Retail pricing is brutal, right? Well, for a long time, you could escape the commoditization of retail products by simply pricing higher. Price your wine at $100 per bottle and tell people that only a few cases are available. $50,000 cars too common? Create an $80,000 car. (This is of course passe; the Mercedes S65 AMG starts at over $182,000, and that’s a “family” car.) Premium vodkas doing well? Invent a “super-premium” category.

What about jeans? Apparently, $300-$500 is considered an acceptable price point for denim for some folks. I don’t pretend to understand this. I still remember a girl in eighth grade telling me her jeans cost $50. She had the appropriate mix of embarressment and pride. I was astounded. So the whole notion of spending hundreds of dollars on jeans is beyond me. But not beyond some people, apparently. (OK, so this isn’t entirely beyond me– I’ll write more at some point in a discussion of The Natural History of the Rich: a Field Guide, a fascinating look at what motivates the behavior of folks with lots of money.)

Anyhow, the whole notion of being priced at the top of the market is great. Except that someone can always come along and price above you (sort of like the danger of a low price strategy, but with entirely different demographics). And you can go out of style and then the product becomes a huge headache in discount outlets, rather than a must-have status symbol. This article on Slate talks about the “bubble” in high-priced jeans.

2 Comments

  1. Brian Massey

    If you follow the theories of Seth Godin, you start to understand that it’s not the product, but the story that people buy. With the $50 pair of jeans, the girl wasn’t buying the cut cloth, she was buying the brooke sheilds mystique.

    Your $80,000 car won’t sell without a story, but part of that story appears to have to be “and it costs a lot” or “it costs a lot but it’s worth it because…” and plug in the story.

  2. Jon

    Reuben,

    Further evidence of the bursting of the “denim bubble”, but at the bottom, rather than the luxury, end of the market….

    http://www.boston.com/business/globe/articles/2005/08/25/retailers_got_denim_blues/

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