The Premium Effect

Understand Your Buyer > How to Engage > The Premium Effect

What is it?

Having a higher priced version of your offering can make the lesser priced versions seem better value and of a higher quality by association. Whilst not many still purchase your premium offering, a premium offering can drive sales at the lower end of your offering.


Why does it work?

It works because it anchors your potential buyers to a much higher price point which makes the lesser offering seem like a great deal.

If you thought a wheelbarrow was perhaps £20 and found a supplier who has a top of the range £150 wheel barrow and an “entry level” £45 wheelbarrow, then you are more happy to buy the £45 version despite it being double your expectation as its so much “cheaper” than the £150 version.

It also implies a higher level of quality. If the seller offers a £150 version of their product then surely some of the quality of that makes it’s way into the £45 product?


What can you do about it?

Considering your current offering, could you create an all out maximum value and maximum price high end version that includes everything?

How could you create a higher value offering that will deliver on the value as well as help to raise the price expectation for your entry level items?


See also

the premium effect



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