Luxury Unfiltered: The Hidden Force Behind Pricing Power in Luxury

For many years, I have dedicated a significant part of my research to one question: what truly creates value in luxury? The answer is not in the cost of materials or functional attributes. Luxury is extreme value, created through psychological effects that extend far beyond the object itself. Added Luxury Value represents this hidden premium. It sits between tangible product features and the emotional perception clients attach to the brand. ALV is what allows a Hermès Birkin to sell for multiples of its material cost or explains why handbags aimed at women often command higher prices than work bags, despite similar materials. It is a subtle yet decisive factor in pricing power.

In recent years, many luxury brands assumed demand would continue indefinitely and that clients would accept any price. The post-pandemic boom reinforced this illusion. Brands raised prices aggressively, relying on reputation and scarcity rather than investing in the emotional and cultural foundations of their value. This strategy worked until it didn’t. Today, the market is more discerning, competition is fiercer, and brands that failed to strengthen ALV are facing resistance, declining desirability, and frustrated clients. Price alone is never enough; it only works when ALV is strong.

Pricing power in luxury is not a financial tactic, it is the outcome of managing perception. Successful brands create desire at a level that feels almost irrational, using storytelling, cultural resonance, identity, and emotion. ALV is generated across every touchpoint and client interaction, not in the finance department. Even one subpar interaction can erode loyalty. Many brands still price according to category conventions, but clients value the brand itself, not the category. The emotional and cultural narrative determines whether a price increase is embraced or rejected.

Younger clients, particularly Gen Z and emerging affluent buyers, are reshaping the rules. They purchase based on emotion, meaning, and alignment with brand values. They demand experiences that reflect the story and culture of the brand at every touchpoint. When these expectations are unmet, ALV quickly erodes, and pricing power collapses. Today, brands must connect purpose, experience, and emotional storytelling consistently to maintain loyalty and justify premium pricing.

Across industries from fashion to automotive to hospitality the same pattern holds. Brands that invest in client experience, emotional storytelling, internal culture, and transformative training build strong ALV. Pricing then becomes a natural reflection of value, rather than a risky lever. Brands that focus only on operational excellence, logistics, or category benchmarks may excel functionally, but they struggle to differentiate emotionally. ALV must be actively managed, reinforced, and cultivated. When story, culture, and client experience align, pricing power becomes not just possible but sustainable.

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