When a Higher Price Makes a Handbag More Appealing
For some ultra-luxury handbags, a steep price increase can make the product more desirable rather than less. That seems to reverse the usual rule of shopping: raise the price, and fewer people should buy. Economists call goods whose appeal can rise with their price Veblen goods. The effect is not that buyers stop caring about cost; the cost itself can become part of the attraction.
The Price Is Part of the Signal
A luxury bag can serve two purposes at once: carrying belongings and communicating status. Its price signals that it is expensive, while its brand and design make that signal recognizable to other people. A higher price can therefore sharpen the message: owning the bag suggests access to something beyond ordinary spending.
There is also a scarcity effect. If a bag is costly and difficult to obtain, carrying one may feel more distinctive. A price rise can reinforce that impression, especially if buyers believe it keeps the item out of reach for most shoppers. In this setting, the buyer is paying not only for materials and workmanship but also for exclusivity and the social meaning attached to the brand.
Why the Effect Has Limits
This does not mean every price increase boosts sales. Even wealthy customers have alternatives, and a price that feels unjustified can push them away. The effect depends on the brand’s ability to preserve the bag’s desirability and its sense of distinction. If too many people own it, or if buyers no longer see the price as evidence of exclusivity, the signal weakens.
That is the unusual economic twist: for a status-driven purchase, a lower price can sometimes make the product feel less special. The price tag is not just the cost of the bag; it can help create the very exclusivity buyers are paying for.
