The psychology behind why we buy luxury products


Approaching the holiday season, it’s all about family, food, sharing happiness and presents of course. Nowadays, looking at advertisements and stores, Christmas is all about the gifts. Originated from the gifts of the three wise men, now all over the world people are giving presents to each other.

In the US, Black Friday is a world famous event when huge sales are pushing people over into the busiest season ever: Christmas shopping. This year the shift to online was even more present, according to business insider retail stores welcomed less foot traffic in stores than last year. However looking at all the mass shopping going on in this weekend, online revenues booked another record year. It was the first time online sales went over the 3 billion dollars… And this is only the US.

In other countries, Black Friday (or Cyber Monday) or not near as big as in the US. But still this month often represent the period most sales of that same year is brought in for a company.

I work at a large e-commerce company myself, where the holiday season is beyond spectacular. Every person within the company is working their asses of in order to satisfy all online shopping customers, and to make sure they get their presents on time. Working in this sector it’s one of the most stressed out times of the year, and one of the best ones you will ever experience.

Imagine that on the busiest moments, people order at least dozens of products per second. Yep, you’ve read that right, per second. Amazon sold even 86 items per second on Black Friday, and that was only last year. Online shopping made buying presents a whole lot more convenient. And everybody is embracing the possibilities that comes with it.

So what does this has to do with buying luxury products? Global demand for luxury goods is growing as well, although not as strong as it used to be. And the Christmas holidays are still the best season to treat your friends, family or yourself with something luxurious.

But what exactly are luxury products?

It’s not only about fabulous designer clothing, shoes and bags. But also mobile phones or hing end smart devices, like a self-learning thermostat. Looking for a proper definition I came to the following:

Luxury goods are products that are not necessary but are a pleasant addition in your life, and of which demand increases (sometimes disproportional) as income grows.

So when income rises, people tend to spend a bigger % of their income on a luxury goods. When having lower income, a old television set is probably the one you buy. But when your income rises you might consider a smart television with 3d options. Therefore a television is a luxury product. This is also being measured by the income elasticity of demand. 

When trying to achieve more savings it’s important to not being dragged along with this. Instead it’s key to let expenses remain at a certain standard while your income rises. Or even lower your expenses at the same time. What can help is to understand why we are attracted to these kind of items, and how we can stay away.

The attraction of luxury goods

It’s an undeniable fact that good quality products are favored over poor quality products. Luxury items are most often associated with better quality or have more options. Although the materials may be soft, the design may be more beautiful or it may has a higher comfort. The price tag of a luxury product is far from appealing. Unless having a high income or a lot of savings, most will not be able to afford.

Considering the high amounts of outstanding consumer debts and the known fact that we don’t always behave rationally, a lot of people don’t always act in their best financial interest. And there is nothing wrong with it, it’s human behavior. By understanding how we act and why we can influence how we tend to act.

Luxury products are the perfect example of how irrational behavior people can have. A working mobile phone can be bought for only €50, yet people spend hundreds on one with a famous brand name. (anyone owning an iPhone?)

But why?

One reason is that we tend to ignore the negatives of a product, and only focus on the positives. With Apple, customers line up nights before a new product release in order to be the first to buy it. They stay loyal with the brand even though the products aren’t really technologically unique or superior to similar products.

We perceive luxury products as excellent quality, and non-luxury goods as inferior. For example: a cheaper car thats need maintenance is seen as a liability, but a sports car that needs an expensive repair is suffering from how it’s handled.

Another is because luxury goods can give a boost to self-esteem and status. People like to show off or feel the need to keep up with The Joneses. A study also showed that individuals whose self-worth was harmed, sought affirmation in high-status goods.

These kind of products are often associated with wealth and succes. But also tend to provide a sense of belonging. The feeling that you’re part of something and keep up with all of the others.

The internet is a powerfull driver in the uplift of sales in luxury goods. With online shopping all items, doesn’t matter how expensive, got available to everybody with a computer and internet acces. A €450 costing handbag is just a few mouse clicks away.

Shopping can work as an ultimate therapy session, especially with luxury items. When feeling blue, because of online, impulse shopping has only been made easier.


People buy luxury products because it’s all related to the emotions we feel at that moment. The product being bought is just a physical form being used to fill the need for that emotion.

It really doesn’t matter if we’re financially comfortable with it. We buy these items to reward ourselves, show off or gain acceptance.

So whenever I feel the urge for some unexplainable spending, or impulse shopping, I remember to think about why I’m doing it in the first place. Is it something I really need? Is it worth the money? Do I even have the money to spend in the first place?

When emotion is taking over, asking these kind of question brings up the ratio part of this whole thing. And makes it easier to say no, or to realize something might just be worth it.

Did you ever experience the need for impulse shopping? Or do you feel better when purchasing certain items? Or are you some die-hards who’s always in control of your spending habits? 


5 thoughts on “The psychology behind why we buy luxury products

  1. Great post!

    “Luxury goods are products that are not necessary but are a pleasant addition in your life, and of which demand increases (sometimes disproportional) as income grows.”

    I never thoughts on luxury products…for a long time I typically just associated luxury products with expensive (guess all the marketing does work)!

    I think I’ve moved a little further up the spectrum on the luxury goods market for workout clothes. Before I would buy Champion shorts/shirts because they were the cheapest money can buy. However, I’ve more recently seen myself pick up a few Under Armour gear (albeit on Black Friday) even though its probably twice as expensive.

    I mean the Under Armour clothes ‘feels better’ because the fabric is nicer, but both brands pretty much do the same thing haha.


    • Thanks a lot!

      Marketing certainly does have a high impact on how we perceive products (and a lot of companies are damn good in it too!) It’s astonishing sometimes how easy you get ‘tricked’ in buying something.

      I believe we are all somehow affected by buying more ‘expensive’ goods over time, not only because our income grows but also because over time our demands can change.

      I’m also buying clothing of different (more expensive) brands now than I used to do 5 or 10 years ago, also because it just last longer and the quality is way better. But mostly on sales as well. Apparently we can’t keep that part out 😉


  2. I have to admit that I get on my wife about buying designer brand clothes. She thinks that they are far superior to non-designer. We’ve had “discussions” about how they are both produced in the same factories but she’s convinced designer things last longer.

    She then flipped the argument on me one day and said if you don’t care about designers why do you like Nike gear so much. She had me there. I have to admit I love Nike clothing to the other brands.

    Funny how the perceived value changes when it’s flipped on you 🙂


    • Thanks for the nice comment, really made me smile.

      There is probably something to agree on in both statements. The fun fact is that it doesn’t really matter because YOU believe it has a certain value.

      Love Nike as well and can’t go without my sneakers anymore 🙂

      Liked by 1 person

  3. I do think the ‘pay for quality’ argument is valid to some degree. There are some brands that charge a lot just because they want to be perceived as a high end brand, but there are others where the build quality is noticeably better and it is worth it. Quality doesn’t always have to set you back though. I swear by Toyota products because of my positive experiences and they are priced competitively and in many cases less than other brands. I think it is good to think about this when you buy an item. Make sure if you pay a premium for something, that you can honestly say the build quality is better than the cheaper model. Don’t notice the label, just the item. Thanks for sharing!



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