In 1985, one of the most iconic Nike shoes ever, Air Jordan 1 was released. The basketball shoes were designed for famous athlete Micheal Jordan. Today, more than 35 years later, the shoes are still as popular as ever. In fact, it is now a multi-billion dollar worldwide sensation. The shoes are no longer just basketball shoes but a fashion and marketing phenomenon. With various design innovations, Air Jordan has now become hype. Hype means an extravagant item that only a limited number of people in the world can own. It is a sort of marketing strategy for luxury goods. In other words, exclusivity becomes the main selling point. Yet, people still buy it. In fact, some Air Jordans models are now being sold at a hefty price of over $100,000 per pair. That is the allure of limited edition items.
This phenomenon is not just happening in rubber shoes. It is also true to luxury watches, designer bags, cars and many more items out there. In economics, you call them veblen goods. Investopedia defines a veblen product as a good in which demand increases as the price increases. This means as the items become more expensive so is the demand for these products.
How are these products different? Limited edition items are actually just renditions of the original product but with a little alteration in the design detail. Typically. brands collaborate with other brands to have access to new markets. For example, athletic brand Nike collaborated with luxury brand Dior to release the Air Jordan 1 High OG Dior limited-edition sneaker that they sold for $2000 dollars but is now available in the after market at a hefty price of more than $10,000 each pair.
So, why do people buy expensive limited edition items? Although these items are high quality goods, their selling price and even the after market values do not make sense anymore. The answer is simple: people buy them for their exclusivity. Imagine owning something that only a handful of people in the world have. This is their biggest selling point. What it offers is actually a status symbol. So people are willing to buy second hand goods for a hefty amount just to be part of that exclusive group of people around the world who own that specific product.
Is it Worth it?
The answer is it depends. Buying an expensive limited edition item is all right if you can afford it. The money jar budgeting system allocates 10% of income for play account. So, if it falls within your 10%, why not? You deserve to reward yourself every now and then for all the hard work that you have been doing. It is definitely not worth it if your main purpose is just to keep up with the Joneses. And worse, if you are going to use your credit card and be buried in debt just for a status symbol.
But of course it is different if you are buying it to earn money. However, just like any business it comes with risks. Just because it is a limited edition item does not necessarily mean it will appreciate in price in the after market. You still need to do your due diligence. One of the investment rules from the Richest Man in Babylon is that never enter an investment or a business that you are not familiar with. So, make sure you know what you are getting yourself into.
In short, there is nothing wrong with wanting to own limited edition items as long as you can afford it. But if you can’t, it does not make you a lesser human being if you don’t have what your friends have. If you have a problem fitting in, then you are in the wrong crowd. At the end of the day, it all goes down to loving yourself. If you do, you will be confident about who you are. You will understand that your material possessions do not define who you are.