A lot of people have seen or even owned, a luxury item without ever knowing it was a luxury item. This is because a lot of people don’t know what constitutes a “luxury item,” and often confuse them with essential items or inferior items. This means they can often underestimate its quality, resale value, or how essential they are.
But, what are true luxury items? And what defines a luxury, essential, or inferior item?
Economists and market researchers actually have a system for assessing whether something is a luxury item or not. It’s called the Income Elasticity of Demand. In simpler terms, this is an assessment that looks at how much a certain item will be in demand with a change in customer income.
For example, assume the average income of people who buy Ferraris is $600,000 per year. With this, Ferrari sells an average of 10,000 cars per year. Imagine the average income of their customers falls by $100,000 per year, due to a recession. This coincides with a drop in sales to 5,000 cars. This means that Ferrari’s cars have an income elasticity of demand of almost 2.99 (found through dividing the change in demand by the change in income).
So, with an income elasticity index greater than 1, we can officially say that Ferrari sells a luxury item. Meanwhile, goods that fall between 0 and 1 is a normal good, while those that fall below 0 is an inferior good.
The word “cheap” is another term often misused. It’s usually used to denote a product or service that’s relatively low cost or affordable. But, there’s a big difference between affordable and cheap.
As stated above, you can tell where a product sits in someone’s lifestyle by how it’s demand changes with people’s income. Cheap products would be considered inferior goods. This is because people will actually buy less of them as their income increases with pay raises or winnings from sites like LottoGo. The reason for this is that cheap goods usually have high fidelity and may not always serve the purpose they were bought for.
Meanwhile, affordable goods can be normal and luxury goods that are simply within the budget of middle-class individuals. These products are known for both durability and reliability. So, their demand will not go down as income increases. It may even rise.
Below, we lay out a few luxury items that are more affordable than their counterparts, but just as durable and reliable.
Rolex is a brand that’s become synonymous with luxury. In an era of watches becoming a top luxury item, Rolex is the king. Surprisingly though, they can be surprisingly affordable. The Rolex Submariner is one of the brand’s flagship watch ranges.
They hold their value well and look good on your wrist. A Rolex can go for as little as $8,000. This may seem like a lot. But, in an era of million dollar watches, it’s an affordable item for many middle-class people.
This is easily the most expensive item in the list. But, when have cars ever been a cheap item?
Relative to other supercars though, the Nissan GTR is easily the most affordable. It’s one of the fastest production cars in the world and you can get one for as little as $70,000, depending on the year of the model.
It also doesn’t fall short on specs or design, offering a durable and sleek look when getting you from A to B.
This is a luxury item that borders on necessity. For most people in middle and upper-class groups, a suit is essential.
Hugo Boss and Armani both offer well-fitted and high-quality suits that may not be cheap, but won’t break the bank. With pricing anywhere from $1,000 to $10,000, they are a worthy investment for any business person or those in formal settings.
In contrast to the Nissan GTR, this product would be the most affordable on the list. Like Rolex, Chanel has positioned itself near the top of its market of scents and fragrances.
For good reason too, they’re fragrances are usually made with high-quality ingredients and last longer than their competitors. With prices from $70 to $150 and their wide range for men and women, it’s one of the most affordable luxury items out there.
For female buyers, Louis Vuitton needs no introduction. They’ve successfully positioned themselves as one of the lead brands in luxury handbags. With materials ranging from leather to cotton, and prices ranging from $800 to $3,000+, this product epitomizes luxury. Even if it is more affordable than some luxury items.