this?

iPhone 5C does everything that 5S can (there’s a slight difference in design and performance).

That’s not all.

iPhone is less powerful than Samsung Galaxy (in terms of performance). Plus, iPhone is pricier.

Though, people still prefer to buy the pricier iPhone.

There come’s the logical question:


Because prestige prices make people feel special, extraordinary and valued.

2. Nike

First logical question:

Does Nike sell footwear or a footwear with a famous brand logo?

Let’s make it clear,

People value Nike more than just a quality product, they like the brand’s image and everything it has to offer.

And the price is the least thing they worry about.

It’s better to put it this way:

If people admire your brand and respect its identity, premium pricing will actually help your sales because it shows how valuable your product is.

3. Rolex

Why do people buy the luxurious watches from Rolex?

Can’t other watch brands tell the exact time? Is there something we need to know? Do Rolex watches have some innovative features?

Absolutely not. It’s a regular watch with regular features.

It shows the time as good as, for example, Swatch and Seiko, but there’s something else, that makes the brand so demandable.

Owning a Rolex watch indicates that we’re financially strong. Besides showing the right time, Rolex is a status symbol that clearly shows your social status.

And that’s something everyone wants to feel.

4. Bentley

It’s not a new discovery that luxury car companies love to jack up prices.

For example, Honda Civic and SsangYong Rodius will get you from point A to point B just as smoothly as Bentley Continental.

But people obsessed with  luxury products won’t allow themselves to drive a regular car that can be driven by anyone in the streets.

5. Ralph Lauren

Ralph Lauren is one of the world’s most luxurious clothing brand. The company produces high-end clothes for men, women and children.

Brands like Ralph Lauren, Gucci, Calvin Klein and Giorgio Armani have a higher price point because they represent more than just clothes, these brands have a reputation and that makes a huge difference.

Do you know what these companies do?

They produce their high end products in countries like Bangladesh to keep the production costs as low as possible.

What happens next?

You know that prices in stores are unbelievably high.

What Type Of Businesses Fit Premium Pricing?

The most common industry that uses premium pricing is fashion. Though, it’s not the only place where the strategy can be implemented.

Frankly speaking, premium pricing can be used everywhere if the demand is high and companies sell dull products.

Additionally, to uses this strategy, you don’t have to be a worldwide brand or a legendary organization. Prestige pricing can be effective for companies that limit their production and market them as an exclusive service or a product.

It’s a psychological act that manipulates the human mind, making them believe the product is unique, extraordinary and very valuable.

Hence, image pricing can’t be implemented after the company starts selling its products and services. It’s something that must be used from the very beginning. 

Let’s look at it this way:

A low-end business rarely and I mean, rarely becomes a luxury brand.

How to Become and Maintain Your Prestige Price Position

  1. Become a Premium Provider. Identify the products that have the ability to become high-end and then highlight those products using marketing. Don’t get overwhelmed with the idea that offering a regular product can become something elite. Only premium stuff have premium prices.
  2. Define Your Value. As bad as it sounds, being a premium provider isn’t enough to encourage customers buy your prestige priced goods. Explain why your prices are high, explain why should they buy it and show them the difference between your product and the competitors.
  3. Go The Extra Mile. Thousands of companies state that they offer premium services because they staff is friendly and kind. That’s not all. Ambitious companies offer more than just a friendly staff. These employees are fully aware of customer needs and they anticipate them even before it actually erupts.
  4. Don’t Sacrifice Price. If things are starting to wrong and your “heavenly” plan is falling apart, don’t drop the price (at least, instantly). Be as clear as possible, explain why your services and products are worth the investment and ask for feedback. Plus, you shouldn’t stop here. Offer some special deals to your loyal, long-term customers and be more flexible with them. Make a list of such customers and let the employees know to approach them a bit differently.
  5. Don’t Become A Part Of The Lower Price Game. That’s the gesture of a weak. Weaker competitors always cut prices to earn business. Don’t become like them. This will instantly kill you off as a brand and it’ll be really hard to recover from this severe damage. Our task is to build and maintain a brand that keeps up with your prestige pricing strategy.
  6. Prestigious Image Of Your Brand. In order to reinforce premium prices, it’s crucial to build a prestigious brand image. With the right environment and customer experience, your image prices will become more legitimate and acceptable. But, building a prestigious brand doesn’t come easy, it’s essential to deliver promises and transmit your company’s core value.
  7. Giving The Prices The Right Image. Your prestige prices need optimization. You can’t just go ahead and say “Hey, I like this price, I think, it’ll work great!”. Price optimization needs lots of research and observation. Some companies use online surveys like “Survey Monkey” to find, whether people are willing to pay specific prices or not. Though, these online surveys aren’t always accurate.

Pros and Cons of Prestige Pricing

While some companies hesitate and feel risky about using prestige pricing strategy, let’s lighten their burden and explain what advantages and disadvantages this strategy has.

Advantages of Prestige Pricing


One of the biggest benefits of premium pricing?

Competitors Advantage.

Spending lots of money and using the right advertising strategies to correctly promote our brand’s premium products is a great way to gain the upper hand in competition.

Plus, it will make harder for other companies to enter the market and compete with the same strategies and ideas.


Every business owner wants to raise product awareness, and prestige pricing might be the top choice. As we said, premium prices make people crave for your product and they’ll do anything to own it. And when they, they’ll make sure that the whole world knows it.

As a result, product buzz increases demand. Demand means the product is desirable. Desirable products are mostly quality work.

With all said above, premium prices do help in terms of awareness and general interest.


The most obvious one.

The favorite part of small business owners.

Though, it’s not simple as it sounds. Like, set higher prices and the profits will raise.

Companies that use premium pricing strategy must invest lots of money in marketing because the brand has to succeed in developing a “premium company” name.

Cons of Prestige Pricing

Yes, premium pricing sounds like easy to use, profitable strategy and a great way to develop your business. But, it has some drawbacks. Drawbacks that can severely harm your company.


The cost of effective marketing is a serious premium pricing drawback. If the business owners aren’t eager to invest sufficient funds, it’s impossible to create a premium brand image.

Let’s put it this way:

Customers won’t pay high prices for things that they have never heard of. So, if you’re not capable of funding your marketing campaign, it’s better to avoid this strategy and stick with regular, competitive price.


Image pricing can be difficult for businesses with huge competition. Your competitors can do two things, and both are dangerous:

  1. Draw attention away from your products and services by providing better alternatives
  2. Create a reality where your products are bad, useless and less exciting

Either one of them or both happens, it can dramatically affect your customer’s attitude (they won’t be willing to pay).

Hence, some companies implement premium pricing for a limited time and abandon it as soon as competitor companies arrive.


As we said earlier, prestige pricing indicates to larger profits.

But that’s not true for every business, around.

Sometimes, image pricing limits our customer base, shrinks it and eventually, decreases annual income.

Why does this happen?

Let’s get back to the name of the concept, “prestige pricing”:

That means “these products aren’t for everyone”, so only some can afford to own it. As a result, we have to say “NO” to lots of people.

If you’re planning to chose premium pricing as your main marketing strategy, you have target people from the upper class.

And that’s a must.

The Key to Prestige Price Is Consistency 

As we said, prestige pricing is not something that only a big, famous brand can use.

But, it’s not like you can jack the price up and become a premium seller. You have to take cautions steps and make smart decisions. Only then you can implement the premium pricing strategy and start working differently.

If you can effectively communicate your brands value, explain why should people pay more for your premium priced goods and how exactly will it be beneficial, customers will keep coming back.

The key is to maintain both credibility and higher margins at the same time. As with the prices, the quality must be top-level. 

If the quality doesn’t accompany prices, it’s only a matter of time before the brand starts falling apart. So, build trust and customer relationships, offer quality products with optimal prices and in no time, you’ll be leading the competition.

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