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> in LA the higher the price, the more desirable people think your product is Many luxury items are 'Veblen goods' (https://en.wikipedia.org/wiki/Veblen_good h

by taneq 5y ago

> in LA the higher the price, the more desirable people think your product is Many luxury items are 'Veblen goods' (https://en.wikipedia.org/wiki/Veblen_good https://en.wikipedia.org/wiki/Veblen_good) - the high price is a feature, it keeps the riffraff from having the same things you have, which makes your things better status symbols.

fncypants 5y ago
Brought to mind Yeti coolers. Unnecessarily expensive, but that's why you have/want them. > Well, the price, for one thing. Yetis work like a Veblen good, which are luxury items that turn the laws of supply and demand upside down. Take Swiss watches: “A guy who buys Rolex watches doesn’t want a cheap Rolex,” Williams says. “Part of the prestige of that brand is when you wear it, everyone knows they cost at least $8,000 and up. If Rolex brought out a low-end model, it would kill their brand.” It’s why the iPhone 5C — a low-priced iPhone — flopped. [0] [0] https://melmagazine.com/en-us/story/why-are-coolers-so-expensive https://melmagazine.com/en-us/story/why-are-coolers-so-expen...
- dntrkv 5y ago
  Yes, Yeti coolers are generally the most expensive coolers. But if that was the only reason for their high price point, we would see alternative rotomolded coolers of similar quality that are significantly cheaper, not just the 10-33% we tend to see in the market. Yeti 45: $300 Engel 45: $275 RTIC 45: $200 Sure, $300 is quite a bit more expensive than $200, but they're also not the same: - Yet 3 years vs RTIC 1 year warranty - Yeti performs better - Yeti has better design (form & function) - You can pick up a Yeti at your local REI vs RTIC is only available DTC - Yeti is a household, lifestyle brand, that's done the work to create this market (alternatives would most likely not exist without Yeti doing this work) The difference between a Rolex and another watch that has the same capability is a couple orders of magnitude apart in price. $200 vs $300 on a cooler isn't that big of a difference.
- retsibsi 5y ago
  But then why did the 5C flop, rather than succeeding in the short term and killing the iPhone brand?
  - taneq 5y ago
    I'd wager it's because it wasn't nice, not because it wasn't expensive. Low end phones aren't nice to use, and people who buy Apple buy it for the polished user experience. If they sold their flagship phone at entry-level prices then I'd expect it to do as you suggest, selling like hotcakes but devaluing the brand. Even then it wouldn't do half as much damage to the iPhone brand as a $100 Rolex would do to the Rolex brand, because iPhones have a lot of utility that makes them worth having whereas a watch is, these days, almost entirely a vanity item.
schrijver 5y ago
There’s also a complementary strategy followed by many larger luxury brands, where the clothes are the halo product, but they make most of their profit selling accessories (sunglasses, perfume, etc.) that are affordable to many more customers (including those outside of LA!). The latter are often produced by other companies under a license.
AuryGlenz 5y ago
It’s well known in the wedding photography world that raising your prices might actually net you more customers - to an extent, anyways.

by taneq 5y ago

fncypants 5y ago

Brought to mind Yeti coolers. Unnecessarily expensive, but that's why you have/want them. > Well, the price, for one thing. Yetis work like a Veblen good, which are luxury items that turn the laws of supply and demand upside down. Take Swiss watches: “A guy who buys Rolex watches doesn’t want a cheap Rolex,” Williams says. “Part of the prestige of that brand is when you wear it, everyone knows they cost at least $8,000 and up. If Rolex brought out a low-end model, it would kill their brand.” It’s why the iPhone 5C — a low-priced iPhone — flopped. [0] [0] https://melmagazine.com/en-us/story/why-are-coolers-so-expensive https://melmagazine.com/en-us/story/why-are-coolers-so-expen...

dntrkv 5y ago
Yes, Yeti coolers are generally the most expensive coolers. But if that was the only reason for their high price point, we would see alternative rotomolded coolers of similar quality that are significantly cheaper, not just the 10-33% we tend to see in the market. Yeti 45: $300 Engel 45: $275 RTIC 45: $200 Sure, $300 is quite a bit more expensive than $200, but they're also not the same: - Yet 3 years vs RTIC 1 year warranty - Yeti performs better - Yeti has better design (form & function) - You can pick up a Yeti at your local REI vs RTIC is only available DTC - Yeti is a household, lifestyle brand, that's done the work to create this market (alternatives would most likely not exist without Yeti doing this work) The difference between a Rolex and another watch that has the same capability is a couple orders of magnitude apart in price. $200 vs $300 on a cooler isn't that big of a difference.
retsibsi 5y ago
But then why did the 5C flop, rather than succeeding in the short term and killing the iPhone brand?
- taneq 5y ago
  I'd wager it's because it wasn't nice, not because it wasn't expensive. Low end phones aren't nice to use, and people who buy Apple buy it for the polished user experience. If they sold their flagship phone at entry-level prices then I'd expect it to do as you suggest, selling like hotcakes but devaluing the brand. Even then it wouldn't do half as much damage to the iPhone brand as a $100 Rolex would do to the Rolex brand, because iPhones have a lot of utility that makes them worth having whereas a watch is, these days, almost entirely a vanity item.

schrijver 5y ago

There’s also a complementary strategy followed by many larger luxury brands, where the clothes are the halo product, but they make most of their profit selling accessories (sunglasses, perfume, etc.) that are affordable to many more customers (including those outside of LA!). The latter are often produced by other companies under a license.

AuryGlenz 5y ago

It’s well known in the wedding photography world that raising your prices might actually net you more customers - to an extent, anyways.