OUR Chanel made a splash by raising the price of the most popular bag she is on the same level as “famous” Hermes Birkin. “This is a fascinating example of how wealthy buyers are being manipulated, but the results so far are mixed,” the Wall Street Journal comments. Birkin is considered the most expensive bag. When it’s made of leather, for example. crocodile, can cost upwards of $100,000 while even the cheapest bag in the line costs $10,000. In addition to some of them costing more than the average car, Hermes limits production to around 50,000 a year.

Recently, the so-called “Birkin premium” – the difference in price between a Hermes bag and other brands – has sharply decreased. Chanel has increased the price of its popular medium-sized Classic Flap bag by 75% in three years. According to PurseBop founder Monica Arora, the bag cost $5,800 in 2019, and today it has reached $10,200. The Chanel bag in question is now, for the first time, more expensive than a similar-sized Birkin bag in Europe.

Chanel claims these moves are related to inflation and changes in exchange rates. Most luxury brands charge buyers more as the cost of raw materials rises, but nowhere have prices risen as much as at Chanel. For example, Birkin is only 6% more expensive than before the pandemic.

One of the luxury industry’s theories as to why Chanel raises prices so high is that they want a bag that is truly meant for the few, like Birkin. The Classic Flap is now being sold at prices beyond the reach of all but the richest. Chanel may also be trying to limit the number of bags it makes each year.

Despite grumbling about price hikes on online bag forums, the move seems to have done no harm to the brand. “They raise prices because customers are willing to pay,” says Michelle Burke, chief executive of luxury handbag retailer Prive Porter. Hermes, for its part, since two models, Kelly and Birkin, make up about a quarter of the company’s sales, wants their prices to be out of reach for the average buyer. The brand raises prices just enough to offset inflation in its supply chain. It’s typically between 1% and 2% per annum, although Hermes raised prices by 4.4% in 2023 in response to higher inflation, according to UBS.