When a Higher Price Becomes Part of the Product
For some status-focused goods, a higher price can make an item more attractive to certain buyers—not despite its cost, but partly because of it. Economists call such products Veblen goods, after economist Thorstein Veblen. Their appeal includes what the price communicates: that the buyer can afford an item unavailable, or out of reach, to most people.
That does not mean luxury brands have overturned supply and demand. It means the usual relationship can bend for a particular group of buyers and within a particular price range. A steep price may discourage people shopping mainly for practical value while making the item more appealing to those who value the status it signals.
The Price Is a Signal
A status symbol works only if its meaning is legible. A recognizable design can help, but so can a price that implies exclusivity. If an item becomes much cheaper or widely available, some buyers may feel it no longer distinguishes them as strongly. Raising the price can preserve that signal, even as it puts the product beyond the reach of more customers.
This creates a tradeoff for the brand. A higher price can strengthen an aura of exclusivity, but it can also reduce sales or push buyers toward competitors. The strategy works only if enough customers believe the product’s prestige, craftsmanship, or scarcity justifies the cost. Price alone cannot reliably create that belief.
Exclusivity Has to Be Sustained
Brands may reinforce high prices through limited availability, controlled distribution, or designs that remain recognizable. These choices help keep the product from seeming commonplace. But scarcity and status are not the same as physical quality: a costly item can signal wealth without being proportionally more useful or durable.
The surprising consequence is that a discount can sometimes weaken a luxury item’s appeal to status-seeking buyers. For them, paying more is not merely the expense of acquiring the object; it is part of what the object says.
