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John Silvestro has some tips on how to show your customers how premium can be affordable

Every retailer wants to sell premium brands as they offer higher benefits and value. The saying “you get what you pay for“ usually rings true. The problem is that whilst educated consumers understand different levels of brand values, uninitiated consumers do not – and uninitiated consumers are in the majority.

Uninitiated consumers generally purchase market entry products, then with education and improved understanding, they upgrade. The key question is how to accelerate the upselling process.

One proven strategy is ‘break-down’ pricing. To upsell from market entry level products, consumers must be convinced of the higher benefits linked to the higher prices. This can be difficult where there are significant price differentials between market entry and premium products. In these cases break-down pricing is deployed to demonstrate the affordability of premium products.

The strategy takes the emphasis away from the higher retail price, focusing the consumers mind on superior benefits as an affordable proposition. You will find this strategy in many high value sectors such
as electronics, furniture and cars.

“break-down pricing can help upselling to a £10 premium product by expressing the premium £10 vitamins product as only 33p per day”

For example, if a consumer has a choice between a market entry £250 product or a premium brand £1,000 product. The £1,000 purchase to be paid over 12 months can be expressed as ‘under £20 per week’. A £10,000 purchase to be paid over 50 months can be expressed as ‘only £200 per month’. This is effective break-down pricing. The perceived major price gap between lower quality and higher quality products is psychologically reduced in the consumer’s mind as the premium product is now expressed as an affordable proposition.

Break-down pricing is equally effective in lower value purchases. When a consumer purchases a market entry £1.99 vitamin brand from a discounter, break-down pricing can help upselling to a £10 premium product by expressing the premium £10 vitamins product as only 33p per day. This closes the price gap by highlighting the affordability of the superior product.

Break-down pricing can be used across a wide range of food products. For example a premium £5 box of 25 tea bags can be expressed as only 20p per cup. This simple, powerful pricing strategy can be used to help upsell consumers to a range of premium products with expressions of affordability such as per bowl, per serving, per meal, per session, etc.

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