Should Hermès Raise Its Prices?

PurseBop at Hermès

Chanel handbag prices are going up… again- for the second (or third) time this year.  That Louis Vuitton bag is also going to cost significantly more. We’ve been reading and writing these reports repeatedly for the last year and a half through the pandemic, and even before then, luxury handbag prices were on the rise. Some more, some less, but directionally the same- up.

Except for Hermès. Price tags for its coveted Birkin and Kelly remain relatively flat. Perhaps there’s a couple of hundred dollars difference here and there. However, on the whole nothing particularly significant.

Image Credit: @hermes_ginza_xiaoma

Don’t believe us? Let’s look at the actual numbers, comparing Togo Birkin prices from Fall 2019 to Fall 2021. The B25 went from $9650 to $9750 (our data suggests price declined????). The B30 rose $100 from $10,900 to $11,000 and the B35 increased by $200 from $12,100 to $12,300.

It kind of defies logic. And when compared to the magnitude of price hikes for the Chanel medium flap, it is astounding. That classic flap rose $2000 in the same approximate time span, and now retails for $7800.

It’s not explained merely by inflation, labor or goods’ costs. Nor is it a matter of the Chanel flap being more in demand than the Birkin. Possibly, the inability of many to purchase a Birkin due to unavailability along with the style and ease of the flap, has increased desire for Chanel. But, we dare say many fashionistas, if given the choice, would opt for the Birkin over the Flap.

Image Credit: @arilovesfashionx

Given that, why hasn’t Hermès increased its prices more? The demand certainly exists. Longtime Hermès customers lament the unavailability of Birkins, complaining there’s nothing available. New fans can’t figure out how to get a bag at the boutique.

Meanwhile, the secondary market and pricing of these bags soared in the last two years. True, not all Birkins are equal. Only brand new and/or smaller size bags command the highest premiums. Nevertheless, the resale market is thriving. Put another way, by not increasing its prices, Hermès is leaving money on the table. Collecting it are resellers.

Furthermore, without price hikes, devoted collectors fear devaluation. This is particularly true for used bags. When the bag you purchased for $10,000 three years ago retails for the same price now, it’s hard to justify charging that amount for the older bag. Unless, of course, it’s unused and in a rare and sought-after size/fabrication. But that’s another issue altogether.

Unlike Chanel, which is trying to create exclusivity by increasing prices and limiting purchases, Hermès is already there. Simply put, most consider it the proverbial ‘top’ of the luxury handbag market. For decades, it’s consistently been the most expensive brand.

Image Credit: Edward Berthelot/Getty Images

More importantly, it’s also is the most difficult to obtain. Never have you been able to just walk in and purchase a Birkin off the shelf. In fact, the display bags generally aren’t available for purchase. And although a few years ago it did seem like supply had increased, those days are certainly gone for now.

So the answer, as best we can tell, is Hermès doesn’t need to raise prices. With its exclusivity and demand practically preordained, it can boost revenues through other goods categories, like RTW and homeware, as well as it’s non Birkin/Kelly bags.

What are your thoughts? We’d love to know. Should Hermès increase Birkin prices? And do you think it will?

Love, PurseBop

XO

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