In 1443 Christopher Columbus brought the first pineapple to Europe. Due to the rarity of the fruit it was immediately associate with the rich and royal. The royal family loved it so much King Charles posed with it for an official portrait.

Pretty strange right?

Anyway, skip to the 1600s where the pineapple plant was no longer confined to the Caribbean. Guess what… the price dropped. Drastically.

Even though the pineapple was the same tasty fruit it had always been, its royal status disappeared overnight. Why? Because the price was lowered.

Where is the pineapple now?

Don’t get me wrong I love a good pineapple, but when was the last time you actually went and bought one? We buy bananas, apples, grapes and the odd kiwi… but not pineapple. How has this fruit gone from royalty to being associated with the juice served at hotel breakfast buffets?

The answer: price = perception and perception = value.

To lower the price is to lower the perception of its value.

What does this have to do with marketing?

“We have more functionality than our competitors”,
“we add more value”,
“we offer more support”,
“we source local produce” (the list goes on),
“… and we’re cheaper.

Sound familiar?

If so, the problem lies within the words – “we’re cheaper”. If your product is superior to another why is it cheaper? The human brain can’t comprehend how something is cheap and valuable, so subconsciously writes your brand off as mistaken, or worse, a lie.

People think they want value and quality – but without the reinforcement of price, quality becomes strangely ambiguous.

6 benefits of premium pricing

1. Investment

When someone spends more than the bare minimum on a product it’s an investment. They’re invested in the brand and take pride in the purchase. For example: if you buy an online course for £10, there’s a good chance you won’t finish it. It’s written off as an impulse purchase and never thought about again.

Now, if you buy a course for £200 that’s a different story. It could be exactly the same as the £10 course with one key difference. Price.

Due to the higher price users take their time with the purchase. They read reviews and work out what they want to gain from the content. When it comes to the purchase, you bet they are going to finish the course because they are invested.

So why does the £200 course get a better response than the £10 course, even if they are identical?

The Self-Fulfilling Prophecy (SFP).

In every aspect of life, people have an initial perception of something. The SFP simply suggests that this perception manifests itself and determines the outcome. If you have a positive perception and expect something to be good, you’ll only look for the good things. If you expect something to be bad, you go out of your way to find the negatives. It takes a lot of work to change the initial perception of the prophet (or customer, as they are more frequently referred to).

In short, price alters the users initial perception – and therefore their whole experience.    

2. Quality

If you pay more for clothes they won’t shrink in the tumble dryer. If you pay more for a consultant they’ll make more money for your business. It’s common correlation, which has been thrust upon us all our lives.

If you have something superior to your competitors, tell customers through price. It’s how they were taught to listen.

3. The differentiator

“We spend more money on something because it’s better, right? The manufacturers must have some secret we don’t know about, which justifies why I should pay above and beyond”.

In a crowded marketplace, a higher price can be used as a differentiator. Even if your product matches up against those of a competitor, why not use the ‘common correlation’ mentioned above to give your brand the edge? It’s worth a thought.

4. Relationships

When someone repeatedly pays more for a brand – you’ve got loyalty. From this point on (unless you do something to seriously piss them off, or get complacent) this person will remain loyal to you.

Relationships are something every business strives for. They are the difference between selling one item to one person and becoming the exclusive provider of that product / service for the rest of their lives. Hence the term and important metric ‘life time value’.

Once more, this person is now an advocate for your brand. No-one pays extra without bragging rights packaged and ready to go.

This sort of cheerleading ONLY happens with higher ticket items. When was the last time you heard someone say “I couldn’t live without Tesco’s own brand baked beans”? No, it’s my man Heinz.

I honestly can’t taste the difference but I buy them anyway. Price affects us all.

5. Scarcity

This one’s simple. The higher the price, the less people can afford it. Therefore less are made. And when less of something is made…. people want it more.

6. Discouts

Groupon has this sussed. They place the so-called ‘discounted’ value, right next to the ‘actual’ price with a massive strike through it.

In many cases, this solves the ‘investment’ dilemma above. Peoples’ brains can now comprehend that they’re getting value and quality because they can see the ‘actual’ price of something, therefore it’s not a lie.

To make things even better they add some scarcity to the mix. “You can get this quality product at a discounted price, but you have to get it right now.”


Somehow Groupon has managed to cram all 6 benefits of premium pricing into one platform. Well played Groupon.


[d]D[/d]on’t try and win on all fronts. If you’re superior to your competitors, let the price do the talking.