The Veblen Good Strategy
For status-driven products, higher prices can increase demand by signaling exclusivity and quality.
Explanation
Veblen goods violate normal demand curves—higher prices increase desirability because price itself communicates status and quality. This works when customers use the product to signal identity or when price serves as a quality heuristic in ambiguous categories. The key is ensuring the high price feels justified by exclusivity, not arbitrary.
Real-World Example
Supreme drops limited items at high prices, creating lines and resale markets. Tesla Model S maintained $100K+ pricing when competitors offered cheaper EVs—price signaled innovation leadership. Rolex could produce cheaper watches but high prices maintain luxury positioning and desirability.
How to Apply
Identify if your product has status or signaling value to customers. Test higher pricing with messaging emphasizing exclusivity, quality, or expertise. Use scarcity and selectivity to justify premium positioning. Monitor if higher prices increase or decrease demand in your category. Position price as investment in identity, not just utility.