The company deliberately prices above a named rival or the prevailing price for a comparable offer, or refuses a free plan the market expects, to fund service or quality and filter for buyers who value it.
How Premium Pricing works
A higher price funds service or quality and filters for buyers who value them; it holds only if those buyers keep seeing a difference worth paying for.
How companies won with Premium Pricing
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
vs. Wix · 2005–23
Squarespace
Paid-only: filter for customers who value a finished site
What it did
Free plan dropped after year one because free users 'were never, ever, ever going to upgrade'
Wix
Freemium from its 2006 founding: 42.1 million registered users and 789,753 premium subscriptions (end 2013)
Is the company priced above the alternative on purpose, and what does the premium pay for?
Who names it
Author
What they call it / where it appears
Nagle & Müller +
Premium (skim) pricing
Note. Near miss: A price increase to cover rising costs. Does not count: Charging for services or add-ons alone; being expensive without evidence it was a choice.