What is Premium pricing?
Answers: Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or to hand, the high run out of the possible price range to assistance attract status-conscious consumers. A few examples of companies which partake in premium pricing surrounded by the marketplace include Rolex and Bentley. People will buy a premium priced product because:
1. They believe the large price is an indication of good trait;
2. They believe it to be a sign of self worth - "They are worth it" - It authenticates their success and status - It is a signal to others that they are a bough of an exclusive group; and
3. They require flawless performance within this application - The cost of product malfunction is too giant to buy anything but the best - example : heart pacemaker
The term Goldilocks pricing is commonly used to describe the practice of providing a "gold-plated" performance of a product at a premium price in demand to make the next-lower priced selection look more reasonably priced; for example, encouraging customers to see business-class airline sitting room as good plus for money by offering an even higher priced first-class route. Similarly, third-class railway carriages contained by Victorian England are said to have be built without window, not so much to punish third-class customers (for which there be no economic incentive), as to motivate those who could afford second-class chairs to pay for them instead of taking the cheaper way out. This is also known as a potential result of price nouns.
The name derives from the Goldilocks story, within which Goldilocks chose neither the hottest nor the coldest porridge, but instead the one that was "basically right". More technically, this form of pricing exploits the general cognitive bias of aversion to extremes. This practice is specified academically as "framing". By providing three options (i.e. small, surrounding substance, and large; first, business, and coach classes) you can knead the consumer into choosing the middle choice and thus, the middle choice should yield the most profit to the street trader, since it is the most chosen option.