[1] Premium refers to a segment of a company's brands, products, or services that carry tangible or imaginary surplus value in the upper mid- to high price range.
It is used to maximize profit in areas where customers are happy to pay more, where there are no substitutes for the product, where there are barriers to entering the market or when the seller cannot save on costs by producing at a high volume.
The use of premium pricing as either a marketing strategy or a competitive practice depends on certain factors that influence its profitability and sustainability.
[7] Frequently, companies will invent various (sub)brands to differentiate their product lines into premium and general segments (as, for example, Toyota does with its Lexus marque).
[8] In that sense, the term "premium" replaces the traditional attribute "luxury," although the former can be perceived as less ostentatious.