Ferrari

Italian luxury sports car manufacturer that exemplifies costly signaling strategy. Ferrari deliberately caps production at 10,000 units annually despite capacity for 50,000, forgoing approximately $10 billion in potential revenue to maintain scarcity signals. The company invests $400 million annually in Formula One racing (25% of revenue) and requires 200+ hours of hand assembly per vehicle.

Ferrari's strategy demonstrates how costly signals create honest quality indicators. Their $1.85 billion annual signaling cost (foregone revenue + racing + craftsmanship) generates 17% profit margins versus 6% for BMW and 4% for Toyota. The artificial scarcity enables premium pricing ($300,000+ average), exceptional resale values (70% retention at 3 years), and $500M in annual brand licensing revenue.