The Budget Babe | Affordable Fashion & Style Blog

The Psychology Behind Affordable Luxury

The Bagsnob recently alerted us to a bit of fashion insanity: Coach has put a $10,000 pricetag on its Legacy collection Alligator bag.

Those who commented on the post were justifiably shocked and befuddled, and demanded to know if the execs at Coach had lost their minds.

We, too, wondered if they'd gone off the deep end, but were determined to uncover the method behind their madness—and we found at least one good explanation on WSJ.com (Ok, maybe not good but certainly apt): Luxury brands apparently need to create high-priced anchor items in order to fool consumers into purchasing their lower-end, and hence "affordable luxury" items instead.

In other words, the lovely people at Coach would like you to covet the 10k gator bag, then satisfy your needs by purchasing a $200 Coach hobo bag instead as a sort of consolation prize.

This reasoning makes sense to us, because we've succumbed to this sort of thinking ourselves. We've certainly bought designer sunglasses or t-shirts or keychains just to get a piece of the action. And apparently, that's exactly what designers want us to do. According to the WSJ article, "accessories like sunglasses, fragrances, and logoed belts drive the sales of companies like Gucci and Louis Vuitton."

We've also been tempted to buy Marc by Marc Jacobs because it's cheap compared to Louis Vuitton, or Miu Miu compared to Prada, and well, the list goes on.

Our advice for outmaneuvering marketers is to simply know your budget, know your values and then stick to them. It's hard not to draw comparisons, but if your budget for a winter coat is $200, then don't buy a $300 designer coat just because it's on clearance at a sample sale.

But what about you? Are you swayed by the astronomical pricetags of certain designer goods? Is your frame of reference a blur because of them?
Comments
glad you used the journal article for reference. isn't it amazing what you find in the wall street journal? i used to read it at work since it's the only paper my boss got, and was astounded that if i read a fashion article in the wsj, a few weeks later that item was in all the style mags. same with news. remember the word 'jatropha'. i thought it was a place in india because of the way the headline was worded, but it's a hedge crop that's got the potential for being the new biofuel. it's weird interesting stuff like that which catches your eye.
:-)
#1 maggie z on 2007-08-27 07:34 (Reply)
sorry - got carried away with the last comment. personally, if my coat budget is 200 and i saw a great coat, good quality, which used to be 600 and is now 300, i'd buy it and give up something else to make up the difference in price. it always pays to pay up for quality. don't go for the label, go for the quality. as for the 10K+ price tags, that's just nuts. lindsey and brittney can afford that and it doesn't give them class, does it?
:-)
#2 maggie z on 2007-08-27 07:37 (Reply)
We're impressed with the journal lately, too, especially writer Christina Binkley who did the piece we cited! She seems to have her finger on the pulse of fashion as they say.

We have to disagree with you on going for the $300 coat. Chances are you'll use the same logic for your purse...and your shoes...and your car...and it can really start to add up.

Another point: Some people buy things they see as classics, but they're not "classics" kind of gals, so those pricey black slacks and that pricey black wool peacoat end up sitting unworn in the back of their closet. It might be a great quality classic, but if you don't wear, what's the point?

Still other consumers assume higher pricetag equals better quality and that's not always the case, so again, that $200 coat might be just as good as the $300 coat, and you couldn't saved $100 bucks.

But if you know your shopping habits, and you can judge good quality (which we're sure, dear reader, you can!) then by all means, buy up. :-)
#2.1 The Budget Babe on 2007-08-27 08:43 (Reply)
I cannot believe people didn't know about this before, its called marketing, and the do it well, Why because they know people are suckers for fashion!
#2.1.1 Reina (Homepage) on 2007-11-29 22:43 (Reply)
What may seem like stating the obvious to some is news to many.
#2.1.1.1 The Budget Babe on 2007-11-30 12:47 (Reply)
i guess i meant if i had a choice between buying a $200 coat retail and a $300 sale coat i'd opt for the higher price one, providing it's better quality. a coat is a major purchase for me and i hate shopping for one so i try to get one that will last and last. my last one was bought in italy for $99! i've worn it 4 years now. sometimes you get lucky.
:-)
#3 maggie z on 2007-08-27 10:59 (Reply)
We see your point, and it's a good one.

We should have used a different example above, because the WSJ article wasn't actually talking about buying designer goods that were marked-down. Rather it was talking about how people will buy "affordable" luxury items when they can not afford the real "luxury" items.

So, the question is would you buy Prada socks vs. a Prada blouse? Or Chanel sungalsses vs. a Chanel suit? Or a Tiffany pen vs. Tiffany diamonds?
Does that make sense?
#3.1 The Budget Babe on 2007-08-28 11:08 (Reply)
You girls know what is a sure fire way to avoid the marketing tricks thrown at us by high-tag-designer-items vs "reasonably"-priced-designer-items? Go shopping with you boyfriend or husband. lol! Men don't fall for that. "I want it! It used to be $600 and now its down to $200!" male, "So what?! Its still $200 dollars!!!! Do you know how many ---insert sports or electronic item here---- i can buy for that!" I can honestly say that I've had the sense talked back into me on several occassions and my bank account now thanks me, and honestly, I can't even remember the things i just HAD to have that i left behind, I guess I didn't need them that bad after all! I've also heard this work with my mother and father as well! lol :-P
#4 Peaches (Homepage) on 2007-08-28 09:34 (Reply)
So TRUE!
smart significant others make very good financial advisors, for sure. my hubby is a classic for saying exactly what you mentioned, the "it's still $200". another thing he brings up is "why are you buying it now if you won't wear it till next year (for those 'must-have' 70% off sale items)? you know you'll find new things you like next year and then this will just be last year's stuff." or something like that.
re the prada sox vs prada blouse, i would only buy the cheapy item if i had a limited budget and it was a gift. when i was in amsterdam a few years ago i wanted to get my daughter something from the armani store as a cute souvenir so i told them my budget was 20 euros and they showed me a plastic key chain. i got that, but i'd never get it for me bcuz the logos don't do anything for me, knowing you can get knockoffs on the lower east side any day.
also, i don't think 2-300 for a handbag, even if it is coach, is cheap. it's still a whole heap of money in my world!
:-)
#4.1 maggie z on 2007-08-28 11:40 (Reply)
We're glad we hashed this out. Thanks to everyone's comments, we've found some clarity!

So here goes: Don't let Coach's $10,000 purse fool you into thinking that a $200 purse is reasonable. Sure, it may seem cheap by comparison BUT if your budget for a purse is $50, then stick to your guns.

HOWEVER, if you absolutely must have something Coach, then by all means, get the $30 keychain. It's still overpriced for a keychain, but you'll be happy with your little prize :-)
#4.1.1 The Budget Babe on 2007-08-28 12:43 (Reply)
You're so right!!
#4.2 The Budget Babe on 2007-08-28 12:34 (Reply)
I agree with you completely. The value of any item is really what people are prepared to pay for it. It makes economic sense for fashion marketeers in the luxury sector to put a high price tag on their goods. Its up to us if we want to pay it. This creates a perception of luxury and therefore makes their goods desirable.I think few people have the self control to completely ignore the luxury sector, me included. I think this is a great philosophy for life though, if you value yourself, Others will think the same about you.
#5 Designer High Street (Homepage) on 2007-11-19 04:51 (Reply)
To address your point about valuing oneself: I think you are absolutely right. I have certainly experienced that in my own life.

The question for some, though, may be this: Do I value myself enough to buy a $1,000 purse? OR do I value myself enough to put that $1,000 toward a fabulous vacation...or toward the down payment of a home? I think you can best honor and value yourself by being smart and responsible with your money - as well as honest about what you can and can not reasonably afford. :-)
#5.1 The Budget Babe on 2007-11-19 10:24 (Reply)
Having a hubby as a financial advisor and one that is so tight that he squeaks, it would not matter how much money we accumulated. Although we were both business and psychology majors in college, it was if Jimmy Buffet was marrying Warren Buffet. But I succumbed and am tight but not as tight as hubby. He would never buy a new car, although we do drive used BMWs. So if something isn't on sale, we don't buy it. So "BUDGET" is my middle name. I agree with your budget-awareness theory.
#6 Bec Temp on 2007-11-19 09:42 (Reply)
i realize this post is an old one but i came across the link on another blog and had to note how prescient it is considering the book on exactly this topic that came out a few months ago....

your point is well made and while i have made the choice to buy a Chloe top for $150 b/c it was marked down...reading the book "Deluxe, how luxury lost its luster" was an eye opener into the marketing of luxury goods to the masses...and since then i have found it difficult to make that same choice...
#7 diana on 2008-01-05 01:27 (Reply)
i read the book description on Amazon - looks like a fascinating exploration of the evolution of luxury. while that's certainly not my area of expertise, i'm eager to learn more about this topic - one must understand the highs and lows of the fashion market for a full picture and to be an informed consumer :-)
#7.1 The Budget Babe on 2008-01-08 14:03 (Reply)
One option I didn't hear mentioned was to have what you really want by scouring the better consignment shops. Let someone else pay the extravagant "new" price tag, then get it at a steal while it's still in excellent shape.
#8 Bruce W. Coffman (Homepage) on 2008-04-24 15:37 (Reply)
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