Prestige pricing

Prestige pricing is a marketing strategy where prices are set higher than normal because lower prices will hurt instead of helping sales, such as for high end perfumes,jewelry, clothing,cars etc. Also known as image pricing.

Why does it work?

• Customers will pay higher prices for the right image
• Even if it doesn't reflect the value, they will still be willing to buy it
• It gives companies a psychological advantage
• Customers believe that it is higher quality because it is more expensive.
• Increased trust in the brand

Advantages

• It can attract customers 
• Earn more profit-if your product is high end you can charge more for it
• In this instance, expensive=GOOD!

Disadvantages

• If you offer discounts it can backfire, and as a result these may happen:
• Your brand will lose trust and credibility 
• You will lose popularity
• Sales will dramatically decline
• Customers might believe the actual value of your product is poor.

This rule only applies to high end products. For example, it obviously wouldn't work if you priced a hot dog at £100 and call it a premium hot dog, right?