How luxury brands set their prices, why they keep rising and what you are really paying for.
By Shreya S · Last reviewed 31 October 2026
On this page: What you pay for · How prices are set · The Ayerhs view
What you pay for
Why are luxury goods so expensive?
Materials and craft are only part of it. The price also pays for the brand itself: its history, its stores on the world’s most expensive streets, its advertising and runway shows, and the sense of exclusivity a high price creates. For a leather bag, the cost of making it is usually a small fraction of the shelf price.
Is luxury always better quality?
Not always. The best houses use exceptional materials and hand techniques, especially in leather goods, tailoring and couture. But a large share of luxury sales comes from logo products, perfume and accessories, where the premium is mostly for the name.
Read on Ayerhs: Logos and status · Why haute couture is so expensive
How prices are set
How do fashion brands decide what to charge?
Mass brands start from the cost of making a product and add a margin. Luxury brands work the other way: they decide where the product should sit against competitors and what the brand can command, then price to protect that position. Too low a price can damage desire.
Read on Ayerhs: How Fashion Brands Decide What to Charge · How to Price Your Fashion Products
Why do luxury prices keep going up?
Brands such as Chanel and Hermès raise prices regularly, citing rising costs and currency changes. Higher prices also keep products exclusive, move the brand further from mass luxury and, for icons such as the Chanel Classic Flap, help resale values, which in turn makes buyers feel the bag is an investment. Steep increases after 2020 also led some shoppers to push back, which slowed sales from 2024.
Why do some luxury brands never go on sale?
Discounts teach customers to wait and cheapen the brand. Houses such as Chanel, Hermès and Louis Vuitton avoid sales on their core products, and some have historically destroyed or recycled unsold stock rather than discount it, a practice now restricted in France.
The Ayerhs view
Is luxury worth the price?
It is when you are paying for craft, design and longevity, and less so when you are paying only for a logo. The smartest luxury buyers spend on pieces they will wear for years.
Read on Ayerhs: Is Luxury Fashion Becoming Too Commercial? · The Future of Luxury in 2026: Purpose Over Price
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