Over the last several years, we have been carefully monitoring what we previously coined as the “Birkin Premium.” Let’s review the concept before we examine what has happened to the Birkin Premium in the United States over the last three years as Hermès and Chanel increased prices, and what could happen if and when Chanel raises prices again on its Classic flap.
By definition, in financial terms, a premium or discount is the percentage difference between one good’s value and that of another. Putting it simply, the Birkin Premium refers to how much more expensive the Birkin is compared to another bag. The Premium does not take into account the brand exclusivity or difficulty in acquiring a Birkin over that other bag, it just narrows in on price.
For our purposes, the comparison is the Classic Chanel flap in sizes medium and large to the Birkin 25 and 30, respectively, in the United States. Note, this is based on retail pricing only, not what you might pay in the secondary market. It also does not factor in any Hermès prespend to build your profile in order to “facilitate” a bag offer.
If we study the prices and calculate the Birkin Premium (again, over the Chanel Classic flap, not other bags), we see that in 2022, the Birkin Premium was in the double digits – 13.74% on the Birkin 25/Chanel Classic medium and almost 19% for the Birkin 30/Chanel Classic large.
However, between 2022 and March 2023 the Birkin Premium declined substantially. What happened? Well, in March 2023, after Hermès imposed its 2023 price increases, Chanel spiked prices substantially, the first hike on the Classic flap since November 2021. And it was huge. The cost of the Chanel medium flap skyrocketed from $8800 to $10,200 – that is a $1400 increase, or 16%. The large flap price rose $1500, to $11,000, also about 16%.
That infamous March 2023 re-pricing of Chanel Classic handbags caused the Birkin Premium to decline precipitously. With the new Chanel price scheme, the retail cost of the Classic flap approached that of the Birkin.
Effectively, the Birkin Premium declined between 2022 to 2023 from 14% to 2% for the B 25. Regarding the B30, it went from 19% to 5%. Based on our Birkin Premium analysis, the WSJ went so far as to consider whether the Chanel’s 2023 price increases amounted to a “bag war”.
Which brings us to this year. On January 2, 2024, Hermès increased US prices 9.6% for the Togo leather B25 ($10,400 to $11,400) and 7.8% for the similar B30 ($11,600 to $12,500). Notably, these price hikes are greater than the historical level of Hermès increases, and they’re coming earlier in the year . Chanel, as of writing, has not (yet) raised its prices in 2024.
So, as of February 2024 the Birkin premium has spiked back up, now 11.8% for the B25 and 13.6% for the B30. As you can see, the greater the difference in pricing between the bag styles, the greater the Birkin Premium.
With rumors of impending Chanel price hikes flooding social media for the last six months, none of which have yet proven accurate, it raises the question: what happens to the Birkin Premium if and when the Classic flaps become more expensive? If Chanel increases the price of the medium flap by $1000 – the Birkin Premium declines to under 2%. Similarly, a $1000 increase in the Chanel large flap, brings the Birkin Premium down to 4%.
For those interested, the Birkin Premium situation is slightly different in the EU where euro prices and pricing structures are different. Hermès prices in Europe are lower than the comparable dollar conversions. On the other hand, given Chanel’s global harmonization policy, its prices are the same in the US as in Europe. Put more simply, there is less difference in Europe in the pricing of Hermès Birkins and Chanel Classic flaps. As a result, the Birkin Premium in Europe is nearly zero. Stay tuned as we address this in another article in the near future.
Updated: March 5th, 2024
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