Why are luxury goods so expensive?

[Blanquist]

Because they are made in western countries where the labor costs are higher? And because the materials are more expensive and because they talk more hours to make?

I'm talking about luxury clothing in this example.


I have heard about the high mark-ups on luxury clothing because of the brand name alone but is that true? I mean if something is hand-made in Italy of fine material shouldn't the price reflect that? If something costs $100 to make and then is sold for $2,000, is that so different from something that's not a luxury item that costs $5 to make but is sold for $100?

[black magick hustla]

actually, some "brand names" have better materials than like cheap clothes

[Nothing Human Is Alien]

actually, some "brand names" have better materials than like cheap clothes

Not always. A t-shirt with a Nike logo screened on the front is no better than a plain one for example.

New York Magazine ran a test on several different kinds of jeans sometime last year. They found that $30 pairs of Levi's were more durable than some of the super-expensive custom boutique denim jeans that cost $200, $300, $400, or even more.

It's a bit difficult to address the OP though. What exactly do you mean by luxury goods specifically here? Are you talking about general items like jewelry, yaughts, etc.? Or do you mean why is a Coach bag so much more expensive than a no-name bag from Wal-Mart?

It would also help to know how familiar you are with the concepts of value and price.

[Regicollis]

In general luxury goods cost more because the process is more labour-intensive. There goes much more work into baking a quality loaf of bread (long proofing time, use of low-yield specialty grains etc.) than a loaf of Wonderbread. Also some of the materials used are more expensive.

With that said a lot of "luxury" products is really just an advertising scam. A t-shirt does not become any better by having a logo stamped on it but it becomes more expensive.

Investing in brand value instead of in product quality makes good sense for a capitalist. He can take a perfectly ordinary product and charge a higher price for it by paying much less for advertising than he would have to pay for a better product.

Brand value is just another way capitalism is manufacturing "values" out of thin air.

[Blanquist]

Not always. A t-shirt with a Nike logo screened on the front is no better than a plain one for example.

New York Magazine ran a test on several different kinds of jeans sometime last year. They found that $30 pairs of Levi's were more durable than some of the super-expensive custom boutique denim jeans that cost $200, $300, $400, or even more.

It's a bit difficult to address the OP though. What exactly do you mean by luxury goods specifically here? Are you talking about general items like jewelry, yaughts, etc.? Or do you mean why is a Coach bag so much more expensive than a no-name bag from Wal-Mart?

It would also help to know how familiar you are with the concepts of value and price.

I'm talking about 'luxury' clothing. NIKE is not luxury clothing.

I said in the OP I was referring to luxury clothing.

[Armchair War Criminal]

In value-theoretic terms I would say that brand is a form of fixed capital, in that it takes labor to develop and maintain and raises prices of production above values. It would be a mistake to insist that it's chicanery; displaying that you can afford a fashionable brand and know what they are is as genuine a use-value as keeping you warm in the winter.

[MajorGeneralPineapple]

As technology improves and production capacity increases, "branding" is only inevitable. Big business realized this in the late 80s--- if you're a, say, soda company, you can't beat the competition anymore just on soda alone. Soda is easy to make and Sam's Cola tastes no better or worse than Pepsi or Coke. But Pepsi and Coke have brands, they have a carefully constructed mystique. But this is, again, just an inevitable perversion of the capitalist "ideal." Eventually you reach a point where you can't profit serving a need, you have to profit by creating a need.