For what may seem like an extravagant purchase to us, is nothing to the rich and famous – £600,000 for a diamond Christmas tree topper for example mightn’t cause a bat of an eyelid to them. And it doesn’t stop there, there are pens available for just short of £1 million and Rolex watches fitted with diamonds for close to £45,000. How the other half live, ay?

Read on as we take a look at the market of expensive goods and investigate how some items earned their price tags.

What factors can increase the price of a product?

There are many factors that can determine the price of a product, such as the quality of materials that were used to make it, the level of craftsmanship that was required or even just the brand whose product it is and their brand image.

Two materials that often bump up the cost of an item are diamonds and gold — but why these materials in particular? Our love for diamond rings can date back centuries. At one point in time, they were reserved for royalty — making them a stone owned by the rich and wealthy and sought after by everyone else.

When does our love for diamonds date back to?

Products that have added diamonds can be worth millions or hundreds of pounds. Take a look at the following, for example:

• One dog collar was valued at an astounding $3.2 million (£2.26 million). Forbes Magazine called it ‘the Bugatti of dog collars’ and it’s clear to see why. It was encrusted with 1,600 diamonds with a seven-carat, D-IF (faultless) colour-graded centrepiece and black alligator leather for the collar.

• Potentially the most expensive pair of shades in the world are Dolce and Gabbana’s DG2027B sunglasses. They have been crafted with a solid gold frame and studded with diamonds. To buy this luxury product would set you back $383,609 (£271,472).

Clarity, carat, colour and cut determine how much a diamond is worth. Clarity refers to the overall appearance of the diamond, which can be affected by ‘inclusions’ and ‘blemishes’. These are often not visible to the naked eye but are found through analysis by an expert. The weight of the diamond is expressed through the carat weight — a metric ‘carat’ is defined by 200 milligrams.

Moving over to colour, a pure diamond is truly colourless and more valuable than one which has a presence of colour. Lastly, the cut grade of a diamond determines how well it sparkles due to its interaction with light.

What draws us to purchase expensive things?

There are other reasons why consumers feel the need to splash their cash on costly goods. This might be simply because they can afford to buy such things, but there are many other reasons, such as social status, and the image that particular products portray.

It’s the attitude of a consumer that can decide what they’re going to buy too. In fact, 70% of luxury purchases are influenced by online interactions. The availability of luxury ecommerce also meant that 14% of buyers aged 18 to 24 were found to have made their first luxury purchase over the internet.

Influences from the Digital Age are also changing the luxury market. In fact, 70% of luxury purchases are influenced by online interactions. The availability of luxury ecommerce also meant that 14% of buyers aged 18 to 24 were found to have made their first luxury purchase over the internet.

Another reason could be to give off the impression of a higher social status. In one argument by French philosopher, Pierre Bourdieu, it was suggested that the things that consumers buy are ways of communicating a ‘symbolic hierarchy’ to others — a way to distinguish their place in society. Other research found that women purchased designer handbags and shoes in order to signal status — it can be one way of preventing other women from going near their man.

What image does Gold portray?

Gold has been associated with luxe and wealth for many years, and the opinion continues today. One of the reasons it’s widely used is its low reactivity levels. This means that it is less likely to corrode when used. The metal also doesn’t rust and is aesthetically pleasing, plus it’s versatile! We’ve seen many items crafted out of gold or fitted with gold plates to add value. Take a look at the following:

•Costing $999,999 (£707,799) is the GoVacuum GV62711. Features include: a 14-inch cleaning nozzle, a weight of 16 pounds and gold plating. There were only 100 of these products made — true exclusives.

•Another standard product made expensive by the addition of gold is the 24-carat gold shoelaces. These cost a pricey $19,000 (£13,448) or shoppers can opt for the silver shoelaces which would set them back $3,000 (£2,123)

These are examples of materials that can add luxury. They’ve been popular for centuries with the rich and famous and aren’t going anywhere anytime soon. It’s clear that the addition of them to even the most mundane of products can increase the value more than a hundred times over. While the wealthy have the funds to do so, it’s likely that they’ll continue to splash their cash on things that everyone else thinks is a bit extravagant.