Premium pricing examples from Hermès, Apple, Liquid Death and Patagonia: how brands hold high prices permanently, and what keeps a premium from collapsing into a discount.
Premium pricing keeps prices well above competitors on purpose and for good, because the higher price is part of what customers buy. Hermès rations its bags, Apple holds price across its range, and Liquid Death sells canned water as a brand.
This page is part of Read Startup’s pricing case studies and one of the types of pricing strategies. It covers what protects a premium, four brands that hold one, and how premium differs from skimming and value-based pricing.
What is premium pricing?
Premium pricing sets prices persistently higher than competitors to signal quality, exclusivity or identity. Unlike skimming, the price is not meant to fall; the brand has to justify it continuously.
The high price is not a side effect of high costs. It is a signal: it tells the buyer the product is better, rarer or says something about them. That is why premium pricing is sometimes called prestige pricing. It also means the price itself is part of the product, and cutting it damages what the customer is paying for.
How does premium pricing work?
A premium holds when buyers believe the product is better or more meaningful, supply is controlled, and discounting is avoided, because a sale tells customers the full price was negotiable.
- Brand and identity. Customers pay for what the brand says about them as much as for the product.
- Scarcity and controlled supply. Limited supply and selective stores keep the product feeling rare. Scarcity does the job a discount would otherwise do: it creates urgency.
- No-discount discipline. Discounting teaches customers to wait for a sale. Once they learn that, the full price stops being real.
- Product quality that supports the claim. Materials, design, service and warranties give buyers proof that the premium is earned.
Which brands hold a premium price, and how?
Hermès protects its premium with scarcity and no discounts, Apple with design and an ecosystem, Liquid Death with identity marketing on a commodity product, and Patagonia with a mission tied to its ownership structure.
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| Brand | What the premium buys | How it is protected |
|---|---|---|
| Hermès | Status and craftsmanship | Limited supply, waiting lists, no discounting |
| Apple | Design and a connected ecosystem | Consistent pricing, own stores, products that work together |
| Liquid Death | Identity on a commodity product | Distinctive brand and marketing |
| Patagonia | Values and durability | Mission tied to its ownership, repair programmes |
Hermès: waiting lists instead of discounts
Hermès makes its best-known handbags in limited numbers and sells them through its own stores, where demand outruns supply. Instead of discounting to move stock, it rations what it makes. Scarcity is the protection: the bag is worth more because it is hard to get.
Apple: holding price across a product range
Apple prices above most rivals and rarely cuts prices on current products in its own stores. It justifies the premium with design and with an ecosystem in which its devices work together, so the value of each product rises with the others you own. That is a differentiation strategy expressed through price.
Liquid Death: a commodity sold as a brand
Liquid Death sells canned water, about as close to a commodity as a drink gets, at a price above ordinary bottled water. The premium buys identity: heavy-metal branding and humour that make a can of water something people want to be seen holding. It shows that a premium can rest on brand alone; see our brand and community case studies.
Patagonia: a premium tied to the company’s ownership and mission
Patagonia charges more for outdoor clothing and backs it with durability, repairs and environmental commitments. In September 2022 founder Yvon Chouinard transferred 2% of the company’s stock, all of the voting shares, to the Patagonia Purpose Trust and the other 98% to the Holdfast Collective, a non-profit, according to Fortune. The ownership change made the mission part of the structure, not only the marketing. Read about Patagonia’s ownership transfer.
When does premium pricing fail?
Premiums collapse when the brand discounts publicly, sells everywhere, or stops delivering on quality, which teaches customers to wait for a sale and erodes the reason to pay more.
- Public discounting. One visible sale resets what customers believe the product is worth.
- Over-distribution. Selling through every outlet, including discount stores, weakens scarcity and makes the product ordinary.
- Quality slips. If the product stops being better, the premium becomes a markup customers resent.
How is premium pricing different from skimming and value-based pricing?
Premium pricing stays high permanently and is justified by brand; skimming starts high and falls over time; value-based pricing scales with measured customer value. Name which one you are running before you set prices.
| Strategy | Intent | Duration | What justifies the price |
|---|---|---|---|
| Premium pricing | Signal quality or identity | Permanent | Brand, scarcity, proof of quality |
| Price skimming | Capture early adopters, then widen the market | Temporary | Novelty and being first |
| Value-based pricing | Grow revenue with the customer | Ongoing, scales with use | Measured customer value |
The three are often confused because all can produce high prices. The difference is what happens next: a premium brand protects its price, a skimming company plans to cut it, and a value-based company lets it move with the customer’s results.
How can you hold a premium price?
Decide what the premium buys (status, quality or values), control where you sell, never discount in public, and invest in proof such as materials, service or warranties.
- Decide what the premium buys. Status, quality or values: pick one and make every part of the product support it.
- Control distribution. Sell through fewer channels you control rather than everywhere.
- Never discount in public. If you must move stock, use private offers, bundles or gifts instead of a visible price cut.
- Invest in proof. Better materials, service and warranties give buyers a reason to believe the price.
Frequently asked questions about premium pricing
What is premium pricing?
Premium pricing is setting prices permanently above competitors to signal quality, exclusivity or identity. The higher price is part of what the customer buys, so the brand protects it with scarcity, quality and a refusal to discount.
What is an example of premium pricing?
Hermès is a classic example: it limits supply of its best-known bags and does not discount them. Apple, which prices above most rivals and backs it with design and its ecosystem, is another.
How is premium pricing different from price skimming?
Premium pricing keeps the price high permanently and relies on brand to justify it. Price skimming starts high for early buyers and then lowers the price over time to reach more customers.
Why does Hermès not discount?
Discounting would tell customers the full price was negotiable and weaken the scarcity that makes its products desirable. Hermès limits supply instead, so demand stays above what it makes.
Can a startup use premium pricing?
Yes, if it has a clear, provable reason to pay more, such as better materials, a distinctive brand or a mission customers share. Liquid Death charged a premium for water from early on by building a brand people wanted.
Write down what your premium buys and check every channel and promotion against it. Compare more pricing decisions in our pricing case studies, or get one company decision broken down twice a week.
By the Readstartup Team. Figures are attributed to their source and dated; corrections are logged on our Corrections Policy page.
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