A brand doesn't need to charge the highest price in the market, but it does need to hold a price gap wide enough that customers don't decide on cheaper price alone. That gap doesn't come from product quality alone. It comes from the recognition and meaning the brand has built up in customers' minds. When the identity is clear enough and the meaning is real enough, a brand can hold its price level without constantly explaining why.
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Every market has a price floor. It is the level anyone can reach if they are willing to cut everything.
The question isn't whether you're selling at rock-bottom prices.
The question is how far the brand stands from the floor, and whether that distance is enough to keep customers from looking at cheaper competitors.
A brand doesn't need to sell at the highest price in its industry. But if the price gap is too thin, every competitor promotion becomes a real threat.
A price war is a trap with no winners
When an industry starts competing on price, everyone in it loses. Margins shrink, marketing costs rise to hold on to customers, and quality is gradually cut to make up for the margin.
This is not a theoretical claim. Kantar found that a 1% increase in selling price delivers more profit than a 1% increase in volume, meaning that pricing correctly earns more than selling more.
The 38% figure is not a threshold every brand reaches.
But it shows the direction: meaning and recognition are the mechanisms that create a price gap, not production cost or the number of years in business.
What a minimum price threshold is
The minimum price threshold is the level below which a brand no longer has a reason to exist independently. Customers choose by price, not by brand.
This threshold isn't fixed by industry. It depends on one question: if a competitor cut their price by another 10%, what percentage of your current customers would leave immediately?
If the answer is “a lot,” the brand is standing too close to the bottom. If the answer is “few, because customers buy for other reasons,” the brand is holding its distance.
A brand is how customers perceive you, not a logo or a slogan. That perception decides how much they pay.
Marty Neumeier, The Brand Gap
That perception is built from many small touchpoints, not from one big campaign. And it accumulates over time, not with advertising spend.
Three identity elements that hold the threshold
After looking at many cases of brands being dragged down to the price floor, Sinh Vũ identified three identity elements that play the clearest role in maintaining that distance.
First: instant recognition, without thinking. Research by Lindgaard et al. (Behaviour & Information Technology, 2006) shows that a visual impression forms within 50 milliseconds, before the brain has time to process the content.
A brand that is recognized quickly creates a sense of familiarity, and familiarity is the foundation of trust.
Second: identity assets must belong to the brand, not blend into the sector. Jenni Romaniuk (Ehrenberg-Bass Institute) measures identity assets on two dimensions: recognition (Fame, meaning whether customers remember it) and distinctiveness (Uniqueness, meaning whether customers link it correctly to the brand).
A color or typeface that is common in the industry has high Fame but low Uniqueness, and cannot hold the gap.
Third: stay consistent long enough to build memory. Identity is not an asset that accumulates by the month, but by the year.
A brand that keeps changing its look forces customers to relearn it, and each relearning wipes out what had accumulated before.
A thin identity means thin prices
There is one way to look at the problem directly: a weak brand identity means the brand depends on price to persuade customers.
When customers don't recognize you immediately, don't remember where they met you, and have no particular impression, price is the only thing left to compare.
This is why many businesses fall into the price trap even when their product is better than the competition's. A good product that isn't recognized has no advantage in the customer's mind.
Positioning is what you do to the mind of your prospective customer, not to the product.
Al Ries & Jack Trout, Positioning: The Battle for Your Mind
In other words, the price gap is built in the customer's mind, not on the product spec sheet.
A realistic starting point
Not every business has the budget to build a brand properly from the start. But there is a minimum that a business of any size can do.
- Choose two to three core identity assets: a main color, a typeface, or a distinctive visual element. Only two or three, but keep them consistent.
- Check whether those assets blend into the industry. If everyone in the sector uses that color and that typeface, they aren't yet your assets.
- Keep them long enough to build up. At least two years without a break before you consider changing anything.
The price gap does not come from one big decision. It comes from thousands of small decisions kept consistent over time.
A brand that achieves this has something competitors cannot copy by cutting prices: a place in the customer's mind.
References
Kantar BrandZ, Brand Equity Studies (around 2020). McKinsey & Company, The Business Value of Design (2018). Byron Sharp, How Brands Grow (2010). Jenni Romaniuk & Byron Sharp, How Brands Grow Part 2 (2016). Marty Neumeier, The Brand Gap (2003). Lucidpress/Marq & Demand Metric, The State of Brand Consistency (2016, 2019).