Good Quote by Raghuram Rajan
“Customers often value a good more when its price goes up. One reason may be its signaling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich.”
About This Quote
Source Book: The Rise of the Rest, Raghuram Rajan, 2019
Higher price can create perceived prestige, making consumers value items for status rather than function.
In simple terms: Expensive items signal wealth, boosting perceived value.
Key Takeaway
Consider status effects when pricing.
Themes
status
signaling
consumer behavior
pricing
perception
Mood
analytical
critical
Type
observational
economic
When to use this quote
- Luxury branding
- marketing strategy
- product positioning
- price setting
Key Concepts
Signaling theory
Veblen goods
psychology of value
Questions to Reflect On
- Does price always reflect quality?
- How does status influence purchase decisions?
A Different Perspective
High price may deter actual utility seekers.
