It's price discrimination.
The market for a $1,095 mattress wouldn't be caught dead shopping at CostCo, even if it's the exact same mattress.
The "Select" branding isn't there to bamboozle them, it's to help them rationalize paying $500 more to be known as someone above shopping at CostCo.
Casper wants one person's $1,095, and another's $599, so they use branding and channel differentiation to scoop $1,694 from both sales, instead of $1,095 for just one, or $1,198 for both.
If we presume their cost is $400, then they go from $398 in margin (two sales at $599) or $695 in margin (one sale at $1,095) to $894 in margin. That's good business!
