The Hidden Price Tag: What is the real cost of your designer handbag? 

A tote to carry your laptop. A crossbody for quick errands, just enough for your phone and keys. A backpack for travelling. A handbag is one of the most useful, hardworking items in a Fearless Girl’s wardrobe. Bags have become more than just something to cart your things from place to place – your bag choice says something about you.  

From the quiet luxury of a Chanel 2.55 to the fashion cachet of the Goyard tote, bags are a status symbol, making a statement about identity and taste. But what is the real cost of your designer handbag?  

Missed opportunities 

The real cost of your designer handbag goes beyond the initial price tag. Let’s look at that Goyard St Louis tote on everyone’s arm this year. At the time of writing, it’s priced at $1890. Whether you find that to be jaw-droppingly expensive or not, one thing you need to know – this bag will not just cost you $1890.  

Historically, the stock market has yielded average annual returns of around 7% to 10%, outpacing inflation. Imagine you invested that $1890 into a diversified portfolio of stocks and bonds and you did nothing else to it for 10 years. Assuming a conservative interest rate of 7%, by the end of the first year you would have $2022. After 10 years, thanks to the magic of compound interest, you would have $3720, which is almost double the amount you originally invested.  

If you invested that $1890 into your retirement fund and left it for 60 years, adding absolutely nothing else, it would be worth $109,518.75.

That’s right. Over a hundred thousand dollars. From just one handbag. Meanwhile, the handbag may provide temporary pleasure but (usually) its value depreciates over time.  Are you reconsidering your Goyard tote yet?

The luxury bag boom 

In 2020, the world shut down. In Dubai, residents had to apply for a permit to buy groceries. The UK saw lockdown after lockdown in varying degrees of strictness. Ireland had the longest consistent lockdown in the world. You might think, as we went out less and didn’t have a need for designer goods, that big brands would suffer.  

In fact, Louis Vuitton and Chanel seized the opportunity to increase their prices by up to 17%, and watched the demand for their products increase as they became even more exclusive. The price of the LV Neverfull increased by 14% in just six months during the COVID period. As these bags become increasingly expensive, the opportunity cost to you of owning one keeps increasing.  

The initial cost and the loss on compound interest are bad enough. Even worse, if you are someone who has to save up to buy one, the goal post keeps moving. If you have your heart set on a Neverfull, you might have set a target of $1690 to match the price in 2022. But by July 2023, you would have needed to save $2023. That’s a price increase of $333.  

If you invested $333 over 10 years, assuming that same interest rate of 7%, it would be worth $655. As the big brands cash in, you lose out.  

But what about Chanel bags?  

Unlike some ‘it’ bags which reign for a season and are then consigned to the back of the wardrobe, a Chanel bag maintained in mint condition could increase in value by 10-15%. Second hand retailers can even charge a premium for vintage bags and the limited editions can sell for multiples of the original price.  

Chanel themselves say “the price of a Chanel bag reflects not only a sense of exclusivity, but also our values. Buying a Chanel bag brings with it renowned expertise and French design, an unfailing commitment to preserve skills and craftsmanship, leading-edge innovative manufacture, and guaranteed provenance of the raw materials (leather, jewelry ornamentations, etc.)” 

However, it’s been suggested that the demand for second hand goods are what drives the ever-increasing prices of Chanel bags.  

So should you invest in a Chanel bag? If you are going to buy a luxury handbag, it’s probably the best one. But still, at Fearless Girl Finance, we encourage you to be cautious about investing in a singular good. Look at the 2023 cancellation of Balenciaga after the December advertising scandal. The brand reported its worst quarter with stock prices down 22%.  

Investing thousands in a bag in the hopes of making money later could be costly should the brand lose its value. And do you really want to buy a beautiful bag with high quality materials so that it can sit in a box and wait to be re-sold? Do you really want to miss out on the pleasure of using it?  

I hear you…but I still want one 

That’s great! If you’ve weighed up the pros and cons and you know that you would truly cherish a designer bag, then go for it. You’ve saved for it, and it’s ok to celebrate your hard work and financial discipline.  

But there are some things you can do that will help you get the most out of your purchase. First, consider pre-loved. As we saw, many pre-loved bags are kept in box-fresh condition, and there is a greater variety of vintage options if you prefer something unique. Environmentally, this is the best option too. Luxury materials like leather and silk place a strain on the environment and are not cruelty-free. 

Second, ensure that you are caring for your bag the same way you would care for your first-born child. The money you’ve spent will go to waste if you throw the bag around like it’s a Primark special.  

Third, consider your cost per wear and choose a classic style. If you buy a bag based on a trend, that trend will pass and you end up with something you never want to use. If you pick something simple and classic, you will likely use it for years to come, reducing your cost per wear and making it a better buy. Because in all seriousness, have you ever heard of a classic flap ending up in a landfill? 

The real cost of your designer handbag 

Whether you have had your heart set on a Dior tote or a Birkin, consider what else you could use that money for. While the allure may be irresistible, forgoing the instant gratification could allow you to travel or work on building a stronger financial future. Think about the opportunity cost of compound interest and weigh up your resale value. Ultimately, if you decide to go for it, use it, love it, cherish it.  

Has the real price of your designer handbag shocked you? Let us know in the comments below or tag us on Instagram @fearlessgirlfinance_