Is the world's most expensive omelet too cheap?

Is the world's most expensive omelet too cheap?

Luxury pricing is difficult. How to determine the right price? The "Zillion Dollar Lobster Frittata" served at Norma's in Le Parker Meridien hotel is a great example for a luxury pricing case. 

CNBC published an article about it, citing that the price was recently doubled to reflect increased quality and cost of the caviar used. Originally the price was $1,000, now it sells for $2,000. For one omelet!

Dr. Langer wrote about this omelet in the book, Luxury Marketing & Management (2013). For his PhD in luxury management he developed a powerful pricing tool called the "Luxury Index". It allows to run category assessments for luxury brands and determine pricing opportunities. As an outcome luxury brands will be able to understand if a category has already developed a true luxury segment. And it allows luxury brands to identify (significant) pricing potential. 

When the book was published in 2013, it stated "Nevertheless, a price of $200 per scoop of ice cream for the Great Opulence Sundae in New York’s Serendipity 3 (served in 5 scoops for $1,000) or the $1,000 Zillion Dollar Frittata omelet in New York’s Le Parker Meridien will be out-of-reach for most, while the category benchmarking indicates still an upward potential." 

And this is where it gets interesting. Most people -- even many mangers of luxury brands -- would argue that the price of $1,000 for an omelet is already extreme. However, the data clearly indicated that the omelet could be priced significantly higher. The restaurant doubled the price to reflect the higher cost of the ingredients, while the pricing assessment already suggested some years ago that the price of the omelet was clearly too cheap.

A wake up call for many luxury brands, as many categories have significant potential for a luxury segment at higher price points. And typically those categories are counter-intuitive. Among categories with significant luxury pricing potential are first class air travel, hotels and hospitality, luxury cars, champagne, men's fashion, men's shoes, golf clubs, hair care, ice cream, coffee, laundry care, to name a few.

In short, many luxury brands are too cheap and miss significant pricing and profit potential. At Équité we have expertise in luxury pricing and develop creative strategies to make products, services and experiences truly special and unique, including branding strategies and limited editions.