When are people willing to pay a super-high price premium for something? They do, for example, for vacation properties in just the right places, like Southampton, Carmel, or Aspen; for condos in famous buildings, like 432 Park Avenue or The Millennium Tower (even if the latter might be sinking into oblivion); for signature luxury fashion pieces, like ridiculously expensive Birkin Bags by Hermes; or for cars. Do you really need a Rolls Royce Phantom for $500K, or will a Bentley Flying Spur for $250K work, or can you get by with a BMW M760 for $150K? The answer is all about identity. Buying these goods both helps you reinforce to yourself who you are, and encourages others come to the same conclusion about you.
Pricing Needs to Reflect Who People Want to Be, Not Just What They Want
How magazines price themselves, and how identity figures in.
January 25, 2019
Summary.
The prices that people are willing to pay are driven by identity. My context for this personal ah-ha when I was working on the turnaround strategy of The New Yorker magazine in the mid-1990s with then-publisher Tom Florio and then-editor Tina Brown. When we took a really deep dive on the nature of The New Yorker reader, we concluded that for readers The New Yorker wasn’t just a source of news and good writing. It was a key part of their identity as a person. The lesson here extends beyond magazines and luxury goods to a wide array of business domains, especially (but not only) those catering to consumers. When you’re designing a product or setting a price, don’t just think about what customers want, but who they want to be.
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