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This was an interesting glimpse into a world I can’t even imagine. What do the costs for “real” luxury bags even go to? Some of them apparently cost hundreds o

This was an interesting glimpse into a world I can’t even imagine. What do the costs for “real” luxury bags even go to? Some of them apparently cost hundreds of thousands of dollars. It’s enough for two artisan workers to collaborate on making a single bag a year, then rest in a comfortable lodge in the Swiss alps until they make a single bag next year. I can understand luxury car prices, to an extent. There’s engineering and material prices that surely can’t be cheap. I can’t understand a piece of cow hide going for the same price.

wodenokoto 4y ago
I think you are paying for the store front, the personal shopping experience, the models showing off the goods on runways far away. Advertisement and branding. There are plenty of costs involved in luxury goods, not all of them goes towards material.
alar44 4y ago
Most luxury bags are a few grand tops, not 100s. I'm sure they exist but that's not the norm. That's like someone buying a custom made $10 million Ferrari. Very rare.
- grapeskin 4y ago
  Looking up the subject, Birkins, I’m seeing them selling from tens to hundreds of thousands of dollars.
  - alar44 4y ago
    It's a tiny tiny part of the market. Think $500 million yacht. Yes they exist, but 99.9% of them don't cost that much.
  - deleted 4y ago
    [deleted]
  - CamperBob2 4y ago
    Almost a classic example of a Veblen good. The demand doesn't increase uniformly as the price increases, but they'd probably sell fewer if they cut the price in half. They've clearly found the sweet spot in the overall profitability curve, somewhere in the six-figure range.
  - thablackbull 4y ago
    alar44 is not talking about Birkins when he says 'Most luxury bags are a few grand tops, not 100s...' but the LV's, Gucci, Burberry bags most people with branded handbags have. Birkins are another class of their own.
pintxo 4y ago
Isn's this the last 20% of performance being expensive and the last 1% prohibitively so? I imagine for high-end leather, you are raising 10 animals for 1 ending up having skin without any bruises etc. Speculation: Then, in the end, this explains maybe 1/3 of the pricing, the next 1/3 is marketing (prime real estate in metropolises, extensive sponsoring, one store employee per customer, a doormen, ...) and finally some nice profit margin, looking at you LMVH.
lordnacho 4y ago
An iPhone is also quite a technological challenge, yet Apple doesn't spend nearly as much making it as people are willing to pay. Same goes with these bags, they are a luxury item that people will pay far over the production cost for. You literally buy them to show how much money you have, so it's the brand doing most of the work, and the bag-making process just needs to be somewhat professional. From what I gather the factories in China that make the real thing will also make extra copies of the real thing, thus making it extremely hard to tell the difference. The social element is maybe the most interesting, it's like a hobby for these ladies. What I've noticed through my life is there's always people who do some kind of cottage buying-and-selling on the side: friends who buy luxury watches, collectible cards, used cars, restoring old laptops. There's something universal about that instinct. Being socialites it makes sense they gather about this particular thing.
- Jyaif 4y ago
  > From what I gather the factories in China that make the real thing The Hermes bags are made in France, by leather artisans.
  - thablackbull 4y ago
    > The Hermes bags are made in France, by leather artisans. And yet ironically in the article, > She echoed a number of women I spoke with who think authentic customers are the ones getting played. “These days, the reps just tend to be better made,” a Hamptons-based chief strategy officer tells me. “They last longer. There’s more attention to detail. You can tell that things have been done by hand.”
    - nebula8804 4y ago
      The Chinese are just next level when it comes to the work ethic in learning every little detail about a particular product and applying techniques to improve. Their EV offerings will probably be very competitive once they hit the US.
    - ridgered4 4y ago
frereubu 4y ago
Someone I knew worked in a very expensive jewellery / leather shop in London called Aspreys in the late 90s. A family walked in and within ten minutes had picked out and paid for a £10,000 luggage set. There's a bunch of people around - probably even more now given the rising levels of wealth inequality - who can do that kind of thing without thinking. That family probably shopped there without thinking too much about what things cost, they just knew that they liked what was in Aspreys.
- thriftwy 4y ago
  Two centuries ago this would be the only customer type there was. Back when there were no middle class and the only buyers in some goods were the aristocracy and some nouveau riche.
  - eru 4y ago
    Exact dates depend on country. Two centuries ago Britain was already well through its Industrial Revolution. Its mass production went hand in hand with mass consumption. What you describe was probably closer to true for eg Russia.
- eru 4y ago
  > [...] probably even more now given the rising levels of wealth inequality [...] Huh? Global wealth inequality has dropped dramatically in the last few decades. What's important for luxury sales is not the gap between rich and poor, but that the rich are richer.
  - frereubu 4y ago
    I could perhaps have been clearer about the kind of inequality I was talking about - intra-national - but at the very best it's been flat over the last few decades: https://www.economist.com/briefing/2019/11/28/economists-are-rethinking-the-numbers-on-inequality https://www.economist.com/briefing/2019/11/28/economists-are... I personally don't really buy the post-tax rationale presented in that article though. Pre-tax is more interesting to me in that it's where the money is, not how much spending power people have after tax.
throwcean 4y ago
Not defending the prices but it seems to be the same as with paintings. It's just some water color on a piece of paper isn't it? The materials certainly won't make the price of famous artworks.
tasuki 4y ago
I guess they have to spend a bit on marketing? Creating the perception of "this bag is super great" probably isn't easy?
imgabe 4y ago
They're paying for the ability to display that they can afford to pay six figures for a piece of cowhide.
- dagw 4y ago
  Not just that they can afford it, but that they have been 'allowed' to buy one. You cannot just walk into a Hermes store and buy a birkenbag, you have to convince them you are 'worthy' even just to be added to the waiting list to maybe be allowed to buy one eventually. This is why second hands brikenbags go for so much. Because it's the only way to get one without having to go through the whole approval and wait list process.
eru 4y ago
Eh, luxury bags are about conspicuous consumption. Not too different from NFTs or art.

wodenokoto 4y ago

I think you are paying for the store front, the personal shopping experience, the models showing off the goods on runways far away. Advertisement and branding. There are plenty of costs involved in luxury goods, not all of them goes towards material.

alar44 4y ago

Most luxury bags are a few grand tops, not 100s. I'm sure they exist but that's not the norm. That's like someone buying a custom made $10 million Ferrari. Very rare.

grapeskin 4y ago
Looking up the subject, Birkins, I’m seeing them selling from tens to hundreds of thousands of dollars.
- alar44 4y ago
  It's a tiny tiny part of the market. Think $500 million yacht. Yes they exist, but 99.9% of them don't cost that much.
- deleted 4y ago
  [deleted]
- CamperBob2 4y ago
  Almost a classic example of a Veblen good. The demand doesn't increase uniformly as the price increases, but they'd probably sell fewer if they cut the price in half. They've clearly found the sweet spot in the overall profitability curve, somewhere in the six-figure range.
- thablackbull 4y ago
  alar44 is not talking about Birkins when he says 'Most luxury bags are a few grand tops, not 100s...' but the LV's, Gucci, Burberry bags most people with branded handbags have. Birkins are another class of their own.

pintxo 4y ago

Isn's this the last 20% of performance being expensive and the last 1% prohibitively so? I imagine for high-end leather, you are raising 10 animals for 1 ending up having skin without any bruises etc. Speculation: Then, in the end, this explains maybe 1/3 of the pricing, the next 1/3 is marketing (prime real estate in metropolises, extensive sponsoring, one store employee per customer, a doormen, ...) and finally some nice profit margin, looking at you LMVH.

lordnacho 4y ago

An iPhone is also quite a technological challenge, yet Apple doesn't spend nearly as much making it as people are willing to pay. Same goes with these bags, they are a luxury item that people will pay far over the production cost for. You literally buy them to show how much money you have, so it's the brand doing most of the work, and the bag-making process just needs to be somewhat professional. From what I gather the factories in China that make the real thing will also make extra copies of the real thing, thus making it extremely hard to tell the difference. The social element is maybe the most interesting, it's like a hobby for these ladies. What I've noticed through my life is there's always people who do some kind of cottage buying-and-selling on the side: friends who buy luxury watches, collectible cards, used cars, restoring old laptops. There's something universal about that instinct. Being socialites it makes sense they gather about this particular thing.

Jyaif 4y ago
> From what I gather the factories in China that make the real thing The Hermes bags are made in France, by leather artisans.
- thablackbull 4y ago
  > The Hermes bags are made in France, by leather artisans. And yet ironically in the article, > She echoed a number of women I spoke with who think authentic customers are the ones getting played. “These days, the reps just tend to be better made,” a Hamptons-based chief strategy officer tells me. “They last longer. There’s more attention to detail. You can tell that things have been done by hand.”
  - nebula8804 4y ago
    The Chinese are just next level when it comes to the work ethic in learning every little detail about a particular product and applying techniques to improve. Their EV offerings will probably be very competitive once they hit the US.
  - ridgered4 4y ago

frereubu 4y ago

Someone I knew worked in a very expensive jewellery / leather shop in London called Aspreys in the late 90s. A family walked in and within ten minutes had picked out and paid for a £10,000 luggage set. There's a bunch of people around - probably even more now given the rising levels of wealth inequality - who can do that kind of thing without thinking. That family probably shopped there without thinking too much about what things cost, they just knew that they liked what was in Aspreys.

thriftwy 4y ago
Two centuries ago this would be the only customer type there was. Back when there were no middle class and the only buyers in some goods were the aristocracy and some nouveau riche.
- eru 4y ago
  Exact dates depend on country. Two centuries ago Britain was already well through its Industrial Revolution. Its mass production went hand in hand with mass consumption. What you describe was probably closer to true for eg Russia.
eru 4y ago
> [...] probably even more now given the rising levels of wealth inequality [...] Huh? Global wealth inequality has dropped dramatically in the last few decades. What's important for luxury sales is not the gap between rich and poor, but that the rich are richer.
- frereubu 4y ago
  I could perhaps have been clearer about the kind of inequality I was talking about - intra-national - but at the very best it's been flat over the last few decades: https://www.economist.com/briefing/2019/11/28/economists-are-rethinking-the-numbers-on-inequality https://www.economist.com/briefing/2019/11/28/economists-are... I personally don't really buy the post-tax rationale presented in that article though. Pre-tax is more interesting to me in that it's where the money is, not how much spending power people have after tax.

throwcean 4y ago

Not defending the prices but it seems to be the same as with paintings. It's just some water color on a piece of paper isn't it? The materials certainly won't make the price of famous artworks.

tasuki 4y ago

I guess they have to spend a bit on marketing? Creating the perception of "this bag is super great" probably isn't easy?

imgabe 4y ago

They're paying for the ability to display that they can afford to pay six figures for a piece of cowhide.

dagw 4y ago
Not just that they can afford it, but that they have been 'allowed' to buy one. You cannot just walk into a Hermes store and buy a birkenbag, you have to convince them you are 'worthy' even just to be added to the waiting list to maybe be allowed to buy one eventually. This is why second hands brikenbags go for so much. Because it's the only way to get one without having to go through the whole approval and wait list process.

eru 4y ago

Eh, luxury bags are about conspicuous consumption. Not too different from NFTs or art.