In the last couple of weeks, there has been an interesting post on reddit and a couple of comments on this blog discussing why people are willing to spend hundreds or thousands of dollars on a single fountain pen. This is a topic people often ask about, particularly those who have recently moved into the hobby and are (understandably) a bit staggered at the prices that are sometimes paid. A lot of people respond to these discussions by saying that expensive pens aren’t any better quality than mid-range pens, and concluding that they are being bought primarily as status symbols. The premiss of this claim seems completely wrong to me, and so the conclusion doesn’t follow. In today’s post, we’ll have a look at why I feel this way.

Early on in the blog, I wrote a post that broke FPs down into several tiers, including beginner pens, intermediate, advanced, premium, etc. Recently, a reader commented on the post and asked if I shouldn’t include another category of Veblen goods. This is an economic term that is sometimes used in these discussions, but it doesn’t seem to be widely understood so we’ll begin by getting into some theory.

In economic theory, goods (products and services that people purchase and consume) can be categorised in various ways, one of which is whether the good is normal or Veblen. A normal good is one that fits with the law of demand (which simply states that people tend to consume more as a product becomes cheaper). It’s an aggregate phenomenon: if the price of a particular car falls, it doesn’t mean you personally will buy one or more, but more will be sold throughout a community. On the other hand, a Veblen good is one where people are more inclined to buy it if the price is high, the justification being that a high price signals the product is of high quality or that the consumer is of high status. This would suggest that a business could potentially sell more of a particular product if they just priced it higher, as consumers would conclude that the quality is much higher or — perhaps knowing the quality isn’t that great — they would buy it to impress other people.

Most economists are a bit hesitant about Veblen goods for two reasons: first, most economic theory from the last century has been built on top of the law of demand and its violation would undermine most of what we think we understand. Second, despite the idea circulating since 1899 I’m not aware of any evidence of support of it: after 116 years of economists looking for a Veblen good, we’ve not found a single example (and not for want of trying). To me, this suggests that Veblen goods certainly aren't prevalent, if they exist at all, which means those businesses you see selling super high-end luxury products — fine wines, expensive handbags, and even the most exclusive, premium fountain pens — are all still bound by the law of demand: when they raise prices, sales fall.

This fits with my own experience. When I come across an expensive product that I like, I do my homework: I look for reviews or online discussions and read about other people’s experiences. I try to have conversations to hear firsthand experience or even try the product, when it’s possible. Most of you probably behave in the exact same way as me. When pressed on this point, defenders of the idea of Veblen goods (particularly in pen discussions) often say that you and I might behave in this reasonable way but invoke the existence of some group of buyers who are fundamentally different to us: the wealthy, uninformed ‘other’ who has no idea about quality and no taste, but has unlimited resources to spend on ultra-expensive luxury goods. I’ll call this group the Veblen consumers.

The assumption that such people exists interests me because I have a little experience of the world that these people are supposed to inhabit. In the past, I’ve been fortunate enough to work with senior people in the banking, commodities, and public sectors. These are exactly the kinds of people who are supposed to be the rich, tasteless buyers of crap — CEOs, company directors, bankers, traders — and yet, I haven’t come across anyone who meets the definition of a Veblen consumer. These people certainly weren’t afraid to spend a serious amount of money on things, but they weren’t buying to convey some vague notion of status: they bought simply because the products suited their tastes. While expensive, they were often a smaller proportion of their income than I’ve spent on much cheaper products.

That is not to say that these people lost their perceptions of value, or were impressed by price. I’m quite certain that the presence of an expensive fountain pen — a nice Montblanc 149 or a limited edition Visconti — would not have impressed them. In fact, I think the opposite: that they would be appalled at how much money had been wasted on a pen. Rather than conveying my status and importance, it would have lost respect.

So I have had a little experience of the communities where we might find a Veblen consumer and come up with nothing. That’s not to say they don’t exist — I’ve never met an oil sheik, maybe they would fit the criteria — but it seems that they are elusive, and it’s hard to imagine luxury markets existing for such a rare kind of buyer. I think it’s more likely that luxury markets are serving buyers we know to exist: those who have disposable incomes and can afford to drop $500 or $1000 on a nice FP. But why would they do that when they could have the same quality for a much lower price?

To understand this, I think it’s worth starting by thinking about why people are willing to spend extra on fountain pens in the first place. Why is it worth spending $15 on a Pilot Metropolitan when you can have a Bic for much, much less? For most people who come into the FP world, I think the answer lies in functionality. It’s a better writing experience: the nib moves more smoothly, the ink flows more easily, and it requires less effort. There might be some stuffing around swapping cartridges or refilling the converter, but overall it makes writing into quite a pleasant, even enjoyable, experience — one that makes us willing to pay extra.

The justification for going beyond improved functionality — beyond the Beginner pens — seems to lie in our willingness to pay for quality and convenience. The quality of the overall build and the nib improve our experience and are things that many of us are willing to pay extra for. The convenience of a larger capacity — say a piston instead of a converter — or a retractable nib mechanism is also valuable to most people.

It seems that the $200 price point is where quality plateaus. Improvements beyond this point seem to diminish: from $50 to $150, there is a massive improvement in the quality of the pen that you can get. But from $150 to $250, there isn’t a whole lot of difference. The nib is still gold (albeit maybe a little larger), the filling system is still likely to be a piston, etc. Quality and convenience don’t really explain why we might spend more than $200 on a pen: as many have pointed out on reddit, there isn’t a huge amount of difference between the functionality or quality of a $200 pen and an $800 pen.

To me, the explanation lies in the aesthetic experience. The last post introduced the idea of aesthetics and demonstrated that it applies in the FP world but there isn’t a great deal of variety in design below the $200 price point. Many models from the big three Japanese brands (Pilot, Platinum, and Sailor) are almost indistinguishable to non-FP enthusiasts, and while some of the European brands are more distinct (particularly Faber-Castell), you could describe the dominant motif as being sleek and modern: the Lamy 2000? Sleek and modern. The Pilot Vanishing Point? Sleek and modern. Sailor Pro Gear? Sleek and modern. Pelikan M205? Sleek and modern. You get the picture.

Obviously, this is because brands recognise that sleek and modern is the design that most buyers in this price range are after. If you want something that’s better suited to you — something that suits your personal tastes and preferences, something that reflects who you are and what you like — then you have to look away from the pens that are mass-produced and mass-marketed, into the niche markets. Niche markets necessarily mean higher costs, and therefore higher prices. A $600 pen isn’t meant to be three times better than a $200 pen, it’s meant to be a $200 pen that really, truly speaks to a small group of buyers and appeals to their tastes.

I’m going to speak from personal experience here: I like Montblanc Meisterstucks, a lot. It’s not because they are piston fillers with nice nibs — every brand in this price range offers that — but because they have a nice, classic, refined look to them. Each element of the design seems to complement the others; there isn’t a lot of contrast, and the overall look is deeply unified. That resonates quite deeply with me, but I know that it doesn’t work for everyone. Some people find the design lacks complexity — the elements are too complementary — and they are left feeling it is a bit plain or simple. That’s a totally legitimate view as well. Someone who finds the Meisterstucks a bit dull might prefer the Italian brands, like Delta or Montegrappa, which utilise bolder elements and richer contrasts. It’s a lot easier to justify hundreds of dollars on a pen when the aesthetic is something that has deep appeal to you — and for me, it makes a lot more sense to spend $500 on one pen that truly works for me than buying five $100 pens that have less overall appeal.

The other piece of this puzzle comes down to your ability and willingness to spend on the designs that appeal to you. That’s something which I’ve previously covered in the discussion on pens being Overpriced and will get into again later, but it makes sense to me that pens sell for a lot of money when the aesthetic has deep appeal to a person who has the ability to purchase it. It also fits neatly with the experiences of other purchases, like cars, watches, shoes — even holidays. At one level, you want something that’s functional; at the next level, you want to go beyond basic functionality and get something that’s good quality (or a better experience); finally, you want something that has emotional resonance for you. For me, this explanation makes a lot more sense than claiming that some people -- people who aren't us or anything like us -- behave in some totally irrational way, actively ignoring their own preferences in order to impress others.