MORADO, CARLO T.

BSBA MM 2-1

Introduction
PRESTIGE PRICING
Is when customers set price floors and will not buy at prices below those floors. Above
price ceilings, items would seem too expensive. The entrepreneur must consider that products must
follow the price floor and ceiling set by the government.

A marketing strategy that involves keeping a high price for a product or service to
communicate high quality or expensive product. It is a technique often employed for high-end
products since low prices can be translated into low quality by target consumers.

Prestige pricing, also known as premium pricing or image pricing, is when a company
prices its products at a higher point to give consumers the perception that the product is high-value.
This pricing strategy is closely tied to brand perception. Companies that take this approach to
pricing often have products that are recognized for their superior quality or the value they add to
the lives of customers. The pricing method works based on the assumption that consumers perceive
more value in the product if it's priced high, and they're willing to pay a higher price for it.

Price is an element that works both ways depending on the target market. A low price might
be appealing to a corporate buyer or a person with a tight budget but a high price can also be
attractive to a person with certain quality demands or a high social status. This is where prestige
pricing, also known as premium pricing, comes into play. Companies that target customers with a
taste for expensive products or just looking for those with the highest quality use prestige pricing
as a method to transmit those attributes.

In order for this strategy to work, companies must actually have a high quality product to
offer or at least one that is perceived as such. If quality perception is low, the strategy will fail. On
the other hand, marketing expenses for such products are much more higher than those of regular
ones, since there has to be a amplified effort to build the brand’s image to create the premium
perception in the consumer’s mind.

A prestige pricing strategy is when companies deliberately set their prices higher than the
actual cost of the product. Fashion, technology, and luxury goods are often priced with this method
because they can be marketed as exclusive or rare. Commodity goods aren't unique items and a
prestige pricing strategy isn't a good fit.

Prestige pricing strategies can vary depending on a company's goals for their brand and
offerings. You'll want to look at competitors in your market to see how they price products that
are similar to yours. With a unique value proposition that differentiates your product from the
competition, you'll be able to justify a higher price point.
Methodology
The product that approve to our group is 3 products then we choose of what are suitable
and easy to innovate and we chose the “Kalabasa Soap. The strategy that we use is the cost-based
price, which we base or focus for the cost of the ingredients of the product that we use, then we
calculated each one of the ingredients of the product. We serve as the available price range to our
costumer that suit to the budget of the costumer. The advantages of the strategy the we use is to
find the price of the customized product which has been produced as per the specification of a
single buyer.

Result and Discussion

NIKE
Nike is a perfect example of a company that effectively uses prestige pricing, which is a
pricing strategy where prices are set higher than normal because lower prices will actually hurt
sales. If customers value the image of your brand and the features of your product over those of
your competitors, then prestige pricing (also known as image pricing) can help you capture value
despite the production costs or quality of the product.

The theory is that customers will pay higher prices for the right image and won’t investigate
whether the price accurately reflects the value. In Nike’s case the brand is what communicates
value, not the specific nature of the product. Prestige pricing has the ability to give companies a
psychological marketing advantage by convincing customers there is added value for the cost, and
it takes advantage of the buyer’s assumption that one brand’s product is of a higher quality than
the competitors because it costs more.
 The decision-makers in the company pursue prestige pricing which is a strategy that allows
you to appear as though you’re a premium brand selling premium products. In some cases, brands
that pursue this strategy are truly superior to their competitors. Usually, however, the level of the
quality difference between the premium brands and the others doesn’t reflect the difference in their
prices. Rather, even if the products are similar, prestige prices are significantly higher than the
market average. Not for all, but prestige pricing might be the best strategy for at least some of the
other products.

Formulated Pricing Strategy

Our approved product is 3 but we chose the Kalabasa Soap because is suitable for us to
make this product. To connect with the prestige pricing, if we set the price to the lower to buy to
our product, the sales which actually hurt. Then, still we couldn't change or set to the lower price
in order to run out the product. The customer really has a value image to the product not because
of the price of the product but because of the quality and feature about the product that we have.

References:
https://www.myaccountingcourse.com/accounting-dictionary/prestige-pricing

https://blog.hubspot.com/sales/prestigepricing?fbclid=IwAR0f_UbmQKqjRkDxO1D8SXMdc4II
cjBGfeKS19xgDJRdsppEn9uJDVsFFKw
https://blog.prisync.com/prestige-pricing/