With the Euro hitting a two-decade low and making it nearly equal to the dollar, many tourists, Americans especially, have been greatly incentivized to shop for designer bags in Europe this summer between the price disparity and receiving the VAT refund. Last week the Euro fell below $1, and while this meant considerably price savings, it was clear that it would most likely mean one thing: price harmonizing.
How High Is the Increase for Europe?
Rumor has it that there will be a 10% price increase of Chanel bags across the board in Europe effective this week. Our forum members whose sales associates broke the news this week confirmed this information. One member shared that her Chanel Sales Associate in Paris said this price increase would become effective Wednesday, August 10th.
The reason for this increase is the growing disparity of prices for a Chanel bag in the US versus in Europe. Chanel, and other major brands, have used the justification of price harmonization across the globe as the reason for the price increases. It makes sense; the brand doesn’t want customers irate over vast differences in prices for the same bags (not all of us spent our summers in Europe with copious amounts of luxury spending money).
Chanel Price Disparity by the Numbers
For example, let’s look at the popular Chanel Large Classic Flap:
In the US, it retails for $9,500. The average tax rate in Florida is 7%, which would mean $665 in taxes, resulting in a final retail price of $10,165.
In Europe, the same bag retails for 8,900 €. A VAT refund of 12%, or 1,068 €, would mean a final price of 7,832 €.
The overall price difference, with the dollar and euro being nearly equal, would be $2,333. Certainly a hefty difference!
With the European prices increasing by the rumored 10% rate, you would still save if you can retrieve a VAT refund. The effective price on the same bag will end at $8,616 if you get the 12% VAT refund on the newly-priced 9,790 € bag. Even with the fixed duty import tax of 3%, you’ll still save money over a US purchase.