Scarcity creates value: lessons from luxury

Scarcity has always been an important principle for luxury brands around the world, and in my opinion it can certainly be useful to apply the scarcity principle to many non-luxury brands as well. The scarcity principle is about how people have a tendency to place a higher value on things that are perceived to be (or actually are) rare or in limited supply. While luxury brands often use scarcity as one of their best practices, any business, brand or professional can use it to create demand for their products and services. And stronger margins along with better customer loyalty.


"Nothing creates cool like scarcity" - Neil Blumenthal


For starters, let's have a look at how scarcity works in a luxury business model. There are two main types of scarcity: real scarcity and perceived scarcity. Real scarcity is due to real, often physical constraints, such as rare materials or limited available resources (human craftsmanship and skill, or perhaps your own time and energy) and, of course, pricing, which can become very irrational, to the point where the more expensive a product is, the more it sells, seemingly violating the law of supply and demand. It's called the Veblen effect in high-end luxury. It's a topic I'll be exploring in a separate article. To return to a more concrete example, the Swiss luxury watch brand Richard Mille is using materials such as graphene, carbon TPT and other advanced composite materials to create watches that are extremely light and durable.  These materials are, by nature, hard to come by. Perceived scarcity is about deliberate (business) decisions to introduce limitations. For example, Dunhill accessories are perceived as rarer and more exclusive than those of S.T. Dupont. This is because Dunhill doesn't have as many stores around the world. Pagani limited its Huayra model to just 100 units. Luxury whisky brands such as Laphroaig and Bunnahabhain make 'travel retail exclusive' bottles, which can only be bought in selected duty-free shops at selected airports around the world. And so on. How many official Ferrari dealerships do you think there are in the London area? Two within walking distance - one owner.


"Luxury implies scarcity" - Prof. Jean-Noël Kapferer


But scarcity isn't just about offering less. Quite the opposite, it's about creating more value, intrigue and desire. It's more complex than that. Scarcity is often associated, directly or indirectly, with notions of availability, accessibility, exclusivity, exoticism, uniqueness, waiting lists, customisation and so on. It can be about space (distribution; locations), time (limited; availability) or quantity (rare materials or limited production). Exclusive and selective distribution makes it possible to control the 'experience' of a product or service in its most finite granularity. Limited time, availability of products/services, exclusive previews, waiting lists, etc. are all mechanics that fuel the fire.


Scarcity in practice

The role of scarcity is paramount for luxury brands because, underlying the very concept of luxury, supply must never exceed demand. Whether real or perceived, demand must always be highly disproportionate to supply in the luxury business model. For example, on an operational level, some luxury brands limit the distribution of their products, while others make the luxury customer wait for the order to arrive. If you want to order a Rolex Daytona, you have to wait about three years. Even if a store had one - or more than one - it would think twice about putting it on display. Making things rare (or: unavailable) increases their desirability to the point where price alone is no longer the deciding factor.  An obvious shortcut, therefore, is simply to limit your products and raise their price. But it's of course not that simple. It's said that in the early decades of its existence, Fabergé, the famous jeweler, made each piece unique. Even the cheaper pieces didn't have a single copy. He took the principle of scarcity to a whole new level, which is why even royalty were among his customers. While this works beautifully in luxury, the concept goes beyond the high-end and is much more widespread than you might think.


"Scarcity can be a catalyst for growth” - John C. Maxwell


Today, the principles of scarcity are being applied across industries. From fast fashion to retail, gaming, automotive, technology, B2B and services. It's very broad.  For example, the fast-fashion brand H&M often collaborates with high-end designers for limited-edition collections. These collaborations create a sense of exclusivity and scarcity, as the special collections are only available for a short time, attracting a rush of shoppers early in the morning before the store opens. Nike limits the production of certain iconic sneaker models (often in collaboration with a superstar) and has marketed its vintage designs so well that they have become collectible items that are in high demand.

In games, players are incentivised with points, tokens or fictional currencies that are in limited supply. Tesla is also quite exemplary in taking lessons from luxury brands. For example, it has an exclusive distribution model, with as few or no intermediaries as possible for the sale of its products. Interestingly, many new car brands copy the approach of taking super-low deposits and then shouting "sold out". Few people know that these sales are driven by "USD 250 fully refundable and non-binding" deposits. Apple is another great example. Millions around the world aspire to the next Apple product and wait impatiently for it to arrive in stores. The demand is evident in the length of the queues outside the Apple Store. The first round of iPhones is always in short supply. So customers wait for some of the second round models to arrive. Similarly, the new AI assistant called Rabbit sold out in the first 24 hours. Want to get ChatGPT Pro for $20 a month? Join the waiting list...

It's not just about physical or software products. Skilled professionals and experts can also be in short supply. For example, there are very few sharply focused experts such as commodity traders' coaches, vintage car restoration specialists, jet purchase lawyers, SAP automotive warranty leads and so on. These experts can charge a price for their services, and they choose who they will work for and who they will not, and on what terms, rather than the other way around.


If you look closely, there are many non-luxury brands and service offerings across a wide range of industries that effectively use the scarcity principle to generate interest, increase demand, drive sales, maintain (or even 'increase') full margins and create sticky loyalty. The equivalent from an employer branding or EVP (Employer Value Proposition) point of view is the introduction of fringe benefits, multi-year stock option plans, etc. Not for everyone, but attractive - and hard to give up once you get used to it.


"Scarcity creates value" - Kevin Harrington


The key to making scarcity work is communication. There is a reason why luxury brands shout their products, dreams and aspirations from the rooftops to the masses. From live-streamed high-end events (streaming is for everyone, attending is not) to influencer marketing and high-level digital, product placement, out-of-home and media spend. The more people who hear the message, and the fewer who can have/access it, the better for scarcity to work in your favour.


Seven ideas for integrating scarcity

No matter what industry you are in, there are very practical ways you can start applying the principle of scarcity.


  1. Limit your supply and/or availability
  • Many non-luxury brands create limited editions or seasonal releases to make their products seem exclusive and scarce. For example, they might release a limited quantity of a particular design or colour for a particular season, creating a sense of urgency for consumers to buy before the product runs out. If you are a service business, think about what expertise you have that you can limit - and talk about it.


  1. Create pre-orders
  • Non-luxury brands often use pre-order campaigns to gauge interest in a product and create excitement. By limiting the pre-order window or offering exclusive bonuses for early orders, they can create a sense of scarcity and motivate customers to commit to a purchase before the official release.


  1. Be time-sensitive
  • Your brand can tie promotions to specific events, holidays or occasions, making the offers time sensitive. For example, an electronics brand could offer discounts exclusively during a holiday weekend, creating a limited time opportunity for consumers to save money. This also applies to your own availability. Think about including a "next available" rather than "open to work" call-to-action on your website - immediate availability is generally an antidote to desirability.


  1. Work in exclusive partnerships
  • Working with influencers, celebrities or other brands for exclusive partnerships can contribute to a sense of scarcity. Limited time collaborations or products only available through certain partners can make consumers feel part of a unique and exclusive group by purchasing these items.


  1. Offer membership or club models
  • Consider membership models that offer exclusive products, services or discounts only to members. This can be particularly effective in service industries; to build loyalty, create exclusive roundtable discussions that are by invitation only. Or create a members-only section of your website or social media where you can share exclusive content, offer personalised advice or host Q&A sessions.


  1. Communicate value
  • Use storytelling to highlight the scarcity and exclusivity of your offering. Explain why they are limited and the value they bring to your audience. Share stories of how your unique expertise or approach has helped others, underscoring the value of your scarce time and attention.


  1. Offer customisation
  • Offer customisable options for your products or services, making each offer unique to your audience. This can apply to many areas, from retail to B2B services. For example, many banks promote and offer highly personalised investment approaches, but are very good at using technology to scale their offerings behind the scenes.


Undoubtedly, these are just the starting points for your own journey of using scarcity to your advantage. By strategically incorporating scarcity into your business and marketing tactics, you can generate interest, increase sales, achieve higher price points, better margins, stronger customer loyalty and create a perception of exclusivity.

But beware: Luxury brands teach us that scarcity alone has very little power. Whether it is because something is literally scarce or because the brand uses scarcity as part of its brand strategy, it only works if the rest of the work is done with a culture of excellence. Scarcity is not a shortcut and should never come at the expense of the quality of what you offer.




[1] World’s Lightest Mechanical Watch Revealed Thanks to Graphene, University of Manchester, 13 Jan. 2017,

[2] Ruffatti, Isabella. “IPhone 15 Sold out in Less than an Hour.” Amateur Photographer, 15 Sept. 2023,

[3] Nolan, Beatrice. “A Sleek $199 AI Assistant That Promises to Handle Your Digital Tasks Sold out in a Day - but More Are on the Way.” Business Insider, Business Insider, Accessed 17 Jan. 2024.

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