Price Premium

What is price premium?

Definition: Price premium quantifies the additional margin a product earns over the basic market rate due to the strength of its brand perception.

Context: This measure is calculated by comparing a product’s price against the lowest 25% of prices within its segment, reflecting how much more consumers are willing to pay for the perceived higher brand value.

Example: If a product’s price is 35€ higher than the segment’s baseline (defined as 1st quartile of the price distribution in a segment), it has a price premium of 35€.