What Drives People To Spend Thousands On Luxury Products?

The psychology behind spending big behind an experience that will be extremely temporary is something many people don’t understand. If you could afford it, would you spend $10,000 on an electronic item or any other luxurious item?

If you could afford it, then why not? But is that luxurious piece 10 times better than the $1,000 item? If considered, rationally, it should be.

We often consider expensive items to be of better quality, bespoke and probably better in a lot of ways. But we all know that’s not always true. So what makes people give away their hard-earned cash on something temporary and probably of an acceptable quality?

According to research, it is proved that we have become so influenced by the cost-quality theory that we rate pricey things as superior even when it’s of the same quality as a less expensive option. When consuming expensive things, your brain too enjoys the experience more, thinking that you’ve earned this expensive experience.

On the Lookout for Ultimate Experience.

People tend to assume that if an item is twice as expensive, do buyers assume it’s twice as good or even better. Since we’re on the lookout for an enhanced experience, we think so.

If a movie is rated 3 stars, it is like a safe choice. For movies rated either 1 or 5 stars means they are extremely good or extremely bad. Since people are looking for the best, they will pick the five-star rated movie. Similar logic is used when people buy very expensive products or experiences.

By collecting memorable experiences, consumers obtain a sense of accomplishment and enhance their self-worth. When you splurge on something to increase your ‘experiential CV’, your happiness will be fleeting, it’ll be less and less rewarding every time.

Flashing the cash

Others spend with the sole purpose to show off that they have reached their level of success. You will want to let everyone know that you’re now a part of a community. According to a theory in Economics, the demand for some goods increases as their price drops. But if it is a Veblen good, then the demand as its price increases, because of its exclusive and coveted nature.

The Feel-good Factor

Lastly, the simplest reason. Everyone spends a hefty sum on something expensive because it makes them feel that when they consume it, they’ll feel good. The amount of happiness you get from spending money will depend on how you spend it and not necessarily how much.

But it is noticed that splurging on items for ourselves is finite and doesn’t add up to increases in happiness over time. Instead, spending money on experiences rather than things. If you’re looking for happiness that stays longer then according to research, giving to others can make us happier people.

Of course, buying things for yourself makes you happy but it’s for the moment; hence, temporary. It just doesn’t seem to add up to much happiness over time. Giving to others seems to add up to happiness over time.