Think of the hotel industry: List price is a key driver of perception. An expensive hotel will attract you because you'll think this is where "good" people go and service must be outstanding. Also, an expensive perfume isa perfume for the stars. That being said, that premium price will convey an explicit or implicit customer promise and that's where you need to be true to it. This does not mean your product or service have to be the same as the all the expensive ones. It means you have to find a "hook", something that will make you different and justify the price: Shopping experience, customer service, unique material etc. can be differentiators. You usually find this through a mix of intuition, direct customer experience, and confirmation through research.
If you're not able to say why your product is not worth an expensive price, it's better to sell it for cheap, but you may be losing a lot :-)
Hope this helps!