Having worked at luxury brands I can tell you from a corporate perspective, it is not an easy climb to selling your goods for a premium. High Quality First, you need to produce a product of greater quality or benefit than what your lower cost competitors have, in order to validate a higher cost. This may mean production is local, versus sent abroad, materials must be sourced at a higher quality level, the designers can be either famous (branded) or command a greater pedigree, one must have more exacting standards and a stronger customer service model where there will be a lot of waste and returns to ensure the items in the market meet this higher level of quality. This all costs money to do. Marketing Second, you need to build the brand equity by marketing, which is higher and more targeted than your competitors. If they advertise in a teen magazine, you will advertise in Town and Country. If they use second rate marketing agencies, you will use a top-tier agency to ensure your brand strategy is at a higher level and penetrating the right market with the right brand cohesion. There is no room at the top to get it wrong. You may need to increase budgets and staff at every level to ensure shipping runs smoothly, distributors are managed well, quality assurance is top notch, production and advertising are working to produce that brand equity you need to back up all your expensive advertising, or your brand is done for. That takes money. High Demand Third, you are trying to grow, maybe even globally, because a true successful business these days can not live only locally. Penetrating foreign markets takes research, different consulting groups on the ground, investments, new local advertising and lots of time running without profit for sometimes even years. These things are often funded by the market that is in a mature state, so the cash cow is supporting the question mark market. More sales, more growth, higher quality, higher marketing branding, all this requires (and attracts) higher talent who in turn commands a higher salary and competitive benefits, and that takes money. The inherent costs of running a successful, sustainable quality high-end brand requires the money they pass on to the customers for the caché of wearing that brand. If it was just money over fist being made for charging a lot on a cheaply made product, everyone would do it. But the market demand for something that does not support customer’s requirements will die fast and the company will not be able to charge premiums once that initial excitement is over their product. You must deliver something premium, consistently. And that takes money.
