Hermès Retail vs Resale – Why the Big Difference?

The price of a Hermès bag is outrageous.

There, I’ve said it (well…printed it. Published it, in fact).

This is something I have known to be true for many years. You know it, too. Everyone does. This is not a secret. This does not keep us from lusting after the bags. This doesn’t stop anyone from wanting them, coveting them, and buying them as frequently as their conscience and their wallet will allow.

The heart wants what it wants, in this as in all things. The prices for just about everything are on a perpetually upward trajectory, each at its own speed.

What will be the limit? Is there a point beyond which demand will drop?

Basic economic theory dictates that there must be such a point, but we do not seem to have reached it yet.

Hermès defies gravity: higher prices seem to create only more demand.

We know this to be true because we have a secondary market essentially overlaid on top of the primary one: resale in luxury goods, which used to be a never-the-twain-shall-meet proposition, now has a share of the primary market for brand-new items.

The share of this market consists most often of either:

• entry-level clients who cannot purchase what they want at a boutique, or
• more experienced clients who do not want to wait for what they want to purchase.¹

The Concept of “Pre-Spend”

These secondary market goods – and note that an important underlying assumption here is that these items are authentic – are not only the same as the primary market items: they are, in fact, the same exact items being sold for a second time by the primary purchaser, often through a resale intermediary.

The intermediary is usually an established retailer specializing in secondary market goods, optimally with a good reputation for both procuring authentic items and well-organized transactions.

Of course, a funny thing happens between the primary retail sale and the secondary one: a measurable jump in price.

Depending upon the condition of the bag and the perceived demand for its specifications, this jump can vary anywhere from 25% to over 500% of the original retail price. Only in the topsy-turvy world of Hermès can paying the full retail price be considered a relative bargain!

For the most in-demand bags – back in the day, that was the Birkin and the Kelly² – there has always been a jump in price for secondary market sales simply due to the difficulty in obtaining a bag from the primary market: perhaps 30 years ago there was empirically less worldwide demand for Birkins and Kellys overall, but there were also far fewer craftspeople to produce them and boutiques to purchase them from.

The increased proliferation of Hermès’ multi-metièr sales tactics created a clientele that came to understand that these bags were more likely to be offered to valued clients: initially, a somewhat nebulous concept involving a certain amount of financial commitment to the brand. This is now understood to mean those who make purchases from various departments (not just leather) and usually spend more than a nominal amount when doing so.

This has put further pressure on the secondary market prices: a Birkin costs whatever a Birkin costs, but there is the added real (but never specified) cost of being offered the Birkin to begin with. This has come to be known as pre-spend³: what amount a given client spends on other items before being offered their desired bag.

Therefore, the client is not only spending some outrageous sum on a bag: they are spending additional sums to even be offered the bag.

Yes, they are buying other items, so they are not spending these additional amounts without getting anything in return, but it is understood that if they did not make those purchases, the bag would likely not be offered.

The Right Amount of Pre-Spend?

The amount that one needs to spend at Hermès to be offered a desired bag rests on several factors, none of which are usually expressed to the client. These factors can include:

• the desirability of the bag, including how popular its specifications are;
• the length and depth of the client’s relationship with Hermès, with the boutique and/or Sales Associate; and
• the other items purchased by the client.

Varying Degrees of Desirability

Not all Hermès bags are difficult to get, and demand varies even within the Birkin and Kelly lines.

This demand can vary due to the specific attributes of a given bag, including size, color, leather, and style (I will go into greater depth on this topic in an upcoming article).

Some of this is based on current trends.

For example, for the past several years, small bags have generally been in greater demand than large bags: Mini Kellys are extremely popular, while there is much less demand for 35cm and 40cm bags.

Other factors are Hermès-specific, such as the popularity of particular colors and leathers.

The Client’s Relationship with Hermès

Hermès values the corporate-client relationship where clients usually work with the same individual Sales Associate (“SA”). Over time the SA comes to know the client’s tastes and perhaps can even anticipate what the client will like from among the newest offerings.

Of course, this makes sales from the various departments relatively easier, which draws the client further in, reinforcing the sales relationship and establishing a cycle where the client begins to feel something of a loyalty (not necessarily exclusive) towards the brand and continues to seek more products on a consistent (although not necessarily a frequent) basis.

It has been said that some departments – such as ready-to-wear, fine jewelry, and housewares – are more likely to trigger a bag offer than others. This is probably true, bearing in mind that these departments also have most of the highest-priced items, making it easy to spend a lot very quickly.

There is, of course, no exact amount of pre-spend that will determine whether a client is offered a bag: it varies from client to client (and all of this can go completely out the window on an extremely lucky day for a new client, as has been known to happen on occasion) and boutique to boutique.

Some stores have many high-spending clients competing for the same bags, which will make this amount higher.

During COVID, bags were relatively easy to get, with a pre-spend of 1 to 1.5x (that is, from the same amount to one and a half times the cost of the bag) until demand started to build.

Now, however, pre-spend can be even 5x (five times the cost of the bag).

Comparing Primary vs. Secondary Market Prices

When clients are spending anywhere from 1x to 5x – from $10,000 to $50,000, or even more – to be offered a $10,000 bag, the secondary market prices don’t seem quite as disproportionate, do they?

This pre-spend also serves as a test of the market before Hermès conducts a price increase, demonstrating the likelihood that higher prices will still be met with consistent demand.

In terms of actual prices, consider the following current retail (primary market) vs resale secondary prices. We have considered current listings on Fashionphile and recent sales at Christie’s Auctions and The Real Real.

Note in the chart below that the year listed is the year that the bag was produced (and presumably sold on the primary market) and that each secondary market seller has their own methods of determining condition.

Fashionphile uses Giftable, New, Excellent, and Very Good; The Real Real uses Pristine, Excellent, Very Good, Good, and Fair.

Since we are focusing on the price disparity for new items, the relevant listings are of the Brand-New-in-Box variety, which would be Giftable / New / Pristine and possibly Excellent. A few from the Very Good category were included when there was nothing else available, further demonstrating much higher resale values even for used items.

As you can see above, even though Hermès’ prices are high to begin with, the secondary market prices are significantly higher for the most popular sizes and styles.

For example, the 2023 Black Mini Kelly in Epsom, listed on Fashionphile as New, has a current listed price of $37,795 when the primary market retail price for the bag was $8,700: this secondary market listing is more than 4x the retail price!

Even the completed recent sale at The Real Real, in Excellent (not Pristine) condition for $29,500, is still hovering near 3 1/2 times the retail price. Other popular styles yield similar results, including the 25cm Kellys and Birkins in Togo leather, which seem to sell for around 3x retail price (with variations based on color and/or hardware).

Interestingly, 18cm Constance yields about 1 1/2 – 2 x if the bag is in Epsom; Chevre bags don’t do quite as well (closer to 1 1/4 – 1 1/2 x), and a surprise winner is the adorable Evelyne TPM, which can yield more than 2x for a brand new bag, especially in light colors such as New White and Craie.