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Comment by grapeskin | Hacker News Reader

This was an interesting glimpse into a world I can’t even imagine.

What do the costs for “real” luxury bags even go to? Some of them apparently cost hundreds of thousands of dollars. It’s enough for two artisan workers to collaborate on making a single bag a year, then rest in a comfortable lodge in the Swiss alps until they make a single bag next year.

I can understand luxury car prices, to an extent. There’s engineering and material prices that surely can’t be cheap. I can’t understand a piece of cow hide going for the same price.

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Someone I knew worked in a very expensive jewellery / leather shop in London called Aspreys in the late 90s. A family walked in and within ten minutes had picked out and paid for a £10,000 luggage set. There's a bunch of people around - probably even more now given the rising levels of wealth inequality - who can do that kind of thing without thinking. That family probably shopped there without thinking too much about what things cost, they just knew that they liked what was in Aspreys.

In Geneva, there is whole range of shops no locals are buying anything, ever. I mean no local swiss bankers, Procter&Gamble global managers, UN high bureaucrats, nobody. Its just that ridiculous.

But every summer (apart from recent covid ones), whole planes come from Arabian gulf. Planes full of ferraris and lambos, so you suddenly see (and hear) a lot of arab plated cars in central europe. These people shop as you describe - come to ie Versace or Piguet shop because its just by the lake, spend ridiculous amount and go to next shop.

Basically these few weeks enable those shops to survive for rest of the year since rentals are crazy.

I wonder if they could have sub-rented out their space in the meantime to make some extra money?

Probably not to just anything, because you have to remain high status. But perhaps host some fancy artists or so.

I think how much time and thought you put into buying things is an inverse parabolic curve. If you don't have much money you put a lot of thought into every purchase, because you have to balance your money to make it cover everything you need. If you have massive amounts of money you also put a lot of thought into every purchase, because you generally only buy things that require a lot of thought (houses, yachts, art, etc). It's the people in the middle who go into shops and buy $10k luggage sets - enough money to cover all their needs easily, but not enough money to be buying things that you need to consider.

Essentially, if you have actual FU money, you're not spending time going to a shop to choose your own luggage. You probably don't even see your luggage. An assistant packs your stuff, a driver puts it on your plane, and a hotel worker unpacks it at the other end. Your luggage is probably some completely boring, utilitarian metal box designed to keep expensive stuff safe.

Eh, different people have different preferences.

Some people _like_ shopping.

Similarly, Prince Philip, Duke of Edinburgh, liked to drive himself. He could have people drive him easily. And I must imagine, he probably liked the experience of test driving new cars and picking one that he liked. Even though his assistants probably knew exactly what his preferences in cars were and could have predicted accurately which one he'd end up choosing.

Two centuries ago this would be the only customer type there was. Back when there were no middle class and the only buyers in some goods were the aristocracy and some nouveau riche.

Exact dates depend on country.

Two centuries ago Britain was already well through its Industrial Revolution. Its mass production went hand in hand with mass consumption.

What you describe was probably closer to true for eg Russia.

I would the bottom that it was an impulse purchase. Luggage - of amount - isn't really something you buy without thought. It is likely the family had been considering various styles and price points for a while, and just now decided to pull the trigger.

There was a good "scales of wealth" post I read some time ago, it wasn't so much about hard figures but about what financial decisions you need to think about before doing; it starts with the basics like groceries, if you don't need to think about what to buy, what brands, or what your weekly budget is for groceries, you're up one level.

That scale went up from that, to vacations, to cars or houses, then up to really expensive things like private yachts and airplanes.

It's all relative to income; for whoever they were, a 10K purchase might represent about as much as their monthly income as a six pack of beer would be for me.

And their wealth was probably still only a fraction of what the super rich have.

https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_i...

> [...] probably even more now given the rising levels of wealth inequality [...]

Huh? Global wealth inequality has dropped dramatically in the last few decades.

What's important for luxury sales is not the gap between rich and poor, but that the rich are richer.

I could perhaps have been clearer about the kind of inequality I was talking about - intra-national - but at the very best it's been flat over the last few decades: https://www.economist.com/briefing/2019/11/28/economists-are... I personally don't really buy the post-tax rationale presented in that article though. Pre-tax is more interesting to me in that it's where the money is, not how much spending power people have after tax.

Keep in mind that you get different results looking at income distribution vs wealth distribution.

Also keep in mind that because so much of the wealth of the very rich is tied up in assets like shares, the wealth share of the very rich takes a (comparative) nose dive whenever the economy enters a recession. Their wealth and income drops dramatically more than that of your rank and file employee, or that of someone on government handouts.

Absolutely, the rich are still rich and the poor are still poor in a recession. but on paper the gap between, say, average and top 0.1% narrows.

And, obviously, recessions are bad for both poor and average people. But you wouldn't get that from looking at inequality.

Just another reason to focus on absolute numbers, instead of whether the Joneses have more.

Btw, why do you want to focus on where the gross money is, instead of what you can buy after taxes with your money? People don't eat money, usually.

An iPhone is also quite a technological challenge, yet Apple doesn't spend nearly as much making it as people are willing to pay. Same goes with these bags, they are a luxury item that people will pay far over the production cost for. You literally buy them to show how much money you have, so it's the brand doing most of the work, and the bag-making process just needs to be somewhat professional.

From what I gather the factories in China that make the real thing will also make extra copies of the real thing, thus making it extremely hard to tell the difference.

The social element is maybe the most interesting, it's like a hobby for these ladies. What I've noticed through my life is there's always people who do some kind of cottage buying-and-selling on the side: friends who buy luxury watches, collectible cards, used cars, restoring old laptops. There's something universal about that instinct. Being socialites it makes sense they gather about this particular thing.

> From what I gather the factories in China that make the real thing

The Hermes bags are made in France, by leather artisans.

> The Hermes bags are made in France, by leather artisans.

And yet ironically in the article,

> She echoed a number of women I spoke with who think authentic customers are the ones getting played. “These days, the reps just tend to be better made,” a Hamptons-based chief strategy officer tells me. “They last longer. There’s more attention to detail. You can tell that things have been done by hand.”

I remember reading an article about attempts to defeat counterfeiting of native American jewelry in the southwest. I guess people in Mexico were making their own versions cheaper and then shipping them in undercutting the people who made them on reservations. At first it was pretty easy to sort out the fakes but the Mexican manufacturers eventually improved their process so much no one could even tell the difference anymore. Which brought up some interesting questions about what authentic even is in this space.

The Chinese are just next level when it comes to the work ethic in learning every little detail about a particular product and applying techniques to improve. Their EV offerings will probably be very competitive once they hit the US.

The comparison to the iPhone doesn’t make sense to me. Who is buying iPhones just to show off? They’re not that much more expensive than flagship Android phones.

> Who is buying iPhones just to show off?

It used to be a big status symbol, but they've become more mainstream now. People will still look down on people using Android phones though.

related: Beats headphones are / were a status symbol, as are airpods. The kids want airpods. People want to be seen wearing airpods. People want to be seen.

> They’re not that much more expensive than flagship Android phones.

You sure the women in the article don't think the same way about the bags? The price difference between a working Android phone and top of the line iPhone is around 10x as well.

Its not a great comparison. You might as well get a flip phone, the price difference can be even greater. A better argument is that you are paying for access to iOS which makes more sense.

A lot of people. Some buy more than one. Apple is like Porsche. It shows your status.

So tired of hearing this argument. What ever happened to just wanting a reliable phone that works well? Many Android -> iPhone users have been burned by the numerous amounts of garbage that has come out of that ecosystem over the years. Its not always about "status symbol". Hell the cheapest iPhone is 429$ today. And that gets you their top of the line CPU that essentially blows away Android at any price. This isn't "status symbol" just immense value.

iPhone is not status. A diamond-crusted case for the iPhoneis status.

Here in Italy are still a status symbol

Isn's this the last 20% of performance being expensive and the last 1% prohibitively so? I imagine for high-end leather, you are raising 10 animals for 1 ending up having skin without any bruises etc.

Speculation: Then, in the end, this explains maybe 1/3 of the pricing, the next 1/3 is marketing (prime real estate in metropolises, extensive sponsoring, one store employee per customer, a doormen, ...) and finally some nice profit margin, looking at you LMVH.

Not defending the prices but it seems to be the same as with paintings. It's just some water color on a piece of paper isn't it? The materials certainly won't make the price of famous artworks.

Most luxury bags are a few grand tops, not 100s. I'm sure they exist but that's not the norm. That's like someone buying a custom made $10 million Ferrari. Very rare.

Looking up the subject, Birkins, I’m seeing them selling from tens to hundreds of thousands of dollars.

Almost a classic example of a Veblen good. The demand doesn't increase uniformly as the price increases, but they'd probably sell fewer if they cut the price in half.

They've clearly found the sweet spot in the overall profitability curve, somewhere in the six-figure range.

alar44 is not talking about Birkins when he says 'Most luxury bags are a few grand tops, not 100s...' but the LV's, Gucci, Burberry bags most people with branded handbags have. Birkins are another class of their own.

It's a tiny tiny part of the market. Think $500 million yacht. Yes they exist, but 99.9% of them don't cost that much.

They're paying for the ability to display that they can afford to pay six figures for a piece of cowhide.

Not just that they can afford it, but that they have been 'allowed' to buy one. You cannot just walk into a Hermes store and buy a birkenbag, you have to convince them you are 'worthy' even just to be added to the waiting list to maybe be allowed to buy one eventually.

This is why second hands brikenbags go for so much. Because it's the only way to get one without having to go through the whole approval and wait list process.

Eh, luxury bags are about conspicuous consumption. Not too different from NFTs or art.

I think you are paying for the store front, the personal shopping experience, the models showing off the goods on runways far away. Advertisement and branding.

There are plenty of costs involved in luxury goods, not all of them goes towards material.

I guess they have to spend a bit on marketing? Creating the perception of "this bag is super great" probably isn't easy?

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