Prestige Pricing

Prestige pricing (or premium pricing) taps into the belief that a high price means high quality.

Although this relationship exists in many instances, it is not true in all cases. Nonetheless,

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prestige pricing is “a strategy based on the premise that consumers will feel that products below

a particular price will have inferior quality and will not convey a desired status and image.” [17] A

small children’s clothing store that carries only top-of-the-line merchandise would use a prestige

pricing strategy. Clothing from this store would be seen as having a higher perceived value than

clothing from Macy’s but perhaps comparable in value to clothing from Bloomingdale’s,

Nordstrom, or Neiman-Marcus.

Prestige pricing can be very effective at improving brand identity in a particular market.

However, it is not typically used when there is direct competition because such competition

tends to have a downward effect on pricing. Unique products usually have the best chance of

succeeding with prestige pricing.

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