There is no question that, in a blind test, luxury goods are overpriced. That’s the definition of luxury goods. They are not better in terms of measurable engineering specs. They are better because they are scarce.

Godin misses the point here — he’s rehashing an Econ 101 text on what a luxury item is. Any kitchen-table conversation can get that far. What he’s missing is that the luxury isn’t meant for the consumer — the luxury is meant for the business: the business has the ultimate luxury in that it can assign any price to the item, and people will pay for it. Make your price as high as you need to support every other endeavor in the business. You then have complete license to create the best. There are no concessions or compromises.

And that is magical. It is a model we want to preserve, because there are no other businesses or industries where cost is not an issue. It does not matter who these luxury brands are: Chanel can close its doors tomorrow. It matters that artists and craftsman have an option to create the best without the typical constraints of a business. That is luxury.