If you are offered two seemingly different (but in reality completely identical) wines in a restaurant, you will taste the more expensive one better . We perceive it as being of higher quality and the High price is an expression brain will guess the rest. If the price is so high, doesn’t that mean the producer is really good ?
If you had visited Costco ‘s website not long ago , you High price is an expression. Would have come across a diamond for almost 13 million crowns. Swiss luxury watchmaker Vacheron Constantin offers its most complicated watch in the world, the 57260 model, for 170 million crowns. The world’s fastest car, the SSC Tuatara, costs 42 million crowns.
High amounts nonchalantly show that the brand is a master in its field . The price and manufacturing experience then create a circle of success. High profits allow for more investment in product innovation and better marketing, which in turn supports attractiveness and thus monetary value (which in turn increases profit, which facilitates investment).
A high price is the best advertisement High price is an expression
Premium products and luxury brands are so closely intertwined that it’s hard to say which came first. That’s why in the past, brands like Burberry, Ralph Lauren, and Gucci have preferred to burn unsold merchandise rather than discount it. As if low prices meant losing face for the entire brand.
A lot of retailers will first release a reasonably priced product, only to spend extreme amounts on advertising. Premium products don’t need that. Everyone wants to belgium phone number library at least see them . The only thing left for the brand is to pay attention to the right one.
The psychology of high prices – why does it actually work?
The effect of premium prices on the sales of cheaper (but still expensive) models is brilliantly explained by Daniel Kahneman with his prospect theory .
Specifically, he argues that when comparing 4 tips to convince an undecided client possible alternatives. Our decision-making is not absolute , but on the contrary, it is always influenced by some reference point . If you want a house to look massive, pitch a tent next to it. If, on the contrary, you want to make it smaller, build a skyscraper next to it. Or in practice: a phone for 21 thousand is too much. However, 21 thousand compared to the price of 35 thousand for the premium version? That might be possible.
In practice, this phenomenon is called the decoy effect
It was first described in the now classic Wall Street Journal study: The Williams-Sonoma Bread Maker . In it, researchers managed to multiply sales of an electric country list bread maker by simply launching it alongside a slightly better, much more expensive version. How simple!
The bait strategy is also effective because it helps eliminate the so-called decision paralysis, which occurs when two very similar products are sold at the same price and leads to a sales drop of up to 31%.