6 Top Tips for Increasing the Value of Your Luxury Brand and its Premium Pricing

1. Enhance Perceived Luxury Brand Value with Brand Stories that Aren’t Easy to Put a Price On

In order to justify premium pricing, it’s important to drive a wedge between your brand and other competitive products or services — to make your brand distinctive, credible, trustworthy and likable in a way that’s very different to your competitors.

If brands are very similar customers will default to price based decisions — purchasing at the lowest price, because you haven’t given them a compelling reason to pay more for your offering. As the custodian of the brand it’s up to you to build your brand strategy so your ideal customers is not defaulting to decisions relating to prices because you’ve given a really strong reason to want to pay more.

Consumers compare products without necessarily recognizing the difference in quality of components so you have to break the functional features and benefits comparisons by giving them more emotional reasons to buy, things which cannot so easily be valued such as stories relating to the provenance of the product.

For example, leather goods maker Hermès discreetly communicates that each one of its bags is made by one named craftsman. If in later years a customer needs the bag to be repaired, it will, if possible be repaired by the same craftsman who originally made it.

This is a compelling story indicating Hermès’s commitment to quality and detail which breaks the basic price comparison when customers are shopping around. Such stories can be well supported by peeks inside the behind the scenes process, such as in this video about Hermès craftsmanship.

This is something which is easy to do for small brands and startup brands which aspire to luxury status. The personal involvement of founders or access to unusual ingredients or components can support this as a reason to believe in the brand. George Clooney provided this for big budget coffee Nespresso. But he performed the same role on a premium tequila brand he co-founded with a couple of friends, called Casamigos. Ben and Jerry of the eponymous premium ice cream brand performed the same role in building their brand from the ground up, despite lacking the star appeal of Clooney.

Related: Brand Stories: 5 Compelling Examples That Sell Themselves

A simple example is the many premium dairy brands like Rachel’s Organic and Tom Parker Creamery,  which have sprung up in the past ten or so years, often utilizing a story about the uniqueness of their farm as part of their brand mission on pack.

Related: Brand Disruption as a Business Framework for Future Growth

Want to become an irresistible brand leveraging luxury brand strategies that commands a premium and leaves your competitors way behind? Work on your brand during one of our Transformational Workshops, like the Persona Brand Building Blueprint™ Mastermind where we take a deep dive, step-by-step on how to build your brand strategy. You’ll discover and apply the systems and methodologies employed by some of the world’s greatest brands on your brand. In fact, because the Persona Brand Building Blueprint™ is a fast-track programme you’ll leave the workshop with your brand strategy fully mapped out and documented ready for implementation to grow your business faster.

Build your standout brand at the Persona Brand Building Blueprint™ Mastermind with Lorraine Carter

Or if you’d like us to create a bespoke plan for your brand, working with you personally, then get in touch. Our brand audit and brand strategy services are tailored to each client individually and use the Persona Brand Building Blueprint™ System. They provide difference and distinction for your brand so it stands out and helps your brand ultimately resonate with your ideal customers because this is what enables you to increase sales. In fact, the Persona Brand Building Blueprint™ System is also used on The Economist Group platform.

2. Why You Should Never Discount Your Prices as a Luxury Brand or Premium Brand

Why would an iconic brand like Burberry burn tens of millions of pounds worth of unsold stock rather than discount it? [2]

Reducing your selling price is clearly an easy way to improve your sale volumes. However this strategy very quickly undermines the premium positioning of a luxury brand.

While this approach may increase sales in the short term, it damages your brand in the long term:

1. First, it causes consumers to question whether your brand is overpriced at its normal retail price. This partly explains the reported decline in popularity of department stores such as Harrods and Macy’s, whose set-piece sales events compromised confidence somewhat in their everyday pricing strategy
2. Secondly, it makes it look as if your brand lacks confidence in its proposition. British Airways regularly discounts its first class seats, while Singapore Airlines does not – and research shows British Airways’ standing with customers is accordingly lower
3. Thirdly, it trains consumers not to buy when they want the brand but to wait for the next discount. Previously high-end brands like J. C. Penney reportedly lost some of their lustre using this approach

One thing which is common to almost all luxury brands is that they never discount their prices. They do change the value proposition of their offer but they do not do it by cutting prices.

Instead, they offer a value added promotion. Luxury spirits manufacturers will, for example, offer a free gift or an exclusive formulation which is only available in duty-free shops. Car manufacturers will build an entire experience around what they offer, such as BMW’s invitation to select customers to visit their factory and use their test track, as shown in this video.

Even as a small to medium size luxury brand, it is possible, and important, to build higher perceived value so the brand is not vulnerable to, or driven by lower or reduced price discounting. For example, high end London chocolatier Rococo Chocolates emphasize brand story, beautiful, distinctive packaging and an other worldly in-store experience to shift stock without cutting prices.

Related: Brand Stories: 5 Compelling Examples That Sell Themselves

Image via Rococo Chocolates

Image via Rococo Chocolates

Related: Top 10 Brands for Customer Experience and What You Can Learn From Them

If you feel that you can only increase your sales by discounting, it may be that your overall brand proposition is insufficiently compelling for your target market. You probably need a brand audit health check to identify areas of weakness so you can change your brand strategy and pinpoint areas for innovation and growth. Feel free to get in touch it you’d like to discover more about what a brand audit health check or brand refresh entails to help you grow your business.

3. Identify and Nurture High Spending HNW Luxury Brand Customers

In business we often hear discussions about some version of the so-called eighty twenty rule. Put simply, most profits come from a small group of about 20 percent of your customers, so if you can identify them, target them effectively and nurture them through exclusive brand experiences they will drive most of your overall success and revenue source.

Luxury brands are typically very good at doing this. Because many high net worth customers buy directly from the brands and welcome rather than resent communication from them, it can be easier for luxury brands to leverage this brand strategy compared to the majority of mass market businesses. Their profit margins and price points also means that they have resources to invest in making exclusive events work very effectively for their elite, niche audience.

It’s not unusual for luxury fashion houses to host small elite events to which they invite their highly valued, high spending, HNW customers. For example, Dolce & Gabbana fly their biggest customers to a private show with them annually. Their approach to maintaining relationships with high spending customers is explained by a co-founder in this interview.

Image via Dolce and Gabbana

This drives sales but also turns these people into informal brand ambassadors, which matters because they are often wealthy influencers whose spending is reflected in others’ spending down the line.

Related: How To Use Brand Ambassadors To Open New Revenue Channels

Service brands have a particular advantage in this area, because they naturally have a more direct relationship with their customers than product brands do.

Image via Cowshed

Small luxury spa brands, from Cowshed to your local upmarket spa, are able to nurture and maintain these relationships because they have contact details and reasons to contact their customers and more experiential opportunities to nurture the relationship with their customers.

Image via Cowshed

Core to this is having something about which to communicate – luxury brands have permission to communicate, but if they say nothing meaningful then they are just one more form of junk mail. Exclusive samples, invitations to product launches, experiential training and personal consultations all excite customers. On the other hand, a brand simply talking about winning an award does not — unless they use the award as an occasion to celebrate their relationship with their highly valued customer.

Related: Boring Brand? How To Create a Unique Brand and Market Positioning

4. Leverage Exclusivity to Drive Premium Pricing in Luxury Brand Strategy

Another lesson from luxury brands is the way in which they help to support the premiumness of their brands through exclusivity. At the scale of Gucci or Louis Vuitton, it is hard to claim the main product lines are exclusive when so many products are sold each year. So the exclusivity must come in other ways. Monogramming services help turn a standard Louis Vuitton bag or trunk into a personalized one.

Image via Gucci

Limited editions are also a strategy to drive exclusivity through scarcity. On their own, limited editions may not be cost effective. However when integrated as part of an overall brand strategy, they keep brand lines relevant and ticking over year after year because limited editions keep the brand in the news, and fresh from a customer perspective.

Related: Brand Hierarchy Fundamentals for Multiple Brands To Avoid Confused Customers or Stagnant Sales

Because many luxury houses build their image based on heritage and continuity, it’s important to leverage strategies, such as limited editions, to keep the brand fresh, news worthy and relevant. Sports car brands like the Maclaren MSO 650S and watches like IWC’s limited edition Portofino watches available only in Harrods for three months are typically examples, as this video about the watch trade show brings to life.

Related: Want Your Customers to be Loyal, Super, Raving Fans? What’s Your Brand Promise?

5. Build Your Brand Experience Far Beyond the Store in Your Luxury Brand Strategy

In order to win the competition in the customer’s mind about how much a certain discretionary expenditure merits you can consider a couple of simple approaches. One option is to reframe your value equation so that your more expensive price point is not such a disadvantage or in some cases is actually an advantage (remember the Stella Artois tagline of being “reassuringly expensive”).

You can also shift thought away from cost altogether towards desirability, as Apple does through advertising such as this which never mentions price.

Another strategy is supporting premium perception touch points away from the pricing moment such as including product placement with other appropriately positioned and aligned brands, sponsorship of elite sports and social events, user clubs and more.

Related: Strategic Brand Partnerships: Does My Brand Look Big in This?

Each year, Chanel puts on a multi-million euro extravaganza fashion show often in a spectacular location, like the one in this video.

On its own, this may not generate enough new sales to cover its costs. But it creates an experiential sense of what the brand represents that makes potential consumers, as well as existing customers, feel reassured that they made the right choice. It solidifies how they identify themselves with the Chanel brand values, independently of the actual monetary value of the purchase.

This could be easy even for a smaller brand to do. The experience does not need to be complex or costly to be compelling. For example, L’Occitane invites a select number of its customers to lotion making workshops at one of its L’Occitane Spas.

Image via L’Occitane

This educates customers that the brand has spas and it’s not just a retail experience. It also helps participants get hands-on experience with the brand’s authenticity and its ingredients integrity while also learning more about its provenance — all of which is integral to the brand’s values, and supports the brand tagline, “A True Story”.

6. Premium Pricing Requires Consistent Execution in Luxury Brand Strategy and Positioning

If you pay top dollar to see a famous singer at a concert, you expect not only the hits but also a great experiential show. If their reputation is such that some concerts are good but others are flat, then you’ll think twice before buying tickets.

The same is true for luxury brands. When customers are paying top prices for something, they expect top quality. The challenge lies in how to deliver the consistent top notch quality and experience.

It is easier to execute consistently when you have control over distribution channels. But in many markets, for reasons of experience or scale, luxury brands are forced to rely on local licensees. This can lead to inconsistent execution, which is why a lot of brand owners have taken back licenses in recent years, such as Burberry did in Japan.

Another brand challenge is price consistency across different markets. Often, pricing is not consistent because of currency fluctuations, changing market conditions, variable taxation structures and a myriad of other considerations all of which need to be evaluated so you manage your brand in terms of reputation, experience and so forth.

The perception of desirability and value must be consistent so that there is never a “bargain basement” execution of the brand. So, for example, outlet stores may work as a strategy for mid market brands like Coach where bags start in the lower end of hundreds of dollars but cannot deliver for more premium luxury brands whose cheapest bags run into four figures, such as Bottega Veneta. It is simply too damaging to the prestige and positioning of a luxury brand for it to be directly associated with an out-of-town large scale retail outlet where busloads of shoppers hunt for bargain basement discounts.

Final Word

Luxury brands have done very well by applying smart business strategies. They have a clear target market which they nurture with careful attention to details. They focus on unique stories and experiences. They frame value away from price.

All of these approaches work even for small companies. The question is, which brand strategy are you applying and which could you leverage more effectively in your business? Would a brand audit health check help you re-evaluate your brand’s strengths, weaknesses and opportunities for innovation and growth? Do you need to change the positioning and perceptions around your brand so you can increase your brand’s perceived value along with your price point and profit margins?

Want to discover more about building your standout, №1 powerhouse, premium priced brand working with us so you can increase your profits and leave your competitors way behind?

1. Schedule an appointment — we can meet in person or online
2. Allow us to create a customised plan for you
3. Let’s implement the plan together  
4. Contact us [email protected] or ring +353 1 8322724 (GMT Dublin/London time 9:00 – 17:30 weekdays)

Questions to Consider

1. What perceived or added value do you offer your customers beyond the merely the product or service itself?
2. Do you have a strong set of brand stories which help articulate the unseen value of your brand portfolio?
3. Does your go-to-market strategy feel like a good fit for your desired pricing perception? Have you validated your premium positioning strategy?
4. How consistently does your distribution network support your desired price point today? How can you fix any weak links? Would a brand audit be an expeditious tool to help you grow?
5. Can you double your prices compared to what you charge now?