Economics of the Birkin Bag

The Hermès Birkin bag is a symbol of luxury and exclusivity, often considered the most expensive bag in fashion history. Its value is not only determined by the high-quality materials and craftsmanship but also by its scarcity and the status it confers to its owner.

Veblen good

The Birkin bag is a classic example of a ‘Veblen good’, a term coined by economists to describe goods that see an increase in demand as their prices rise. This is due to their exclusive nature and appeal as a status symbol. The Birkin bag’s exclusivity is further enhanced by the fact that one cannot simply walk into an Hermès boutique and purchase a Birkin. It requires becoming a regular customer of a boutique, and building and maintaining a “profile” — a history of purchases from the brand across many of Hermès product categories, such as shoes, scarves, ready to wear, and home goods.

The Value of Specific Birkin Models

The value of Birkin bags has increased by 500% in the last 35 years, according to Baghunter. In 2020, a matte white Himalaya Niloticus crocodile Birkin bag was sold at Christie’s auction for $437,330, setting a new world record for the most expensive handbag sold at auction. In 2021, a limited edition Birkin bag designed by Japanese artist Ginza Tanaka sold for over $2 million at a Christie’s auction in Hong Kong.

On Madison Avenue Couture, a luxury reseller, the prices of Birkin bags vary greatly depending on the model and materials. For instance, the Hermes Kelly Sellier en Desordre 20 Rouge De Coeur Epsom Gold Hardware is priced at $39,500.00, while the Hermes Birkin 25 Ombre Shiny Salvator Lizard Palladium Hardware is listed for $120,000.00. The Hermes “Sunrise” Birkin Sellier 35 Rainbow Epsom Palladium Hardware is available for $27,500.00, and the Hermes Sac Faubourg Birkin 20 So Black Matte Alligator Black Hardware is the most expensive, at $225,000.00

The Resale Value of Birkin Bags

The resale value of a Birkin bag can be as high as 80-90% of its original retail price, according to luxury reseller The RealReal. This means that owning a Birkin bag can actually be a profitable investment over time. Baghunter report has further stated that the value of the Birkin bag has consistently outperformed the stock market and gold in terms of return on investment.

The Birkin bag’s value is a testament to its enduring appeal and the power of exclusivity. Whether purchased from the boutique or from a dealer, the Birkin bag is a valuable investment. However, the decision to purchase a Birkin bag ultimately depends on the individual’s personal preference and financial capability.

Next →