A business story about a perfumeand how a higher price increased the sells

| In Articles | 17th July 2019

I heard a business lesson under the shape of a story many years ago, which had as subject the selling of a perfume at a price bigger than the initial price decided by the company.

You might already know it, but I want to let readers that don't know it, learn how to value goods that are the object of their business.

This is how it sounds like that…

targeting a different market by increasing the price and giving the impression of a luxurious product

A perfume manufacturing company was planning to sell its newest produced product that was considered by specialists to be of a good quality.

After calculations with the manufacturing costs, research, and other things involved, it was decided a price not too small but also not too big. The company decided that a price accessible to everyone is more likely to bring big sales.

After a while on the market, the perfume didn't do too well. Sales were not big enough and the company was struggling to get back the investment it had.

A good quality product sold cheap can make the quality suspect.

After a market research, and because the product was not bad at all, somebody from the company came with the idea to increase the price. And because it was nothing to lose anymore, this is what they did.

The price increase sent the product to the top of the most expensive perfumes list. The result:

  • the sales exploded,
  • The perfume was sold in a big quantity,
  • The price in this case was defining the quality.

When is about a perfume, if it is of a good quality, the price range can vary a lot and its high limit can be decided only by the manufacturer or the end seller. Why? If we except the ones that are cheap by smell, have a short-lasting time or have been made from a cheap substance, is hard to classify a perfume by its quality and its success will rely on price, flavor, look, how well is promoted and targeted customers.

Is always hard to know if a product will work on not on a market, even with case studies, because is all about people's taste.

Also, many times is not about how it smells, is only about the price and the way it looks. People buy them as presents most of the time for somebody else without knowing the perfume smell.

A bigger price will always reflect a better quality (even if the quality is not reflected into the price) and will put people in a better light when giving the presents.

What we can learn:

Keeping the price very low to sell more is not always the best strategy if the product or the service can be sold for more (as with this perfume). In some cases, a product will benefit more from an increased price.