The price of the iconic medium-sized Chanel flap bag has increased again, now marketed, for the first time, at more than 10,000 euros. Chanel CEO Leena Nair defended the luxury brand’s pricing strategy to Bloomberg, highlighting the effects of inflation and the use of premium materials and artisanal craftsmanship.
Leena Nair claimed that Chanel’s commitment to quality justifies the increase in prices to keep up with industry standards. Despite the recent controversy surrounding the excessive cost of its emblematic handbags, currently sold at 10,300 euros compared to 9,700 euros a year ago, the bag was offered at only 6,500 dollars (around 6,071 euros) in 2020 according to the barometer of the Business of Preloved Fashion awards.
“Chanel sets the prices of its bags according to their cost price. The price of raw materials and production costs have been marked by constant inflation over the past year, which has led us to adjust our prices in stores,” a Chanel spokesperson told Bloomberg in March. “This increase will come into effect in all markets from March 27, 2024, with an average adjustment rate of 6% in euros. This is a matter of fairness for all our customers. »
Luxury Brands and the Power of Pricing
Luxury brands often have strong pricing power as they cultivate an aura of exclusivity and prestige that attracts wealthy consumers willing to pay premium prices for products, synonymous with social status and sophistication.
Luxury brands invest heavily in branding, marketing and storytelling, creating emotional connections with their customers and reinforcing perceived value. These brands also prioritize quality, craftsmanship and unique design, offering products deemed premium that justify their higher prices.
However, with an average monthly salary in France of around 2,500 euros net per month in 2022 according to INSEE, the acquisition of a luxury item such as a Chanel bag remains within the reach of only a privileged few.
