Price & Value
What does price signal in luxury besides cost?
Rarity, prestige, belonging to an elite “club”
In classical economics, what happens to demand when price increases?
Demand decreases (negative elasticity)
Luxury products are often priced at how many times their production cost?
8–10x production cost
Which customer group disappears in crises: excursionists or true luxury clients?
Excursionists
What group was luxury originally for?
The “happy few” (wealthy elite)
Why is lowering prices dangerous for luxury brands?
It destroys desire and weakens exclusivity
Which effect explains that people want products because they are expensive?
The Veblen Effect
What is the minimum reference price?
The threshold below which a product is no longer perceived as luxury
Do luxury brands lower prices during crises? Why or why not?
No, because it destroys exclusivity and long-term desirability
What new group entered luxury with perfumes, eyewear, and accessories?
The “happy many” (middle class)
What is the difference between mass-market and luxury in terms of price role?
Mass: price measures cost/value. Luxury: price creates value.
Which effect makes demand drop if too many people own the product?
The Snob Effect
Which method measures expensiveness by hours of work needed to buy a product?
Jean Fourastié’s Method
What do true luxury clients do during crises instead of switching to cheaper options?
They wait to buy later
What is the problem created by democratization?
Risk of diluting exclusivity while expanding access
Who said “Price increases are essential in luxury”?
Bernard Arnault, LVMH CEO
Which effect makes demand rise when more people consume a product?
The Bandwagon Effect
According to the article, what percentage did luxury prices rise in the U.S. over the last 20 years?
50–150% (Forbes CLEWI)
Name one brand that kept or raised prices during the 2008 crisis.
Chanel (Classic Flap)
Does democratization mean luxury became cheaper?
No, core products remain expensive or even more expensive