Aspirants dream about Birkin bags, but they'll settle for anything with an Hermès logo on it. So Hermès sells Birkins to wealthy socialites, and not-quite-Birkins to those who've seen them on TV.
In doing so, it captures all the marketplace demand for its brand name through price discrimination. Some luxury brands eschew aspirational customers altogether - you won't find a Tom Ford suit for less than a couple of grand.
High-end prices have gone off the deep end; as the Wall Street Journal reported, "in the past five years, the price of a Chanel quilted handbag has increased 70 per cent to $4,900. Cartier's Trinity gold bracelet now sells for $16,300, 48 per cent more than in 2009."
And luxury sales are slowing down. Consumption was an impressive $390 billion in 2013, a 7 per cent increase over 2012 - but a drop from 11 per cent growth rate in 2011.