The secret economics of the Birkin bag

By Brooke Unger

On a flight from Paris to London in 1983 Jane Birkin, an Anglo-French chanteuse and actress, spilled the contents of her overstuffed straw bag, including her Hermès diary. Jean-Louis Dumas, Hermès’s chief executive at the time, gallantly picked it up. They chatted about overflowing containers in general and her inadequate weekend bag in particular. Dumas, who had not only exquisite manners but also a fine nose for opportunity, designed a receptacle to her specifications that has become the world’s most expensive handbag. Prices start at $7,000; in June Christie’s Hong Kong sold a matte Himalayan crocodile-skin Birkin with a ten-carat diamond-studded white-gold clasp and lock for $300,168.

Part of the explanation for the bag’s exorbitant price – and the one that Hermès likes to emphasise – is the exquisite workmanship. Each Birkin is the handiwork of a single craftsman, who takes up to 18 hours to complete the job, more if the hide is a delicate crocodile skin. Hermès says its prices are based on its costs, which are necessarily high. Yet the many man-hours and fine materials that go into the making of the bag may not account for much of its price: Luca Solca, an equity analyst at Exane BNP Paribas, estimates that the production cost of a basic Birkin is around $800.