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Veblen Goods: How Brands Turn Price into Desire

The Psychological Alchemy of Making Expensive Irresistible

Author

Arzoo Batra
15 Feb • Read Time: 4 minutes

In partnership with

The Weird Science of Wanting More Because It Costs More

Imagine a world where the price tag doesn't just tell you what something costs – it tells you how much you'll enjoy it.

Welcome to the bizarre realm of Veblen Goods, where expensive isn't just a price. It's a promise.

💡: Your brain doesn't just see price. It experiences it.

The Experiment That Reveals Everything

Researchers conducted a mind-bending experiment with painkillers:

  • 10 cents painkiller: 61% said it reduced pain

  • $2.50 painkiller: 85% said it reduced pain

  • Identical product. Completely different experience.

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The Brands Mastering Psychological Pricing

1. Rolex: Selling Status, Not Seconds

The Time-Telling Myth:

  • Base price: ~$6,000

  • Actual product: A watch

  • Real selling point: Social status

  • 2023 Revenue: $10 BILLION

Rolex doesn't advertise time-keeping. They advertise prestige.

2. Hermès: The Bag That Makes People Wait Years

Birkin Bag Strategy:

  • Most expensive version: $2,000,000

  • Sold out immediately

  • Buyers wait YEARS to purchase

  • Exclusivity as the ultimate luxury

3. De Beers: Turning Rocks into Romance

Diamond Transformation:

  • Diamonds: Readily available

  • De Beers' Genius Move: Positioning diamonds as symbols of eternal love

  • Created an entire cultural narrative around engagement rings

  • Maintained massive price premiums

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The Psychology Behind Veblen Goods 🧠 

Why We Want Expensive Things:

  • Status signaling

  • Perceived quality

  • Psychological satisfaction

  • Social validation

The Neurological Hack

When you believe something is expensive, your brain:

  • Increases pleasure perception

  • Enhances expected experience

  • Triggers status-seeking mechanisms

💡 Marketing Wisdom: Price isn't a barrier. It's an invitation.

Real-World Veblen Good Mechanics

How to Create a Veblen Good

  1. Scarcity is Your Friend

    • Limited editions

    • Exclusive access

    • Controlled availability

  2. Tell a Compelling Story

    • Beyond function

    • Emotional connection

    • Lifestyle aspiration

  3. Create Psychological Barriers

    • Waiting lists

    • Relationship-based purchasing

    • Insider access

The Economic Paradox

Veblen Goods Defy Traditional Economics:

  • Demand increases as price increases

  • Opposite of normal supply-demand curves

  • Psychological value trumps rational decision-making

Strategic Implications for Brands

  1. Stop competing on price

  2. Start selling experiences

  3. Build psychological value

  4. Create exclusive narratives

The Numbers Don't Lie

Veblen Goods Impact:

  • 40% higher perceived value with price increase

  • 60% of luxury buyers prioritize status over function

  • $1.4 trillion global luxury market in 2025

💡 Final Insight: The most powerful brands don't sell products. They sell transformed identities.

The Philosophical Footnote

Veblen Goods reveal a profound truth: Value is a story we tell ourselves, and price is just the punctuation.

The next time someone says "you're paying for the brand," wink and say, "Exactly. And that's the point."

Until next time..