For fashion fans and celebrity stans, the first Monday in May means one thing. Fashion’s Biggest Night — the Met Gala.
An exclusive group of celebrities handpicked by designers and approved by Anna Wintour make their way up the iconic steps of New York’s Metropolitan Museum of Art as photographers scramble for the perfect photograph.
The whole spectacle is a bit nuts, and no stranger to controversy. But in watching this year’s coverage, I couldn’t help but wonder about the economics behind it all.
This year, individual tickets cost $100,000, up from $75,000 in 2025. But as I dug into some of the details, I realized it’s possible tickets are actually priced far too low.
The Met Gala is an example – perhaps the most visible example – of what happens when a market revolves around customers who purchase a product not in spite of its expense but because of it, and the sellers can’t compete the normal way through discounts and deals. And once you understand the economics behind luxury brands, the Met Gala stops looking like a runaway extravagance and may start looking like one of the more sensible things this industry does.
The cast of characters
When you watch the Met Gala on TV (or more likely, scroll through Instagram) the visible stars are the celebrities. They’re climbing the staircase. They’re posing. They’re wearing outfits that look like they required both a tailor and a civil engineer.
But the celebrities aren’t the buyers — they’re the display case. Most buyers are actually the brands. Fashion houses buy tables and decide which celebrities, ambassadors, clients, editors, athletes, or other useful people they’d like to put there. They use the night as part fundraiser, part ad campaign, and part status tournament — buying association, attention, and prestige that the celebrities help deliver.
So, why do luxury brands spend this much to put the right people in the right clothes in the right room on the right night?
Signaling status through luxury goods
To answer this question, we first need to understand why consumers gravitate toward luxury goods and brands in the first place. And that’s all about signaling. Signaling is basically a fancy word for “showing off.” But — and this is important — it’s showing off that works.
Think about peacocks. When a bloke peacock wants to encourage a sheila peacock to mate with him, he needs a signal that will convince her of his reproductive fitness. And to be useful, it must be hard to fake. That’s where the tail comes in.
A peacock’s tail is absurd, ornate, and cumbersome. It’s also energetically costly. It’s exactly the sort of thing that a peacock would never grow if its goal was simply to move through the world efficiently and avoid getting eaten. But that’s precisely why it works — separating the fit from the unfit peacocks.
Humans do versions of this all the time. In fact, the first iteration of signaling theory was developed to explain why some people invest so much of their lives — and money — in certain types of education.
A super bowl ad doesn’t just say “here is our product, isn’t it great?” It also says: watch us burn money.
Signaling also shows up in super bowl ads. A super bowl ad doesn’t just say “here is our product, isn’t it great?” It also says: watch us burn money. This works because only a certain type of firm can afford to burn money. Thus, the ad is a credible signal of staying power, confidence, and scale.
A luxury good is basically a super bowl ad that got lost on Rodeo Drive. A handbag isn’t just a handbag. A watch isn’t just a watch. They’re products that broadcast information, telling the world about your wealth, your taste, and your status.
And because of this, luxury brands are in such a strange business. Their customers are peacocking — they want a signal that’s expensive enough to be believable. Which means the brand has to protect the signal’s credibility. If everyone can get a Birkin bag cheaply, the magic (and the signal) disappears.
How brands compete when discounts are off the table
So luxury brands are in a bind. Since the whole point is prestige, they have weak incentives to compete by lowering prices. In fact, price cuts would likely backfire. But just because brands can’t compete on price doesn’t mean competition disappears. It gets redirected.
One of the best examples of this sort of non-price competition can be seen in the real-estate market. For a long time in the United States, residential real-estate commissions were clustered around 6 percent (3 percent to the buyers’ agent and 3 percent to the sellers’). This meant that as home prices rose over time — and selling them became more and more lucrative — more people wanted into the business.
Real estate agents started to spend much more of their time chasing clients, networking, advertising, knocking on doors, and trying to swipe listings off rivals. Basically, anything except actually buying and selling houses.
But there weren’t suddenly twice as many houses to sell just because there were twice as many realtors. There were roughly the same number of transactions, but now spread across a lot more agents. As a result, real estate agents started to spend much more of their time chasing clients, networking, advertising, knocking on doors, and trying to swipe listings off rivals. Basically, anything except actually buying and selling houses. The job, most of the time, is being visible enough that someone thinks of you when they decide to buy or sell.
If luxury brands can’t compete by cutting prices, then rivalry spills into other margins. More celebrity dressing, editorial jockeying, and fashion shows. More giant stores on the fanciest streets in the world, more elaborate campaigns, and more Met Gala spending. None of which involves actually making clothes.
Think of those strange luxury flagships. Thousands of square feet on Fifth Avenue with marble floors and immaculate lighting — maybe five handbags in the whole shop and virtually no customers. From the perspective of ordinary retail, it looks bonkers. It’s perfectly good real estate in some of the most expensive parts of town, mostly empty — there’s a million better ways society could use that space.
But from the perspective of non-price competition, it makes perfect sense.
The store isn’t there to sell inventory, but to stage prestige. And the Met Gala is the biggest stage of all.
The Met Gala — A clever redirection
So let’s put these two pieces together.
On one side: consumers in luxury markets want goods that help them signal status. That creates demand for things that are expensive, visible, and exclusive enough to be believable. To do that job, they’ve got to be pricey.
On the other side: brands in luxury markets don’t want to compete by cutting prices, because cheapening the product cheapens their signal. So they compete through spectacle, celebrity association, editorial dominance, and attention.
If brands are going to spend heavily on this sort of competition anyway, where would the money otherwise go? More cavernous flagships with five handbags and no shoppers?
The Met Gala is where those two worlds meet.
It’s a giant stage on which luxury brands can show that they belong at the top of the hierarchy. That they can attract stars, command the press, and shape the conversation — sitting at the very top tier of aspirational fashion and culture. That’s why the spending makes sense to them.
And now here’s the part where I’m going to surprise myself and actually defend the Met Gala: If brands are going to spend heavily on this sort of competition anyway, where would the money otherwise go? More cavernous flagships with five handbags and no shoppers? More elaborate runway productions? More celebrity contracts, PR, and after-parties?
None of this particularly advances the public good.
Now, let me be clear. The Met Gala does not eliminate this kind of wasteful spending, but it does redirect some of it — channeling it into a fundraiser for the Met’s Costume Institute. That makes it a pretty clever piece of institutional design.
Yes, the Met Gala is extravagant and absurd. Yes, it’s a lot of highly organized peacocking. But it’s also one of the less bad outlets for an industry reliant on non-price competition.
Is the Met undercharging?
All told, the 2026 gala raised $42 million for the Costume Institute. This is serious money for a museum department.
But Launchmetrics estimated that the 2025 gala generated $1.3 billion in media value for brands. This is a proprietary metric — not cash or profit – and these numbers tend to be flashy and exaggerated. But even so, the scale is striking. The museum gets tens of millions, while the industry gets hundreds of millions (possibly thousands of millions) in media, attention, and advertising.
I’d tell her to multiply the ticket prices by ten, and she’d still sell out.
So I’m left to conclude that there is a scandal at the bottom of all this, but it’s probably not the one you expected. The price of a Met Gala ticket isn’t too high, but too low. If Anna Wintour wants my economic advice — and I’m happy to charge her a luxury price for it — I’d tell her to multiply the ticket prices by ten, and she’d still sell out. As it stands, she’s boosting the bottom lines of luxury brands far more than the Met.
And giving the peacocks far too good a deal.
