Want to shop luxury? Jewellery may be a safer bet than handbags

The luxury industry’s focus on ultra-wealthy customers has led it to overlook the importance of middle-class buyers, who despite an inconsistent market remain crucial to the success of the luxury industry.

Last year high-end brands like Burberry and Yves Saint Laurent lowered prices of its topselling bags to reconnect with this crucial segment. But the markups on luxury handbags remain astonishingly high. While middle-class consumers may not individually spend large sums on designer items, they collectively account for a significant share of global luxury sales.

Why luxury handbags are so much more expensive than fine jewellery

According to Boston Consulting Group, over half of luxury purchases come from roughly 330 million people who each spend under €2,000 (around $2,180) annually on items like handbags, clothes, and jewelry. However, if one considers the larger picture, handbags prices have risen higher than jewellery in the last two decades.

Since at least 2010, luxury fashion houses have raised prices on their top products far faster than jewellery labels have, according to UBS data. As a result, jewellery has preserved a stronger price-to-value perception in consumers’ minds. The contrast has contributed to jewellery’s outperformance of fashion and leather goods.

The curious case of affordable luxury jewellery

Luxury jewellery, traditionally seen as the higher-priced, more "serious" investment in fashion, is paradoxically becoming relatively more affordable or at least more reasonable in terms of long-term value. A big reason are stable pricing models; while jewellery prices fluctuate with the cost of raw materials like gold, silver, and diamonds, brands typically don’t hike prices as aggressively as handbag makers. The pricing structure is often based more on intrinsic value than brand hype.

So even Tiffany T Smile Pendant in 18k Gold costs something between $1,200–1,600 while a Chanel Wallet on Chain (WOC) can cost $3,000+

Fine jewellery labels like Cartier and Van Cleef Arpels have consistently worked on lower entry points which becomes a backbone for the luxury industry given the aspirational nature of these purchases. for Many luxury jewellery brands now offer more affordable collections with smaller carat weights or minimalist designs. Brands like Tiffany & Co., Cartier, and Bvlgari have introduced entry-level pieces ranging from $500 to $2,000, cheaper than many designer handbags today.

Gucci Link to Love Stud Earrings in 18k Gold is available for $900 even though it offers both luxury branding and gold a reissued heritage bag like Gucci Jackie 1961 Small Shoulder Bag can cost something around$2,700 which is more than 3x the price of their jewellery.

Even iconic pieces of jewellery like the Bvlgari B.Zero1 ring or a simple diamond pendant from De Beers can be bought for prices lower than those of luxury tote bags or logo-centric shoulder bags. This pricing divergence is surprising, especially when considering that jewellery is made from tangible high-value materials, unlike most bags, which use leather, metal hardware, and canvas.

But it's important to understand how pricing works for luxury handbags and how they're viewed. Brands like Chanel, Louis Vuitton, Gucci, and Burberry have steadily raised their prices, sometimes multiple times a year. Sure, higher prices create an aura of exclusivity and desirability but also, brands often limit stock and use waiting lists to inflate demand. This creates a secondary resale market where prices can skyrocket even further, reinforcing the illusion of value.

Markups are also part of the issue, especially for luxury brands. he estimated production cost of a luxury handbag is about $180. Around 30% of that, roughly $60 goes toward high-quality leather and materials. Labor makes up the largest portion at 40%, or about $72. The cost of hardware, brand logos, and other decorative details accounts for another 25%, approximately $45, while the remaining 5% covers various miscellaneous expenses. Now, this total remains fairly consistent, whether the bag retails for $2,000 (like a Louis Vuitton) or a premium $8,025 (like an Hermès Kelly).

Luxury handbags have traditionally carried higher profit margins and as per a 2024 report, these margins can reach up to 80%, compared to just 10–20% for mass-market or high street brands. In recent years, luxury prices have surged as brands strive to preserve these margins amid rising costs for raw materials and production. An analysis by HSBC shows that the prices of iconic luxury handbags have increased by an average of 50% since 2019.

A few weeks ago, several videos circulating on X show Chinese suppliers alleging that they manufacture products for major brands like Chanel, Estée Lauder, Bobbi Brown, and others. These suppliers claim they sell the same high-quality, logo-free items made with premium materials and skilled labor directly to consumers.

Some even offer perks like free shipping and import duty coverage. One supplier stated that a Birkin bag, which sells for $34,000 (about ₹29 lakh), actually costs just $1,400 (around ₹1.2 lakh) to produce. “The manufacturers make only a small profit, while most of the money goes to the brand for its name,” the supplier claimed.

Suppliers claimed that the goods are made with high-quality materials and skilled labor, even when sold without logos, suggesting that much of the value consumers are paying for lies in the brand name itself rather than in tangible product differences.

So the higher markups are justified by brands through narratives around heritage, artisan skill, and rarity. However, if identical, logo-free bags can be produced at a fraction of the cost, as claimed by these viral bagmakers, it brings into question the whole luxury ecosystem.

These claims also hint at the increasingly blurred lines between authenticity and ethical production. While official luxury brands stress exclusivity and control, the ability of suppliers to offer nearly identical products directly to consumers undercuts those messages. So the buyer doesn't really know what they're buying.