Desirable Because It's Expensive

One of the things that rational economists love to do is talk about price elasticity. They say that offers that have high price elasticity experience major changes in demand when price changes.

Again, from the rational perspective, demand should increase as price decreases. And this is actually true for a lot of commodities.

But it's not true for everything.

In some industries, the fact is that you'll stop appealing to a large number of people if you decrease the price below a certain value. You see, certain things are desirable in this world because they are expensive.

A lot of people like Mercedes because it's expensive. OnePlus becomes appealing to a lot of Android users because it's expensive. As simple as things can get, people see value in Starbucks coffee because it's expensive.

Pricing strategies cannot be taken lightly.

A decrease in price might make your product appealing to certain people, but it will also alienate others who could have proven to be more profitable customers in the long run.

You see, there is a risk of alienating people who stuck with the brand because of its high price. These are the people who whose loyalty is not fickle or subject to price change.

Make no mistake: Those who've accepted your brand today because of a price drop will also leave you at the drop of a hat when they find a better deal with some other brand.

Therefore, pricing has to be set in a way that it ensures that the company is able to serve its most desirable customers. Again, everyone cannot be your customer; only a few segments of people can be.

And one of the ways to clearly communicate about your customer preference is your pricing strategy. Change the price, and the change will not only be about the number of customers, it will also be the kind of customers.