We may never know with utmost certainty the exact cost of a Louis Vuitton bag production cost compared to its retail price, what we can do however, is make an estimation based on some known facts.
Much like other luxury brands, Louis Vuitton marks up the price between 800% to 2000%, which means that for bags retailing from $ 1500 to $ 40000, the production cost may only be of $ 200 on the lower end up to $ 800 for very special cases.
What can possibly explain such high retail prices?
– The professional workmanship.
Knowing that each bag has been carefully crafted by hand by a professional craftsman, and holding the end result in your own hands will definitely make you appreciate the quality level offered.
– Long manufacturing times.
Since the bags are handmade, it can take up to 18h to complete the job, which adds up to the cost.
– R&D and marketing.
The manufacturing process is only one step in many, the bags need to be designed and marketed, however, this cost can be diluted once manufacturing ramps up.
– Fine materials.
On most occasions, Luxury bags are made of very high quality leather or some other exotic materials (like Ostrich, Crocodile, Python, etc). This will however have little impact on the manufacturing price since most of the cost will come from labor.
– High demand, limited availability.
Due to the way these bags are made, availability will always be more limited than a large scale Asian operation, however, availability is also closely monitored and adapted to make sure the demand stays high.
– No discounts.
Louis Vuitton does not offer discounts to the public (It does to its own employees tough), which means that a bag will be discontinued (and the remaining stock destroyed if needed) before there is any chance of a discount.
– The target audience has a very high disposable income.
It is no secret that luxury brands target a public with a very high disposable income, which means that this particular public is less bothered with price and more with the next topic
– Quality, prestige, taste and exclusivity.
There are thousands of brands in the world capable of producing exceptional bags, however, only a handful of them has the brand power and the prestige to gather this level of attention. A louis Vuitton bag is not just a bag, it’s above all a status symbol, one that says “I have great taste, and I have the means to afford an exclusive item”.