Why Do These Hermès Bags Cost $70,000?

Sept. 23, 2013 — -- Many consider collecting a male-dominated hobby, with men dominating categories like stamps, cars and baseball cards. But a surge in luxury accessory sales in the secondary market, handbags in particular, have reinforced female dominance in accumulating items like Hermès handbags that can sell for five figures.

The Hermès Birkin bag, a line of bags made by the French luxury retailer and inspired by British actress Jane Birkin, has played a major part in attracting bona-fide collectors.

"Until very recently, people with lots of bags didn't self-identify as collectors. They were shoppers, buyers or 'fans of Chanel,'" said Matt Rubinger, director of luxury accessories for Heritage Auctions. "They weren't creating a collection with a lasting value or investment in mind. As we've hosted these auctions and people see how strong the market is, that has shifted."

Heritage Auctions recognized the growing popularity of the market and brought on Rubinger three and half years ago to launch the luxury accessories category.

Rubinger said that of Heritage's 35 categories, such as sports collectibles, they are all dominated by a male customer base, except for luxury accessories.

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Because Hermès can have waiting lists that can span years for Birkin bags, handcrafted in France, the secondary market exploded with the prevalence of online retailers.

Websites Ruelala and Gilt host semi-regular sales for luxury handbags, but none are quite as expensive as Birkin bags.

On Monday, Heritage Auctions is hosting in Beverly Hills a "Fine Jewelry and Luxury Accessories Auction" that includes 68 Birkins out of 275 bags. The most sought-after item is a crocodile Birkin bag that was custom made with an indigo interior. It's estimated to be worth $60,000 to $70,000.

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Crocodile Birkin bags can retail for $60,000 in Hermès stores; leather Birkin bags for about $10,000.

Why the big price tag? Rubinger doesn't deny that these bags are "not the norm" for most American households. Buyers with means are paying for both the brand and the quality, Rubinger explains.

"One craftsman sits in factory in southern France and starts with the first stitch, from start to finish. You pay for that craftsmanship," he said. "If they can't get enough of a certain material that meets their standards, they discontinue it."

Hermès did not respond to a request for comment.

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What has enforced luxury handbags as a collectibles category was that many pieces, such as the Birkin, were not only holding in value through time, but rising.

"In the luxury space, if you buy a new luxury car, you are not thinking of lasting value," Rubinger said. "If you buy a Range Rover, you aren't planning to sell it for more than you bought it."

Luxury handbag collectors, on the other hand, can.

"If you really pay attention to what you're doing, you're not going to lose money, and in the best case scenario you can make money on this bag that you enjoyed," he said.

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Last year, Heritage Auctions launched weekly online auctions for luxury bags that start on Tuesday and last for seven days. About 75 designer bags start at $1 with no reserve.