What it is
Price Premium is calculated as percentage by which the price of a given brand exceeds a benchmark price.
Benchmark price being a specific competitor or weighted average across competitive set of brands.
How to use
Price premium refers to the difference between the price of a product and the perceived value of the product to the consumer.
Commanding price premium offers several benefits: (1) increase profit margin, (2) Differentiate from competition, (3) A price premium can be used to strengthen a brand’s image.
What to consider
Benchmarks include average price paid, average price displayed, and price of a relevant competitor.
Prices can be compared at any level in the channel and can be calculated on a gross basis or net of discounts and rebates.
Can also be calculated as Price Premium Index