An emerging literature stream posits that drawing on users rather than internal designers in new product creation may benefit firms because the resulting products effectively satisfy consumer needs. Four studies conducted in the context of the luxury fashion industry uncover an important conceptual boundary condition of this positive user-design effect. Contrary to extant research, the results show that being “close” to users does not help but rather harms luxury fashion brands. Specifically, the authors find that user design backfires because consumer demand for a given luxury fashion brand collection is reduced if the collection is labeled as user (vs. company) designed. The results further reveal the underlying rationale for this reversal: user-designed luxury products are perceived to be lower in quality and fail to signal high status, which results in a loss of agentic feelings for the consumer. The authors explore several strategies luxury brands can pursue to overcome this negative user-design effect. Finally, they find that negative outcomes of user design are attenuated for luxury fashion products that are not used for status signaling—that is, product categories of a luxury brand that are characterized by lower status relevance for the consumer.