Stella Artois advertises its beer as ‘reassuringly expensive’. I love that. They are proud of their high price. They are selling the benefit of a high price. And they are clearly differentiating themselves from other brands that might emphasise value in terms of low price. The term ‘reassuringly expensive’ puts the beer in the same league as other high-class and sought-after products. It’s like saying that Stella Artois is the Rolls-Royce of beers.

Despite the law of supply and demand, a high price can actually increase sales.

Of course this doesn’t apply to simple commodities, because nobody would pay a high price when exactly the same thing is on sale at a lower price. The point is that most products and services are not simple commodities such as sugar or oil or wheat. Every product and service is different in some way than its rivals or its equivalent. One computer game is not quite the same as another; one architectural service is not exactly the same as the alternative on offer; each musical performance is unique. A feature film made by one director will be different than another made to the same specification. The choice facing customers is much more complex and varied. Not only is the direct product or service different in some way, but the intangibles associated with it are also different. The status of the brand and the kudos attached to owning this – rather than that – is different. The level of service bundled with the product, even the packaging, is different. There are also differences in the sales experience, and the peace of mind resulting from choosing the ‘right’ thing.

There’s much to play for in the game of selling benefits, customer perception, and pricing.

Are your prices set at a level to convey the same message? Consequently, do customers regard your products as in the league of Rolls-Royces – or the cheap runabout?

There’s a tremendous amount of psychology involved in pricing. As mentioned above, a high price can actually be an attraction to buy. Not only can a higher price be reassuring, it can also have ‘show-off value’. This is the phenomenon of ‘conspicuous consumption’, signalling the buyer’s wealth through the purchase. The consumer is using goods and services to demonstrate publicly their ability to splash out at the top of the range.

Another pricing technique when offering a range of products at various prices is to make sure that there is at least one product with an extremely high price. The purpose of this is not necessarily to sell that product but to make the other prices look quite reasonable in comparison. For example, a wine list will often include a very expensive bottle of wine. It may be that the restaurant doesn’t even have a bottle of this particular wine available in its cellar, but that doesn’t matter. The purpose of that bottle is to sell the others, and particularly to sell the more expensive wines in the range because it moves the average price upwards.

Would you like your products to be regarded as ‘reassuringly expensive’?

Key Points

Pricing influences customers’ perception and view of quality. A high price can reassure customers about quality and may increase sales.

What to do next

• Consider differentiating yourself from rivals through a high price policy. Which customers would be reassured by this?