Table of Contents

• Introduction
• Luxury as Strategy: Why Status Signals Matter in B2B
• The Indian Setting: Cultural and Commercial Variables
• Procurement Meets Prestige: Why Luxury Makes Sense in B2B
• Veblen Goods in B2B’s Future: What’s Shifting for Companies
• The Significance of Veblen Goods in Strategy and Procurement
• Practical Illustrations of Veblen Goods in Indian Markets
• Conclusion

We’re used to thinking that higher prices lead to lower demand. That’s Economics 101. But every rule has its rebels – and Veblen goods break this one clean in half.

These aren’t your average luxury goods. They don’t sell despite their price tag—they sell because of it. The steeper the cost, the more desirable they become. Think of them as status symbols with a price-demand relationship that runs counter to logic. In this rare corner of the market, expensive equals elite—and elite drives demand.

What’s really going on here? It’s not about the product—it’s about what the product says. This is social signaling in action. Whether it’s a ₹7 lakh designer chair that ends up in a CEO’s boardroom, or a high-margin, custom-finished logistics solution pitched to luxury real estate developers, the function is often secondary to the signal.

Here’s the part that doesn’t make headlines: Veblen dynamics aren’t limited to luxury fashion or imported cars. In Indian B2B sectors, the same psychology plays out quietly—in upscale office interiors, premium construction inputs, even certain steel subgrades pitched as “architectural exclusives.”

Let’s take a real example. A mid-sized tile manufacturer from Gujarat decides to stop competing on volume. Instead, they release a limited series of matte-finish, handmade tiles inspired by Mughal architecture—3x the price, fraction of the output. Not only did the demand hold, it shifted upward. Designers started specifying it in premium commercial bids. Why? Not utility. Perceived rarity. Narrative. Prestige. In other words: Veblen.

Luxury as Strategy: Why Status Signals Matter in B2B

Luxury doesn’t always wear gold-plated labels. In B2B, it often shows up as premium positioning, white-glove service tiers, or pricing structures that suggest, “We’re not for everyone—and that’s the point.”

Let’s call it what it is: prestige pricing as a business move. And it works—not by accident, but by design.

Think about this: when a product or service carries a visibly high price, it subtly tells the buyer it’s in a different league. For enterprise vendors or project-based firms, this signal can help filter out the wrong clients and attract the right ones—those who equate price with reliability, design finesse, or hard-to-access expertise.

This isn’t about gouging. It’s about intentional differentiation. That high-end supply chain consulting firm charging double? They’re not just selling advice—they’re selling confidence. In sectors like logistics, steel, or niche manufacturing, this plays out through “signature” offerings: limited-capacity output, highly specialized specs, or value-added layers that don’t show up on spreadsheets—but show up hard in perception.

A quick detour: A procurement head evaluating two bids—one competitively priced, one deliberately high—won’t always pick the cheaper option. Not in high-stakes tenders. Not when quality failure could derail deadlines or compliance. The cost isn’t just monetary—it’s strategic.

And here’s where it gets more layered: some MSMEs lean into this approach to step up the value chain. They shift from “vendor” to “brand,” not by volume, but by how they package and price what they offer. It’s a quiet but powerful repositioning.

The Indian Setting: Cultural and Commercial Variables

Luxury in India isn’t always what you might think it is. Sometimes the little things say more than the fancy cars or expensive watches. You might be surprised to learn how much status a handcrafted office desk or a custom steel door can convey. These are not only useful objects; they are also outward manifestations of exclusivity and success.

The worst part is that aspiration is the foundation of the Indian market. On the one hand, there is a passion for value—for locating the greatest offer, the most value for the money. On the other hand, there is a great desire to demonstrate success. And the idea of Veblen goods finds a place in this delicate balance.

Businesses frequently pay more for products that are regarded as premium or exclusive in the world of business-to-business (B2B) procurement, especially in industries like real estate or construction. This isn’t because the products are inherently superior, but rather because they convey information about the buyer. Functionality isn’t the only consideration when choosing premium steel for infrastructure projects, high-end flooring, or an HVAC system. It has to do with prestige. It all comes down to conveying quality, trust, and a readiness to spend money on something that will enhance your brand.

Consider this instance: A logistics company based in Pune started providing a higher level of service, which included individualised customer care, special tracking, and quicker delivery times. They were initially concerned about pricing themselves out of the market. To their astonishment, however, demand only increased. Why? Because, even if it meant paying a little more, businesses wanted to collaborate with a partner they could trust—someone who could prove they were trustworthy and serious.

The trend is evident even in government procurement. Branded materials or more expensive components are clearly preferred for smart city projects or high-profile infrastructure tenders. Not because less expensive options won’t work, but rather because a brand’s perceived worth matters in official circles. And that represents a small but significant change in the way that business-to-business procurement decisions are currently made.

Procurement Meets Prestige: Why Luxury Makes Sense in B2B

When you think of luxury, the first things that probably come to mind are things like expensive cars, designer watches, or high-end fashion. But in the world of procurement, luxury doesn’t always look like that. It’s more about value—not just the numbers, but how you’re positioning your product.

For example, think about a company selling steel for major construction projects. Sure, you could buy steel from anyone, but you’ll pay more for the one that’s trusted, that’s been tested, and that comes with a guarantee. In these high-stakes industries, that extra price tag isn’t just for the product—it’s a signal of reliability.

Now take logistics. When a company says they provide “premium” service, they’re not just talking about getting things from one place to another. They’re talking about timely deliveries, secure packaging, and personalized customer service. This isn’t something you get from every logistics provider, and that’s what makes it worth the extra cost. People are willing to pay for peace of mind, especially when they know the consequences of delays.

For small businesses, it’s simple: Don’t just sell products or services. Sell value. Add the little touches that make people want to come back, and charge accordingly. Whether it’s better service or a guarantee that your product will work exactly how it’s supposed to, positioning your offering as premium can set you apart in a crowded market.

Veblen Goods in B2B’s Future: What’s Shifting for Companies

Most people likely associate luxury with pricey items like luxury cars or designer handbags. However, luxury is beginning to mean different things in the business world. Offering customers something more, such as improved quality, additional services, or simply peace of mind, is more important than simply charging a premium price for a high-end product.

Consider a small company that sells steel. What if they marketed their steel as more dependable or having quicker delivery, rather than merely competing on price? Although the steel itself may not be all that different, the surrounding experience may give it a more upscale feel. Additionally, people are prepared to pay more for that sense of assurance.

Now consider a logistics firm. They may have slightly higher prices, but they guarantee delivery and provide real-time tracking. Consumers view it as a promise that their items will arrive promptly and safely, not just as another delivery. Businesses are beginning to see the value of that extra attention and that it makes all the difference.

This change offers a chance for smaller companies. Finding ways to provide your clients with greater value is more important than providing the cheapest service. This could include a more robust warranty, individualised service, or even quicker delivery. Even if the base product is identical to others, these kinds of features give a product a more upscale feel.

In the future, providing more is more important than merely lowering costs. It all comes down to presenting yourself as a company that offers value and gives clients the impression that they are getting something that they won’t find anywhere else. And that’s where the opportunity lies for MSMEs. Your product doesn’t need to be reinvented. Simply determine what unique touch you can offer to establish yourself as the preferred option.

The Significance of Veblen Goods in Strategy and Procurement

Getting the best deal at the best price is the main goal of procurement for the majority of businesses. However, procurement becomes much more strategic for companies that recognise the potential of Veblen goods. Finding the best deal isn’t enough; you also need to position your product or service to enhance your brand and add value.

Suppose you are in charge of a logistics business. You used to concentrate on providing standard delivery services at affordable costs. You may now begin to consider premium offerings, such as trackable services that provide customers with peace of mind or priority shipping. This is a method to reframe your company’s whole value proposition, not just a service improvement. If customers believe they are getting a little something extra, they are willing to pay more.

This also holds true for other industries. For instance, a business in the construction sector may offer steel that is not only robust but also environmentally friendly. Even though the material’s actual qualities are very similar to those of ordinary steel, the added environmental value can give the product a more upscale feel. Here, being the most trusted—which comes from providing something special—is more important than being the cheapest.

This change presents an opportunity for MSMEs. Examine what additional value you can bring to your offering if you want to stand out. Making something completely original isn’t always the goal. Little things like improved service, greater focus on quality, or even providing options for personalised delivery could have a big impact.

In the future, Veblen goods will be more important in strategy and procurement. Making sure your product stands out from the crowd is the key. Regardless of the industry, the goal is to establish a reputation that is worth the cost.

Practical Illustrations of Veblen Goods in Indian Markets

Veblen goods often bring to mind luxury brands and high-end items. But in India, particularly in the B2B sector, these ideas are beginning to appear in unanticipated locations. Some businesses are already coming to terms with the fact that selling the product is not all; rather, it also concerns how the item affects the consumer.

Consider designer steel. The building industry in India is thriving, and certain businesses are producing high-quality steel goods. While their strength may not be significantly different from regular steel, the emphasis is on quality control, delivery speed, and environmental friendliness. The extra advantages—such as sustainability and accuracy—make it seem like a luxury item, and companies are ready to spend more for that.

Premium logistics is yet another excellent illustration. Indian businesses such as Blue Dart or Gati have included more services to their fundamental delivery system. From real-time tracking to express deliveries, these businesses have transformed the simple act of shipping into something that seems unique. Veblen goods are about generating a perception that justifies the price tag, not only about selling at a high price.

Smaller companies, particularly MSMEs, will find much to take away from this. Veblen goods’ power can be used even by non-high-end brands. Focussing on additional service, improved quality, or perhaps just a quicker turnaround time will help you to make a regular product feel unique. Value perception is quite strong; every company, even tiny ones, can use it.

Conclusion

In markets like India, where buyers are becoming more discerning, this idea is gaining ground. Whether it’s a premium logistics service, a limited-run product, or a high-quality raw material, businesses are discovering that there’s strategic power in offering less to sell more—as long as what’s offered feels exceptional.

It’s not about copying luxury brands or inflating prices. It’s about understanding your customer and figuring out what matters to them. That might be reliability, exclusivity, social proof—or simply the confidence that comes with choosing the “better” option.

For procurement heads, small manufacturers, and even digital-first vendors, the takeaway is simple: you don’t have to be the cheapest to win the deal. Sometimes, the smarter move is to build something that’s worth paying more for—not because of what it is, but because of how it’s positioned.

That’s what Veblen goods are really about. Not flash. Not hype. Just value—framed right.

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