What term describes setting prices higher than average to imply quality?

The term that describes setting prices higher than average to imply quality is prestige pricing. This pricing strategy is often employed in luxury markets where the perception of quality, exclusivity, and status is essential to the product’s appeal. By setting higher prices, businesses effectively communicate to consumers that their products offer superior quality or prestige, differentiating themselves from lower-priced competitors.

This strategy can be particularly effective in industries like fashion, high-end automobiles, and luxury goods, where consumers are often willing to pay more for perceived value and brand status. The high price suggests that the product is not just a basic necessity but a desirable luxury, thus enhancing its allure and consumer demand.

Other pricing models, such as discount pricing or everyday low pricing, generally focus on volume sales and affordability rather than enhancing perceived quality. Price lining involves offering multiple products at different price points within a specific range but does not necessarily convey a higher quality image in the same way that prestige pricing does. Thus, prestige pricing is distinctly effective for brands seeking to establish a high-end market presence.