You should price it as a premium product.
Here are a couple of reasons why:
- People perceive the quality of your product based on the price. Even though your product is of higher quality, it will be perceived to be of lower quality than your competitor if it costs less.
- You'll need to sell fewer units to generate the same amount of revenue and profit.
As a side note, there are some ways to increase the perceived value of your product (in addition to premium pricing):
- Better packaging
- Better customer service (which you'll be able to invest in with your higher margins from the premium pricing)