Here are my 7 simple rules for luxury pricing:
1) Superior Value
The value must be, or at least give the perception, that it is well beyond the competition.
What you’ll notice from the highest priced brands is at on time or another, they innovated. Microsoft, Apple, Mercedes Benz, etc. all innovated at some point, but the good news is, you don’t have to create the innovation, instead, you can copy it.
Martin Fridson studied the business decisions of the world’s wealthiest in his book “How to be a Billionaire” and found that these people didn’t create innovations, they stole them and used them for themselves. For example, Bill Gates and Sam Walton invented nothing. Instead, they stole their competitors best ideas but monetized them faster, and better.
Sam Walton actually had the guts to admit that.
- Are you a roofer? Why not start using drones to inspect people’s homes? This will easily drive higher fees at lower costs (over time).
If you haven’t studied Ray Kroc’s model for how he ensured McDonald’s operations could be replicated anywhere in the world, at any time, by total strangers, I highly recommend you look into it.
Create a comprehensive, yet easy to understand, SOP Manual to ensure your company delivers consistent quality, each time, every time.
In short, if I gave you $100 million to open 50 franchises of your company all over the world, is there a proper SOP manual you could hand me? If not, please create one and make sure all of your employees know it inside and out.
It will improve your business, and life, in ways you can’t even imagine.
Creating the image of a luxury brand begins with creating the image of a luxury brand. Makes sense, right? This starts with marketing. In my experience, the fastest route to creating a luxury brand is to channel the look and feel of already existing high-dollar brands.
Right now, there are about 3,000 Casinos in the world who have spent a ton of money on building a “luxury brand.” Start visiting all of their websites until you find the style and feel you like best. Or, simply higher a talented graphic artist.
In terms of messaging, write your copy as if you what you sell is the most important thing that has ever happened in the world. Sounds funny, but try it, and tell me it wasn’t effective.
5) NO Special Offers
Nothing kills a luxury brand faster than “special offers.” When the chief of Porsche’s U.S. operations started offering discounts, he was promptly fired by CEO Wendelin Wiedeking.
How luxurious can your brand be if ‘everybody is doing it.’ Usually, higher prices cut down on volume, but what happens if sales continue to grow, and now volume is the only thing standing between you and bigger profits?
Should you grab the additional market share?
In the “The Story Behind the Lacoste Crocodile Shirt,” Emily Spivack points out that the luxury brand’s wild success finally declined in the 90s due to overexposure.
Every last one of your employees must not only create a superior experience, but a prestigious one as well.
In the early days of Tiffany, a customer could walk into any Tiffany store, and leave with a piece of jewelry on a promise to pay later. While this was a tremendous benefit, it was largely improved by a staff that made the customer feel as if they were boarding the Queen Mary 2.
Being a luxury brand is NOT easy. Not being able to drive revenue with lower prices during lean quarters, combined with having to ensure customer service is always in the top 1% during busy quarters, is extremely challenging and could cost you everything.
That’s why building a luxury brand may seem simple, but maintaining one is NOT.