Why is Hermès so expensive?

From the Birkin bag to the Kelly, the luxury goods manufacturer is as pricey as it is iconic

Hermès has been giving the world premium leather goods since 1837. From the early days of making harnesses, bridles and saddlery in the 19th century, the company expanded to luggage and bags.

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Coming into the public consciousness when Grace Kelly appeared in Life magazine with her namesake bag in 1956, through to the equally highly prized Birkin bag, co-designed by English actress and singer Jane Birkin in 1984, the brand has celebrity endorsement and an almost cult-like following.

Why is Hermès as expensive as it is?

Supply versus demand

Part of the reason for the high prices of the bags, the Birkin in particular, is that the supply is restricted to special clients, resulting in waitlists that can be as long as six years. With a supply much less than the demand, it's only natural that this fuels the price growth.

It can also take up to 48 hours to craft one single Hermès bag, and each is made by a solo artisan who has their very own set of tools. This requires both time and craftsmanship. Time is money and so are special skillsets, naturally pushing up the price.

HERMES ADDS LIPSTICKS, ENTERS COMPETITIVE COSMETICS WORLD 

TickerSecurityLastChangeChange %
HESAYHERMES INTL84.81-2.50-2.86%

Because of this, you can expect to pay anywhere between $12,000 to more than $200,000 for a single Birkin bag.

In fact, the most expensive bag ever purchased was bought by David "Vegas Dave" Oancea, a professional sports betting consultant, who bagged a Himalaya Birkin 35 with white gold diamond hardware, 245 diamonds, 12 karats and 172 ounces of white gold for $500,000 in 2019.

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Material world 

Hermès takes pride in using quality leather. And with such high starting prices of its bags, you can safely assume that it's not synthetic or low-grade leather. The company mostly uses calf leather in its bags.

You will also see premium, highly prized exotic skins used in its products. Everything from the wildly popular crocodile and alligator through to lizard and ostrich skins.

Precious metals and stones

Hermes does not scrimp on any part of its manufacturing. So it should come as no surprise that the hardware it uses on its bags isn't stainless steel. In fact, all the locks, buckles and keys of the bags are plated with either palladium or gold. Using such precious metals instantly added dollars to your final fee.

The decadence doesn't stop there — diamonds can be added in customized designs to order, and some products have diamond details by default.

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Limited

Pretty much all Hermès bags are limited edition. There is no mass production factory, and some styles are only available for a short time.

A safe investment

Unlike most things, Hermès bags actually appreciate over time. In fact, the Birkin bag's value has increased by 500 percent in the last 35 years. That's an average annual return of 14.2 percent, beating out both the SP 500 and the price of gold. In 2016, it was reported that there were a record number of Hermes collectors/investors, so there is a huge market for the bags, both new and old.