HOW MUCH IS A LUXURY BAG REALLY WORTH?

 

What is the difference in quality between a $30, a 300$ and a $3000 handbag?

 

 

Is the 3000$ one 100 times more expensive to make then the 30$ one? And which one represents the best value for money?

There are several contributing factors why certain bags cost thousands of dollars and why others retail for a few hundred or even much less then that.

Some of those factors are certainly linked to the making and the quality of product you are buying. But not all of them. This means that what you are paying for is not necessary all quality. And the 3000$ bag doesn’t necessary offer 100 times more quality than the 30$ one.

To try to understand how this really works we selected 3 bags that look pretty similar, but came with very different price points and quality levels

 

 

luxury handbag worth investment

 

The 3 bags (we can't mention the brands, but you can surely recognize them) are a good way to compare a very similar design from very different brands



the first one is a top quality product from a prominent luxury brand

made in Italy or France with great attention to details, using the best materials and exclusive design. A handbag of this kind is normally priced between 1000$ and 3000$ depending on the brand and quality

 

the second bag is from well-known accessible luxury designer brand

the bag you will get at this price point will be most likely a made in Asia, in leather (even if not full grain), with iron hardware. Accessible luxury designer bags are normally priced between 300$ and 500$.



the last shoulder bag is from an high street brand

the bag you will get at this price point will be most likely a made in Asia product, in eco leather, the design more a replica then original.



Is this enough to explain the very different retail points?

 

 


Not really. To understand why we need to look at more contributors to the final price . The most important are:



Cost of materials (leather, metal accessories, lining, etc.)

The first, cost of material, is obvious. Genuine, high quality skins such as leather, or the more rare ostrich and crocodile are incredibly expensive compared to synthetic substitutes such as fake leather or reconstructed leather. Similarly, a luxury bag uses expensive brass hardware (plated in real silver or gold), while a cheap bag uses much cheaper iron components


Cost of labor and level of craftsmanship

Lower priced handbags are designed to reduce or completely avoid all details that requires special craftsmanship, or can only be achieved by hand. After doing this, cheap bags can be produced on assembly lines in huge quantities. On a luxury product different operations and decorations are still made by hand, requiring a much longer production time and experienced artisans.

In addition, the country where the handbag is made makes a huge difference. The labor cost to make a bag in Italy or in France is incredibly higher then the cost to make the very same bag in Asia.

Finally, the final product quality check has a major impact as well. A quality handbag is individually checked and discarded at the smallest flaw, while a cheap one will always find his way to the shop.


Other costs: brand identity and distribution

Brand identity represents a significant element in defining the final price. When you buy a designer product from a luxury brand you are not only paying for an handbag, but for a brand and its distribution as well.

Costs included in the what we call brand identity are marketing (communication campaigns, celebrities, advertising, fashion shows), brand structure (salaries of designers, PR, marketing, retail), additional costs for balancing the less profitable brand’ ventures (namely, the clothing), company gross margin, ecc.

Last but not less important, distribution costs are the final markup applied on your product either by the direct brand's shops, distributors and independent boutiques selling the bag. Distribution markups are significant, and are applied to the the production costs in a quite proportional way (so if you are buying a luxury product with significant production cost, the markup is going to be a multiplication of it).



The chart below summarize in % how the final price tag is made up. You see as the "product value" (we call product the real cost of materials and manufacturing of your bag) is a fraction of the final price tag.
 

 

LUXURY INVESTMENT BAG REAL VALUE

 


If we take the product cost as a fair indication of the quality, this means that in a 30$ bag you get 15$ worth of quality , while in a 3000$ bag you get 750$ of quality.

There is absolutely, unequivocally, a clear and obvious difference in cost of manufacturing and quality between a $30, $300 and $3000 handbag. Touching the material on each bag, feeling the weight of the hardware used, testing the zippers, seeing the uniformity of the stitching.

But because the product cost is only a fraction of the final price tag, the 3000$ bag doesn't cost to make 100 times more then the 30$ one. As you can see in the chart below certainly you get more quality on a more expensive bag, but you get as well a lot of additional "other costs".

 

 

real luxury value


Which one is the best option in term of value for money?


1) It is obvious that the luxury designer bag is infinitely more qualitative than the cheaper alternatives. But the value for money (how much quality you get for each $ you spend) is reduced by the other costs the luxury brands are obliged to add to the price tag.

2) The accessible luxury product is not the right choice if you are looking for value for money. Both the high street and the accessible luxury bag will most likely be made in Asia, with very similar cheap hardware and materials. A cheap reconstructed leather (that can be legally sold as leather) doesn't cost much more than the eco leather or PVC. Buying an accessible luxury product you are getting a similar quality to the high street alternative, spending additional $ for the brand image and distribution.

3) What about the cheap 30$ high street bag? You are not getting much quality, but the price is fair to the quality you get.

 


Do you still think that an accessible luxury bag (Michael Kors?) is better quality then a Chanel one because it doesn't age or marks with water? Or you still think it is much better quality than a high street one as the leather never wear?

You are right, the heavily coated Michael Kors leather doesn’t wear, while the delicate Chanel lamb is very fragile. But strength doesn’t necessary means preciousness. Is it more precious a fragile hand blown chalice or a thick glass one?





Any option to get more value for money, so a luxury brand quality and a fair price?

 

Indeed, there are actually 2.

You can buy a vintage luxury bag. If you are able to recognize a genuine one and you don’t mind a vintage bag, you can get a lot of quality for what you pay for. Not sure about being able to spot a genuine one? You can find Lido's insider guide here.

Or, if you are want a new bag, and you care more about quality and exclusivity then logo, a genuine made in Italy or made in France handbag from an artisan workshop is the best possible option. In term of value for money, you will get the same materials and the same craftsmanship a luxury brand would offer, and you will pay a price that is a fraction. This is possible because artisans have much smaller structures, and selling directly to the final customers they can avoid all costs and markups due to distribution and retail. 

Not convinced? Give a look at what kind of materials and quality we can deliver on Lido accessories collection

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