Econ in the News: Snap Spectacles and Scarcity Value

Snap Inc. (Snapchat’s newly-created parent) is trying to succeed where Google Glass failed: wearable recording technology. This time, Snapchat’s Spectacles – sunglasses fitted with cameras on either side that can record 10-second clips for all your Snapchat needs – appear to be avoiding the “Glasshole” negative associations that plagued Google’s launch. Indeed, Snap’s strategy provides a really interesting look at the economic concept of scarcity value: the relatively higher price of a good given low supply.

If it wanted to, Snap could have sold their Spectacles online and raked in the dough. Instead, the company has stationed “Snapbots”, complete with armed guards, in a modern-day scavenger hunt for dedicated tech nerds; one recent location was at the bottom of the Grand Canyon. These Snapbots dispense their stock of Spectacles (usually about 200 pairs) for $130 each, with a limit of two per person and a choice of three colors. Once the Snapbot runs out of glasses, it won’t be restocked.

snapchat-spectacles

The result of this sales plan is a very effective marketing strategy as well; people are learning to associate the Spectacles with high value, making it a mark of social status instead of a symbol of tech elitism. The actual market price of Spectacles (as discerned by the Ebay secondary market) appears to be over $1000, with some Snap Spectacles going for more than $1200 by enterprising resellers in the right place at the right time. Built into this price is the concept of scarcity value; people are willing to pay a lot of money to have something that is highly desirable, but that few people can obtain nowadays, even if they have the monetary means to do so.

Once this initial plan wears off, Snap will eventually sell the Spectacles to the masses, but they’re proof-of-concept sales carries with it the implication of the glasses going out of stock soon after. Additionally, a new store that promises to restock Spectacles has been set up by Snap in New York, which should lead to a dampening of the secondary markets as the severe shortage decreases. Regardless, this recent example of scarcity value is a great teaching example of demand creation through well-crafted strategy.

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