Recently I realised that a small white handbag would do well in my wardrobe. A white/ off-white leather bag, top handle with a shoulder strap/crossbody option. One that could be used for a night out as well as daytime. Something that could fit my phone, a cardholder, my keychain and a lipstick. I had my criteria all written down so I began researching some of my favourite brands: Givenchy, Loewe, Louis Vuitton, Celine. I wanted something timeless, well made which fits my aesthetic. The more I researched the more I realised that for a small leather handbag by one of the above mentioned brands, I would need to spend at least 2000 USD. Now, I am no stranger to forking out big bucks for luxury items especially handbags. But at that moment, I took a step back and asked myself, should I always spend so much on small leather goods? Is it really worth it?
Let us be honest, even if we love designer handbags and can afford to pay for them, 2000 USD for a small handbag even in the finest lamb leather, a bag that barely fits my patience is absolutely ridiculous.
What is the actual cost for a small leather bag? Luca Solca, an equity analyst at Exane BNP Paribas, estimates that the production cost of a basic Birkin is around 800 USD. While the quality is exquisite and the craftsmanship is top tier. A 12,000 USD Hermes Birkin bag is for want of a better term way overpriced, that is a 1,500% markup! What we are actually paying for is the prestige of wearing luxury, the history of the brand, the marketing, gorgeous stores sitting on prime real estate in most expensive cities in the world, packaging, the shopping experience and the millions paid to A list celebrities who are used in advertising.
Basic economics teaches us that luxury goods have high income elasticity of demand. In other words, as people become wealthier, they will buy more and more luxury goods. So the prices have nothing to do with the actual cost of the product. No matter how soft and buttery the New Bottega leather bag is, it really isn’t the reason for the cost. As we say in Jamaica ‘we are paying high prices for fine company’.
Over the last few years designer handbag prices increased in double digit percentages sometimes two or more times in a year. Most notable is the Chanel Classic Flap which increased by approximately 2000 USD in a two year period. Not to be left behind, Louis Vuitton had three price increases during the pandemic. These price increases have little to do with increased costs of raw material, or production, but more to do with maintaining the luxury appeal.
So, is it worth it? Due to the high demand, and wait factor when trying to buy directly from a retailer, the bags actually hold their value and can be resold for a profit even in a used condition. More importantly, especially when it comes to luxury, value is more than dollars and cents. So for many paying these exorbitant prices is actually worth it. Some bags especially from Hermés, LV and Chanel have history dating back decades and are not simply handbags but a bit of Culture and Art. The Birkin, the Speedy and the Classic Flap (the reissued 2.55) are truly timeless pieces and in that sense worth the splurge. It is comparable to owning a Van Gogh, prices are not calculated based on the cost of paint, brushes and the canvas. The cost of Luxury is putting a price on something priceless.
Whilst I may have a wishlist with one or two luxury bags, I will hold off from making such an expensive purchase. I want to make sure I can feel good about myself without needing to always have something designer or luxury. Also I would like to challenge myself to find something contemporary, a designer that is doing something fresh, not fast fashion but a great quality handbag that will not cost me thousands of dollars. I will let you know when I find it.