Question

Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness. This type of pricing is known as a. variable pricing. b. penetration pricing. c. skimming pricing. d. prestige pricing.

Answer 1

Prestige pricing is a unique pricing method involving products which would actually generate less overall profit at lower prices than higher prices. As long as the product is views by the public as being "prestigious," it will be in greater demand at the higher price. If the price were lowered, the public opinion of the product would be lower and the product would be seen as less desirable. This results in the product selling less at the lower price than at the higher price.