Luxury Strategy: How Hermes sells the world’s most expensive handbag

An Hermes Birkin bag is beautiful, but it will cost you.

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It takes up to 18 hours of work by single craftsman and the estimated cost price is around $800. Retail price starts from $7,000.
They could sell Birkins at a much higher prices if they wanted to do so, but they ration the market by queue rather than by price. This way, their sales maintain even when demand falls because they always have a buffer or clients in waiting list, and surplus demand overflows to other product categories such as watches, belts and perfume. Not a bad plan!ç
It is estimated that they produce around 70,000 Birkin bags per year, and there are one million of them in circulation.
It took Hermes 32 years to come up with an equally successful bag.
The luxury industry is fascinating!
Full article: Demand curve (1843 Magazine)

 

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