Price Umbrella

Price Umbrella

Price Umbrella Jonathan Poland

A price umbrella is a pricing strategy in which a company sets a high price for a premium product or service, and then uses that high price as a reference point to offer lower prices for other, less expensive products or services. The idea is that the high price of the premium offering creates a “price umbrella” that makes the lower prices for the other products or services seem more appealing by comparison. For example, a luxury car manufacturer might set a high price for its top-of-the-line model, and then use that high price as a reference point to offer lower prices for its other models, making them seem like a better value by comparison. This strategy can be effective in helping a company differentiate its products and create a perception of value among its customers.

Some examples of the price umbrella strategy in action include:

  • A high-end clothing retailer offering a $1,000 designer dress and then using that high price as a reference point to offer a $200 blouse and a $100 pair of jeans, making them seem like a better value by comparison
  • A luxury hotel chain offering a suite with a starting price of $1,000 per night and then using that high price as a reference point to offer standard rooms for $200 per night, making them seem like a better value by comparison
  • A premium smartphone manufacturer offering a top-of-the-line model for $1,000 and then using that high price as a reference point to offer lower-priced models for $500 and $300, making them seem like a better value by comparison

In each of these cases, the high price of the premium offering serves as a reference point that makes the lower prices for the other products or services seem more attractive by comparison. This can help the company differentiate its products and create a perception of value among its customers.

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Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress; a platform for building better assets, tackling global challenges, and advancing the greater good.

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress; a platform for building better assets, tackling global challenges, and advancing the greater good.