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Everything You Need to Know About Price Image

Would you like to discover lesser-known aspects of pricing and consumer psychology? With PricingHUB, explore the concept of price image and how your consumers perceive your brand based on the prices you apply to your products or product ranges.

Want to master the language of pricing? We break down all the important concepts here.

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What is Price Image?

Price image is an idea established in the mindset of a brand’s customers. Depending on the prices set for its products, a brand will be perceived in different ways by consumers. This concept should be identified and mastered to help you grow your business and gain market share. Price image can play as important a role as your visual identity, geographic presence, or communication.

Price image is especially crucial for many companies because, for everyday purchases, price is often one of the main factors in the buying decision. It is therefore essential that your potential customers have the right price image of your company to encourage purchasing decisions.

This concept can be a double-edged sword for a brand, greatly influencing its sales and revenue:

  • If customers have a positive price image of your brand, they will be more inclined to consider buying your products, even if your prices are slightly higher than the competition.
  • If customers perceive a negative price image of your products, they will likely turn to substitutes without considering your products, even if they are cheaper than the competition’s.

A Price Image that Depends on Culture

Due to its subjective and personal nature, price image is not a unanimous or identical concept for everyone. Within the same population, there are often different cultural groups that may have varying price images of the same brand.
On an international scale, it is important for a company to consider and analyze potential differences in perception to understand where its price image stands and whether it aligns with its pricing. The difference in how prices are perceived online and in physical stores, or the use of external information sources, also plays a role in how customers determine the price image of each brand.

Clearly Define Your Positioning to Be Perceived Well by Your Customers

Price image is obviously a completely subjective concept, built over time as a brand evolves and garners consumer interest. To construct a favorable price image, the first crucial step is to clearly define your price positioning in the market. The more your prices align with your initial positioning, the more your price image will logically work in your favor.
Before considering your cost structure, margins, and profitability—which will impact your pricing strategy—it is essential to have a precise idea of the image your company should project to customers. There are four main positioning strategies that can be used to build an effective overall strategy:

  • You can set low prices for low-quality products, signaling that the brand aims to provide cost savings for the consumer.
  • You can set prices lower than average for high-quality products, for example in a penetration strategy, which creates a positive initial price image even if prices rise later.
  • In some cases, it is possible to set a high price for a lower-quality product if alternatives are scarce or nonexistent. This strategy increases profits but sends a negative signal regarding the price image.
  • Lastly, if you want to position yourself as a luxury brand with a prestigious image, your prices can be higher as they justify the superior quality of your products.

Factors Influencing Your Price Image

Comparative Advertising

Thanks to its recent legal expansion, comparative advertising is a major tool that can influence your price image to the detriment of a competitor. Even though the conditions for this type of advertising are quite strict, when implemented effectively, comparative advertising can significantly boost your price image in the minds of consumers and thus increase your sales. However, three important rules must be followed for comparative advertising to have a real impact:

  • Objectivity: Avoid presenting false or manipulated information in your favor, as consumers will quickly notice, and it will backfire. Prefer verifiable and relevant information.
  • Consistency: It is preferable to compare your product or brand to a direct competitor that meets the same need or serves the same purpose, so the consumer can make the right choice when purchasing.
  • Realism: The arrangement of your visuals, slogan, and the prices shown in the advertisement should not be designed to deceive or mislead the consumer.

Promotional Strategy

Some brands choose to implement promotions, either regularly or occasionally, to improve their price image. This strategy can be effective, but only if it is well thought out beforehand.

While some brands base their entire reputation on frequent promotions and make it their selling point, others prefer to offer promotions at specific times and on select products. Promotions are essential for consumers as they create the perception of getting a good deal, directly influencing a brand’s price image. A brand that doesn’t engage in promotional tactics may be perceived negatively by the public, except for luxury brands.

However, according to a 2015 Nielsen study, six out of ten promotions in the retail sector are not profitable. This figure underscores that increasing the number of promotions is not the best solution. Instead, they should be more targeted on strategic products and segments of customers, and better highlighted to attract consumers’ attention.

Overall Consistency of Your Pricing Strategy

The final important factor in shaping your price image is the overall consistency of your pricing strategy across your different products and services. It’s clear that a brand will place more emphasis on certain products or ranges that bring in higher profits and are more strategic. However, neglecting your pricing strategy for the rest of your products can be counterproductive, as a customer’s negative perception of one secondary product will inevitably impact the main ranges later. Therefore, it is important to maintain consistency throughout your entire catalog for the benefit of your overall price image and sales.Pricing tools such as PricingHUB can help you optimise prices of your full product catalog. Learn more about it

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A Long-Term Image Built on Competition

In most markets, consumers can easily switch to a competitor’s brand without additional costs, thereby increasing competition and the importance of being well perceived by consumers. This trend is further amplified today by the ease of comparison offered by the internet and various applications. It is very important to constantly monitor your market and competitors to know where your competitors’ price indices stand and how yours compare. If you are better positioned in terms of pricing than your competitors, you will have an advantage for common mass-market products. Conversely, in certain industries, such as fashion, a price that’s too low can be perceived as poor quality.

Finally, keep in mind that a pricing strategy is never instantly effective—it is the result of a long-term process that needs to be adapted and adjusted according to external changes. With a long-term and global vision, you will be better equipped to anticipate and manage future developments and build a better price image than your competitors.

Using PricingHUB to Improve Your Price Image

Every company needs to pay attention to its price image, regardless of its industry. This lever can be a major factor in a consumer’s purchasing decision, especially in markets where differentiation is difficult, and competition is fierce. Therefore, companies must meet their customers’ expectations in terms of both product or service quality and price. For this, implementing a well-thought-out and precise pricing strategy is essential. However, price image also highlights the fact that pricing decisions should not only be based on the market but also on consumers’ perceptions.

This exercise is extremely complex and involves a large number of variables. Therefore, it can be wise to use a tool like PricingHUB’s to determine this pricing strategy. Its machine learning algorithms continuously test to determine the price elasticity of each product or service offered and suggest prices that adapt based on the real conditions of your market and the commercial objectives you’ve set. To learn more, feel free to contact us for a meeting with our experts and a free demonstration of our solution.

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Discover all our pricing glossary articles

Price
Distribution channels
Cross selling
Customer centric
Price elasticity
Sales index
Pricing AI

Calculating a margin
Back margin
Front margin
Gross margin
Sales margin
Net margin

Omnichannel
MSRP
Price bundling
Selling price
Psychological price
Price image

Relative price
Safety stock
Brand rate
Up selling
Yield management
Dynamic pricing

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