I think you can have luxury software, because we have luxury handbags, luxury watches, luxury perfume/cosmetics. The marginal cost of making things like cosmetics/perfume/handbags/watches are almost nothing compared to their retail prices as luxury goods.

People will pay $100/bottle for a perfume when it cost like $2 to make and distribute.

The economics of luxury goods is not about marginal cost, but about perceived value. Free software works if you have network effects and the value of the software increases with number of users like social networks. If there is little network effect, you can have a luxury niche in software just like you have with handbags/watches/perfume.

Another aspect of luxury is social status. I think this is where software falls short because people can’t easily see what software you use. Software doesn’t confer status the way handbags, watches do.

I think software can definitely have brand value. There are definitely associations with software you use. For example: Linux = hacker.

Luxury is ultimately about status and perceived value, not code/UI/usability.

If we get into WW3, probably armaments.