For some people, £600,000 for a diamond-encrusted Christmas tree topper may be a normal purchase during the Christmas season. But that is just one crazy expensive item, and there are so many more such as pens that are available for just short of £1 million.
Here we look at the market for pricey purchases and investigate why some items are so expensive!
The attraction to expense
Yes, the super-rich do make more expensive purchases because they have the disposable income to do so. But there are many reasons why people feel the need to spend huge amounts of money on products. Victor Ricciardi, professor of finance at Goucher College in Baltimore, believes that “People are more likely to pay more for something if they perceive a lower-priced product as giving lower satisfaction and a higher risk.”
The attitude the buyer has also determines if they are likely to make an expensive purchase. There is a reason why luxury brands such as Prada and Aston Martin have failed in Denmark—as a country, it has one of the most equal distributions of wealth anywhere in the world.
The digital revolution is a big factor in influencing the luxury market and pricey purchases. Media portrayals of wealth on TV and social media have been shown to influence the way the public thinks about luxury goods and what their life should look like.
Why are some items so expensive?
Many facts can determine what price a product is set at. This could be the quality of materials that were used to make it, the level of craftsmanship that was required or even just the brand whose product it is. Two materials that often bump up the cost of an item to the realm of pricey purchases are diamonds and gold when being made to create pieces such as halo engagement rings—but why?
Are you a gold lover?
Gold is a material that has forever been connected with wealth. This opinion has carried on till today with gold being used to show wealth.
It is a material that gets a lot of attention from the rich and upper-class. Gold has always been associated with wealth, power and fancy décor, and this opinion has continued to today.
Gold is actually one of the least-reactive elements in the periodic table, which means that it is less likely to corrode when used. The metal also doesn’t rust and is aesthetically pleasing, plus it’s versatile! We’ve seen many items crafted out of gold or fitted with gold plates to add value. Take a look at the following:
- Costing $999,999 (£707,799) is the GoVacuum GV62711. Features include: a 14-inch cleaning nozzle, a weight of 16 pounds and gold plating. There were only 100 of these products made—true exclusives.
- Another standard product made expensive by the addition of gold is the 24-carat gold shoelaces. These cost a pricey $19,000 (£13,448) or shoppers can opt for the silver shoelaces which would set them back $3,000 (£2,123)
Remember the four Cs
People’s love of diamonds can be traced back hundreds of years. At a certain point in time diamonds were reserved for royalty—making them a stone owned by the rich and wanted by everyone else. Nowadays diamonds are not just reserved for royalty, anyone can go out and buy them, but their price and quality still vary depending on the four Cs.
The four Cs are clarity, colour, carat and cut, each of these factors determines how much a diamond is worth. Clarity refers to the overall appearance of the diamond, which can be affected by ‘inclusions’ and ‘blemishes’. These are often not seen by the naked eye but are found through assessment by an expert. The weight of the diamond is expressed through the carat weight — a metric ‘carat’ is defined by 200 milligrams. Moving over to colour, a pure diamond is truly colourless and more valuable than one which has a presence of colour. Lastly, the cut grade of a diamond determines how well it sparkles due to its interaction with light.
As seen at the start of this article, diamond-encrusted items can sell for millions of pounds. Take a look at the following, for example:
- Potentially the most expensive pair of shades in the world are Dolce and Gabbana’s DG2027B sunglasses. They have been crafted with a solid gold frame and studded with diamonds. To buy this luxury product would set you back $383,609 (£271,472).
- One dog collar was valued at an astounding $3.2 million (£2.26 million). Forbes Magazine called it ‘the Bugatti of dog collars’ and it’s clear to see why. It was encrusted with 1,600 diamonds with a seven-carat, D-IF (faultless) colour-graded centrepiece and black alligator leather for the collar.
Diamonds and gold are examples of true luxury materials. They’ve been popular for centuries with the rich and famous and aren’t going anywhere anytime soon. It’s clear that the addition of them to even the most mundane of products can increase the value more than a hundred times over. While the wealthy have the funds to do so, it’s likely that they’ll continue to splash their cash on pricey purchases that everyone else thinks is a bit extravagant.