Welcome!
Luxury Pricing
Dr. Satyendra Singh
Professor, Marketing & International Business
University of Winnipeg, CANADA
https://sites.google.com/view/drsatsingh
s.singh@uwinnipeg.ca
Context
We do not talk about pricing in luxury as it’s not one-Dimensional
Difficult to price symbolic value. Unquantifiable! So no comparison. Freedom
Gift is a major part of luxury products
People buy luxury products infrequently, so forget
We do not sell luxury, people buy luxury; it’s offer marketing (not demand)
We sell price, not luxury goods.
Price is not publicly advertised. If so, it’d proclaim its dream value or set price level
Internet dilemma. Grey market
We cannot just add gold/diamond and ↑ price, ↑ value
Clients are connoisseurs
True luxury has no predetermined price. Priceless. Freedom to set price.
Elasticity coefficient: negative, null, positive
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Pricing depends on…
Positioning of the luxury. True/intermediate/accessible.
Brand identity. Semiotic consumption values. Semiotic veracity.
Ratio of functional and dream part. Perceived value
Reverse/Cost+ pricing. Premiums (100%-200%):
Exclusivity, scarcity, dream (Hermès)
Brand heritage and prestige (Rolex)
Craftsmanship and quality (Saville Row)
Unique design and Aesthetic (LV)
Customization (Brioni)
Customer experience (Cartier Jewellery, personal consultation)
…
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Pricing depends on
Operating cost, custom duty, foreign exchange
Operating cost (retailing + staff) = 30%
Distributors need +60% margin (retail co-efficient 2.4-2.6)
HK, SP, Guam and Panama 🡪 no custom duty
Duty-free shops 🡪 20% cheaper
Price = all costs (eg. material, production, duty, tax…) + premiums…
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Which premium?...
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Which premium?
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Which premium?
Van Westendorp Price Sensitivity Meter
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Optimum Price Point (OPP)
Indifference Price Point (IPP)
Questions?�s.singh@uwinnipeg.ca
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