The reason behind value is similar to the value of a military/exclusive medal. It's a "legitimate" way for the owner to signal prestige.
There are big quality differences and often luxury brands do use material and labor that makes a bag cost hundreds of dollars or euros to produce.
But not all do and sometimes they flounder or cheat on certain products.
The margin between that production cost (Tanner always gives an estimate) and the actual price is definitely a function mainly of the prestige associated with the brand.
I.e. other factors such as shipping, display (think flagship stores), advertising & sales labor costs play much less of a role in the luxury segment.
Still the best shop was the one who sold stuff only to fit people - didnt have big sizes (I always wondered if they didnt sell big sizes at a premium).