The Strategy Story

The Strategy Story

5/31/2025, 4:01:54 AM

Unpopular Opinion: Luxury brands are justified to charge high prices. They are just following the principle of value based pricing. People shouted "Luxury brands are looting us!” after seeing how cheap luxury bags are in China compared to global prices. But here’s a reminder: Luxury pricing = Value-based pricing. Not cost-based. No one is forcing you to buy that ₹2.5L ($3,000) handbag. It’s not essential. It’s about identity, aspiration, and exclusivity. And brands price it based on what people are willing to pay. So are they really looting you? Let’s look at net profit margins in 2024: Luxury Brands (Value-Based Pricing): LVMH (Louis Vuitton): ~16% Hermès: ~30% Kering (Gucci): ~8% Tech & SaaS Brands (Utility-Based, Recurring Revenue): Microsoft: ~36% Adobe: ~25% Meta: ~38% Luxury isn't even the most profitable game in town. These brands aren’t "looting" you. They're just really good at branding and know their customers well. If customers perceive high value and willingly pay, it’s smart pricing and not exploitation. Don’t confuse premium pricing with greed. Luxury sells dreams. And people love to buy them. #luxurybrands

The Strategy Story

2/12/2025, 7:42:55 AM

🚀 Big News! After the incredible success of The Strategy Story, we’ve identified a key gap in how business professionals collaborate, learn, and share knowledge. *To address this, we’re excited to introduce Strivo.ai — an AI-driven community platform designed to help strategy professionals find actionable insights and solutions faster than ever before.* 🔥 We’re launching our Beta soon! The early access will be limited to a select group of users who will get an exclusive opportunity to experience Strivo.ai before anyone else. 👉 Don’t miss out! Be among the first to access the beta: https://www.strivo.ai/ We’d love to have you onboard and hear your feedback as we shape the future of strategy collaboration.