During an economic crisis, most retailers try to sell overpriced goods eliminate unsold goods. But sometimes this may not be the best solution. Offering products at high premium prices carries several potential benefits.
How is the price made?
Determining the right price is the most important task for any seller. There are several ways to deal with it.
First, you need the price to cover production/operating costs and at the same time bring profit . This approach, so-called cost-based pricing , is relatively simple. However, the resulting price completely ignores the product’s situation on the market. Demand-based pricing, on the other hand, tries to actively reflect the mood of demand. The best example would be the real estate market – the more houses people want and the fewer buildings there are, the higher their value will be. Finally, it is necessary to take into account the offer of the competition ( competitive pricing ).
Because cost-based pricing alone is not enough and the other two approaches require time-consuming and costly market analyses, in practice all three perspectives are often combined .
Expensive vs. priceless sell overpriced goods
The pricing process is always significantly affected by the economic crisis. The current restrictions due to the coronavirus pandemic may lead retailers to believe that they need to “tighten their belts”. In practice, this means eliminating poorly selling products and supporting the rest with well-targeted discounts. After all, slogans such as “complete stock clearance” and “freezingly low prices” are tried and tested on the Czech market.
However, this step, however logical it may seem, may not always be the best . Sales figures are not everything and pricing is not only about maximum profit. 21st century products no longer only support higher and higher consumption. They become part of everyday life, culture, dreams and expectations. A modern successful company is not just an economic entity, but a fully-fledged social institution.
Even overpriced products play a role in this business process:
1) High price encourages the sale of cheaper products
For every expensive product, the belarus phone number library are a dozen cheaper alternatives – those who look will find them. This is a common occurrence in a free market society. However, not everyone realizes that sellers use a similar strategy in their own “internal market”.
Its essence is to release an unattainably expensive item alongside a significantly cheaper , slightly less powerful version. The downgrade of the second product must be how to use google search console in an seo strategy? substantial enough not to compromise the attractiveness of the premium model, but at the same time small enough to maintain functionality. The whole process can be summarized with the slogan: “ A very similar experience, a thousand times cheaper. ”
A great example is the strategy sell overpriced goods
The electronics manufacturer Samsung. Until recently, the flagship Galaxy S20 Ultra was sold for a whopping 35,000 CZK at the time of its launch. However, its little brother Galaxy S20 looked even better, priced at “only” 21,000 CZK. The models differed mainly in display size, pixel density country list and slightly in processor performance – attributes that, while impressive on paper, are not very noticeable in everyday use .
The reason for the paradoxical attractiveness of high prices among the economically dependent population is also the fact that luxury goods are a symbol of success . The desire for prosperity in life is literally lined with Chanel fashion, Cartier jewelry and Tom Ford cosmetics. The opportunity to buy at least one comparably expensive product means being a little closer to fulfilling your dreams.