Customers will tell you price is one of the leading motivators when deciding to buy an item. This often leads companies to racing to the bottom, slashing their prices until the profit margin isn’t even there anymore.
But pricing isn’t the roadblock most people think it is.
That’s not how human psychology works. It’s all about value. You want your customer to think of your products not as expensive, but worth the price tag.
Be Smart with Discounts
The market is competitive, with companies slashing their prices to try and lure in new business. It’s a common tactic with products on the lower end, but if you’re selling premium products, you need to be smart with your discounts.
Products that go on sale set a precedent; people will never buy full price. Not only that, your products will exude a cheap vibe against your competitors. Once that reputation sticks, it’s almost impossible to get rid of it.
Instead of discounts to specific products, consider offering free shipping instead. Or once they’ve made their purchase, offer them a voucher towards a new product. Perhaps a small free gift with an order. Just avoid lowering the price of your flagship luxury products.
The Perception of Luxury
When you walk into a Target, you don’t expect to see a handbag for $600. If Walmart even dares to charge more than $10 for a t-shirt, you’re out of there. That’s because these companies are known for their lower price points.
You don’t want to create that vibe with your brand. Instead, you want everything to say luxury. These are just a couple of ways you can achieve this:
This is 100% a must, especially if you are an online-only business. Your website needs to reflect the aesthetic you would expect from expensive items. If it looks cheap or uses the wrong colors, customers will not be willing to pay luxury prices.
Luxury products are marketed in an entirely different way to your standard low-end goods. Your emails should have a professional design that matches your website, and the copy needs to be on point.
You may also want to consider employing old school marketing methods, like mailshots using the traditional postcard. It’s a far more personal approach and cuts through the noise of the average email. Just make
Highlight the level of craftsmanship that goes into your products. Quality materials, hand-crafted details that cannot be reproduced by machines, personalized customer service.
Even if you don’t actually have a physical product (e.g. you’re a SaaS company), think of ways in which you can show you are beyond the basic service. Parade your talented developers on your website and showcase the level of work that goes into your product.
One of the core elements that sells a luxury product is that it’s scarce. Not everyone can get their hands on your expensive goods, that’s the whole point. Just think about the waiting list for the Hermès Birkin. Do not devalue your brand by flooding the market with your luxury product. Or at least create the perception of scarcity in your marketing.
Improve the Value Proposition
This last one may be the best bet for your expensive product. Think of the so-called “value prism”, the concept that calls for you to shine a light through your product, showcasing the process of its creation.
For example, SaaS isn’t just a piece of software. It’s the creation of 5 PhDs in Computer Science, developers with 250 years of industry experience, millions of dollars of R & D, countless hours of testing, you get the gist of it.
The best example of value proposition is perhaps Dyson. Their About Dyson section of their website shows how the man himself went through a ridiculous 5,127 prototypes before launching the world’s first bagless vacuum cleaner. They also highlight their focus on high-tech research, design, and development, and their team of over 1,000 engineers.
Everlane does something very similar and calls its USP ‘Radical Transparency’. They show the customer exactly how much each product costs to make, and even though they market themselves as a ‘cheaper’ alternative to luxury goods, they’re still pretty expensive compared to your average t-shirt.
Now, of course, your product or service may not have quite the same level of history or expertise. It may not be quite as sexy. But there is definitely something you can show off; don’t be afraid to give customers an insight into the design and production process.
Your brand must exude luxury from top to bottom, that’s the takeaway here. Don’t settle for less anywhere in the process, or your customers will 100% notice and they will no longer be willing to pay that premium price point.