The reverse value/luxury curve

For most products and services, we rate them on a curve.

Of course the seat on the discount airline was cramped, but that’s okay because it was cheap.

Of course this Camry doesn’t look or ride like a Porsche, don’t be stupid…

But, the opposite is true in the high end. When luxury goods are compared to luxury goods, the narrative is, “this one must be better, in absolute and relative terms, precisely because it’s more expensive.”

And so hiring McKinsey costs 10x more than hiring a former McKinsey consultant. And so it’s worth more.

And so $150,000 elephant-sized stereo speakers (yes, they exist) are far better than $5,000 speakers (can’t you see?)

This goes beyond the standard understanding of a Veblen good. Because in addition to being more expensive, these super-luxury goods are less effective, harder to use and generally a pain in the neck. That’s part of their appeal.

(And yes, the same is true for corporate luxury goods, like software and IT consulting…)

Price accordingly. And listen to the reviews with a careful skepticism.