How I calculate the price of a high-end product

The product is consistent or it destroys everything

The section on the product sits in the brand module, not in marketing, publicity or advertising. The product has to be consistent with the brand's narrative and storytelling: I cannot tell one story and deliver something different to the client. It is the branch of the trunk, and the trunk draws its sap from the root. If the product is not consistent, it destroys the work done beforehand at the drawing board.

The internal element: the multiplier

The first element is your financial policy: the price has to be calculated on your production cost multiplied by your multiplier.

Production cost × multiplier = selling price

If, like me, you run a manufacturing company, you calculate the cost from what the material bought for the order costs you, any tooling costs, labour time and machinery depreciation. If you buy a finished product from a supplier to sell it on, you replace the production cost with the purchase cost.

The higher the multiplier, the higher the perception of the brand. This is one of the industrial secrets entrepreneurs guard most jealously, because it is where the whole policy is built. If you produce for a luxury brand, you know what they buy at and what they sell at (the prices are public), and you already get an idea. In any case I can tell you that on the scale, luxury runs from 5 to 10 points and beyond.

In the classroom I sum it up like this: the luxury scale starts at 5. And there is a practical way to check it. A participant on one of my courses produces for a famous luxury brand: she knows what they pay her for the product and she sees the retail price in the boutique. The ratio between the two numbers is the multiplier. Anyone who produces for luxury already knows it; they only have to decide to apply it to their own brand.

The growth flywheel

The higher the multiplier, the higher the margins. The higher the margins, the more you can invest in marketing and advertising. More investment in marketing and advertising increases sales and turnover. And the more I multiply, the higher my brand is perceived. This creates a positive flywheel.

Logically, if I don't sell at high prices but on value for money, I cannot follow the scheme: I will have thin margins, I will have no money for marketing and advertising, which is also needed to pay fixed costs, sales stay stagnant and the brand is perceived as low. A high price, calculated with the proper branding work, sets the flywheel going: high multiplier, high margin, money to invest, sales, a rising perception of the brand.

The external element: market and competition

We don't live on Mars and we have competitors. There are three questions to ask: at what price is the mass market sold? At what price the premium? At what price the top? You need these three questions to calculate your selling price.

The Volkswagen group is highly skilled at developing a single platform and building similar products with different brands on it. On the large SUV platform the factories are different but the platform is one, with maximum sharing of the components the client doesn't see and differentiation in the elements the client touches and sees. It is very likely that the four cars have a very similar production cost. What makes the difference is the consumer's perception of the badge on the bonnet.

When I wrote the book, the Volkswagen Touareg started at €60,000, the Cayenne at €85,000 (+40%), the Bentley Bentayga at €180,000 (3 times) and the Lamborghini Urus at €210,000 (3.5 times), with the same size and platform. With the 2026 Italian list prices: Touareg €85,800, reference value zero; Cayenne €105,845, +23%; Bentayga €222,983, 2.6 times; Urus €268,093, 3.1 times. The gap at the bottom has narrowed because the Volkswagen's price rose 43% in five years, and at €85,000 nobody calls it mid-market any more; the Porsche stays premium as before. Above, the pyramid has stayed the same. Now you know the best way to tease someone who drives a Cayenne: “Why did you spend only €106,000 when you could have had the same car for €223,000?”

At least 40% more

The external element, then, is the gap between the mass market and the premium product: at the very least it is 40%. If I have to do all the work I have described, at the very least I need a price 40% above the mass product. I don't take the lowest or the highest: I take the average price of a mass-market producer of windows and doors, for example, and to set the price of my high-end brand I apply a minimum mark-up of 40%. At the very least. 40% was the Porsche of 2021; today it is less than a Porsche, but let's start there and then see how far to go. And remember that prices go up every year: Rolex has done it for seven consecutive years, +4-9% in January 2026 and a second increase in June, with production held at around a million pieces. Ferrari delivered 13,640 cars in 2025, fewer than the year before, on purpose, with orders covered through the whole of 2027 and an EBITDA of 38.8%.

Then you put the two elements together. If the market price of an object is 100 and my multiplier brings me out at 160, with a good margin that lets me do marketing and make a profit, while the market analysis tells me that mass market +40% is 140, I take the average: 150 as the retail price. In the end I, as the entrepreneur, decide my price. Logically, the higher you go, the more prestige and status you have to deliver. At the beginning it isn't that simple. At mass market +40% you are already premium.

Collections: different bands, same brand

As you evolve, you create collections within the same brand: same brand, a different design that determines a different price and a different positioning. We have one multiplier for the high collections, and a deliberately lower one for the entry collection, to attract a younger band of clients who may dream of a higher-end kitchen. That way they can still say they own a RiFRA and a quality product.

The game is this: when our people in the showroom are in front of a client, they use a disqualification process made of questions to work out which band the client belongs to. If someone likes the €100,000 kitchen but has a budget of €30,000, I don't let them leave without a kitchen: I offer them the entry collection and close the sale. If they have €70,000 I give them the one they wanted, if they have €40,000 I offer them the middle one. But I don't let them leave without the order. Clearly, if you have a €10,000 budget you are not a target client.

The hard part is the people in the showroom. They have to understand that at a certain point you don't go any lower, because every time you go below the threshold you lower the perception of the brand for everyone else, and you lower the return on all the marketing work done before. The entry collection exists precisely for this: it is the way not to go lower.

From my book Direct from Milano and from my classroom courses. Figures and examples updated to September 2026.