High Cost, High Cause: Understanding Willingness to Pay a Premium Price for Sustainable Luxury

ABSTRACT This study aims to explore the key determinants influencing consumers' willingness to pay a premium price for sustainable luxury, in the broader context of sustainable consumption, through an explanatory mixed‐methods approach. The quantitative phase (Study 1) was a survey‐based study examining how CSR actions and product attributes influence consumers' willingness to pay a premium price through their perceived ethicality and quality. Findings suggest that CSR actions enhance consumers' perceived ethicality but unexpectedly reduce perceived quality. Scarcity and aesthetics positively influence perceived quality, which in turn increases consumers' willingness to pay a premium price. Consumer perceived ethicality and long‐term orientation both have significant positive effects on willingness to pay a premium. The qualitative phase (Study 2) involved semi‐structured interviews to provide deeper insights that complement the quantitative findings. Results indicate that consumers' perceptions and behaviors toward sustainable luxury are influenced by skepticism about CSR actions, personal preferences, and trade‐offs in environmental design. This study contributes to the field of sustainable luxury by offering a framework that explains how sustainability‐related cues shape consumers' perceptions and their willingness to pay a premium. Practically, this study provides strategic guidance for luxury brands, emphasizing that sustainability elements should be used to enhance rather than replace the core values of the brand, and be integrated with consumers' values.