The Core of Luxury Pricing Strategy and Product Demand

The Core of Luxury Pricing Strategy and Product Demand

The decision on what to charge for products goes beyond a simple calculation of costs and a mark-up inclusion. Today, companies must also consider how much the consumer is willing to pay and how they value products. There are various pricing strategies that firms can apply to complement their overall strategies, key among them being a value-based approach that sets the price on the basis on how much consumers believe the product is worth (Rao, Bergen, and Davis, 2000). A luxury or premium price implies that customers are able and willing to pay for the products due to a perception of value. Therefore, luxury pricing strategies…