Earlier this year my family and I spent a week skiing. I know very little about skiing (the last time I was on the slopes was 28 years ago!) so was happy to be led by my lovely brother-in-law, Marcus, and his equally lovely wife Penny who we shared a chalet with.
You can actually stay in Courcheval 1550, 1650 or 1850.
This doesn’t’ refer to the year it was founded, but the altitude in metres.
How quaint you might think.
But as I found out, the higher you go, the more it costs for EVERYTHING. And it was as I traveled up the mountain that I had one of my mini revelations.
So let us start at the ‘bottom’ and work our way up…
At Courcheval 1550 you have the kind of ski resort that is perfectly nice and nothing out of the ordinary. You’ll find hotels, shops, restaurants and bars charging reasonable holiday prices.
One hundred metres higher at 1650, it’s is the same, but you notice a few more upmarket shops and a general hike of around 30% in prices.
But it’s not until you get to 1850 that things get – well – a bit ridiculous.
For starters, the shops would grace Bond Street or 5th Avenue…
I’m talking about the likes of Hermes, Cartier, Gucci and Chanel plus plenty of high-end jewelers.
And here are some of the prices you could expect to pay for ‘ordinary’:
- £16 for a pint of Guinness
- 2 hot chocolates and 2 espressos came to £35
- In the same restaurant they had a caviar pizza at the equivalent of £240
- A little further up at The Cap Horn restaurant (alt 2100 meters) you can have a steak for £422!
- On the wine list there were bottles for over £8,000!
How can they charge such high prices?
- KNOW YOUR MARKET: this area of the Alps has always attracted the jet set and more recently the Russian oligarchs. This new money (Nouveau Riche) tends to express itself through extravagant purchases. So businesses at 1850 know that they have a proven market of people with high disposable incomes (to say the least!).TIP: Who is your target market? What are their likes and dislikes? What are their goals and what are the obstacles standing in their way? The more you can understand what makes them tick, the easier it is to sell.
- DEMAND: while the oligarchs, artistos, and Euro trash – sorry I mean elite – flock to Courcheval, so these places can charge and sell at the high prices without denting the demand. Back in the real world, as prices rise, so demand tends to tail off. Not so here. In fact I wouldn’t be surprised that for certain products, demand would increase as the price rises! See point 6 below. TIP: If possible always test your prices upwards. Nothing is ever gained by lowering prices, except to reduce your profit margins and the perceived value of your product or service. Instead find a reason to push up your prices: add value.
- EXCLUSIVITY – As you sit in Le Cap Horn restaurant, watching the Lear jets and helicopters fly the super rich in and out of the resort (the airport is allegedly the 7th most dangerous in the world to access!), it’s clear this is the place where people “want to be seen to be seen in”. And if gaining access to this circle means paying high prices, then so be it!TIP: While not all products and services can be sold as ‘exclusive’ due to price, they can all be differentiated from the competition through other means – packaging, customer service, additional benefits, limited offers, closedowns and buying restrictions.
- AUDACITY – a high price (one that is many times higher than the actual cost of the product itself) also raises the perceived value. To compensate, buyers will actually ‘fill in the missing bits’ – a pint of beer is a pint of beer, but if you’ve just paid £16 for it, wouldn’t you want to savour it that little bit more? To perhaps come up with ways to justify the price by factoring in the ‘ambiance’ and ‘experience’.TIP: I won’t name names, but I was once told by a very successful publisher that his aim was to keep pushing the highest price of his products – he started at £200 and managed to push it up to £10,000 per person. Of course he was delivering value, but part of it was seeing how far he could push the pricing.
- PERCEIVED VALUE: at The Cap Horn restaurant you could have a steak for £422. But this wasn’t any ordinary steak. It was a Wagyu beef. According to Wikipedia ‘wagyu’ refers to several breeds of cattle, ‘genetically predisposed to intense marbling and quality, and demands a high price.’ What’s more, these cows are often fed on a diet that includes either beer or saki (I’m not kidding) and are massaged to keep the meat tender! The typical clients at the restaurants will probably be aware of this unique kind of meat and appreciate the premium price attached to it.Like any luxury product, you will often find that it has a compelling story about how it was produced (think hand-rolled cigars to bespoke hand made suits).TIP: Every product or service deserves a story. It can turn the ordinary into something extraordinary. It adds depth, drama and interest. Ultimately it helps to differentiate you from the competition.Recommended reading: Tell to Win: Connect, Persuade and Triumph with the Hidden Power of Story by Peter GuberMade to Stick: Why some ideas take hold and others come unstuck by Chip & Dan Heath
- EXTREME PRICE RELATIVITY – I’ve just made that term up and I’m sure there’s some fancy academic term word for it, but basically, it’s when you price something so high that all the other prices seem reasonable in relation. So when you see the £422 steak on the menu, the £58 version (with truffled mash another £23), you think you’ve got a bargain.For a much better explanation of clever psychological pricing techniques, check out Predictably Irrational: The Hidden Forces that Shape Our Decisions by Dan Ariely
- COMPETITIVE CONSPICUOUS CONSUMPTION: While the location and ambiance might be exclusive, that doesn’t mean there isn’t a fiercely competitive atmosphere.At The Cap Horn restaurant I watched as tables of guests (there were at least 20 people on each of these large tables) ordered bottle after bottle of champagne (“That will be £500 sir, thanks very much!”).The restaurant very cleverly made an event out of each order. The music would switch to a funky version of the Star Wars theme and a small group of waiters would run across the open air restaurant holding the champagne aloft surrounded by small fireworks shooting sparks into the air!TIP: Make spending money fun! Make sure you customer feels they have made the right decision. And reinforce their decision with compliments and restating the benefits the product or service will bestow upon them.
Back in the 1980s, class war anarchist groups popularised the slogans like ‘EAT THE RICH’ and ‘BASH THE RICH’…
Well I’m not sure if it was a knowing reference, but on many of the tables at the more exclusive 1850 restaurants there were brochures for high end designer ski clothing.
The name of the company?
SAVE THE RICH!
As I said, Courcheval 1850 is like a different world.