A common luxury business practice that has taken hold over the past two or three decades has been fairly regular price increases. These cost fluctuations have a huge influence on sales, via either purchasing before an expected increase or determining whether (and by how much) the same item costs more or less based upon where one is buying it.
Luxury companies aver that they raise prices to keep up with increasing costs and further to achieve price parity around the world; some companies are even pretty good at accomplishing this. Hermès, as much as we love it, is not one of those companies.
Of course, price differences around the world are challenging to determine when you’re dealing with a company that doesn’t sell most of its popular bags online, but our world has gotten small enough so that a bit of research will reveal that there are definitely winners and losers in the Hermès shopping market; while it’s no surprise that there are genuine price differences, in some cases, the price difference is really significant.
Cost Considerations of Purchasing an Hermès Bag in Europe
From a US perspective, it costs a lot less to purchase an Hermès bag (or nearly any Hermès item) in Europe. Of course, international travel isn’t inexpensive, so generally, only if you’re traveling briefly and/or economically will you end up ahead; otherwise, you’re getting a good deal during your European travels.
Here are a few cost comparisons for a variety of popular bag styles and sizes:
|Bag||Leather||USD Price||EUR Price||EU Cost in USD|
|Kelly 25||Epsom Sellier||$10,600.00||€ 7,950.00||$8,370.00|
|Togo Retourne||$9,900.00||€ 7,400.00||$7,790.00|
|Kelly 28||Epsom Sellier||$11,200.00||€ 8,350.00||$8,790.00|
|Togo Retourne||$10,600.00||€ 7,950.00||$8,370.00|
|Mini Kelly||Epsom Sellier||$8,250.00||€ 6,150.00||$6,475.00|
|Birkin 25||Togo||$10,100.00||€ 7,400.00||$7,800.00|
|Touch Togo/Nilo||$19,500.00||€ 14,500.00||$15,270.00|
|Matte Gator||$43,400.00||€ 32,600.00||$34,326.00|
|Birkin 30||Togo||$11,200.00||€ 8,150.00||$8,590.00|
|Epsom Retourne||$11,000.00||€ 8,050.00||$8,475.00|
|Constance 18||Epsom||$7,950.00||€ 5,850.00||$6,160.00|
|Constance 24||Epsom||$10,200.00||€ 7,500.00||$7,900.00|
As you can see, purchasing any of the most popular Hermès bags in Europe will save you about $2-3,000 for a regular leather bag; for an exotic bag, the savings are much greater.
In reality, the cost savings are even better than they seem at first glance. The numbers above don’t even consider the further savings buyers will find when they apply for a VAT refund, even after paying US import duties. While the VAT (Value Added Tax) adds approximately 20% onto the cost of an item in the EU – meaning the € prices listed above already, include the tax – when you leave the EU, you file VAT refund claim forms at the customs window at the airport.
The VAT Refund Process Explained
The VAT refund is pretty straightforward: Hermès will provide your VAT form and envelope along with your receipt (and CITES, if appropriate) when you pay for the bag; the VAT refund window is near the entrance at the airport. At Charles de Gaulle airport, there are self-service electronic kiosks right by the VAT window, but they do seem to reject the most expensive items, so you will probably have to wait in line. When it’s your turn, the person at the VAT window will ask to see your forms – and probably the bag, too, so it’s best to keep your high-end purchases available with you and easy to access (I personally wouldn’t recommend checking a good handbag with your luggage, regardless). They will take your form, and you’re done!
VAT refunds can go back to the credit card you used to pay for the bag. The amount you get for the refund depends on the company you purchased the item(s) from, so the percentage you get back is not the same across the board. Generally, it seems that Hermès gives its buyers a 10% VAT refund, so you can expect to get 10% of the Euro price you paid back as your VAT refund.
How much are the US Import Duties?
Of course, once you enter the United States, you must declare your purchases and pay import duties. Forms are usually given on the airplane as you get close to landing and are taken after you pass through customs and retrieve your luggage.
The Duty is calculated as follows: the first $800 worth of goods you import is duty-free; the next $1,000 is charged at a rate of 3% of the cost, and the rest is charged at a rate of 9%. If you are traveling with other people, the allowances above are multiplied by the number of people traveling together (this includes children).
A Sample Cost Calculation
Remember that for this calculation, you’re paying for the bag in Euros, and the VAT is based on the Euro price, but US Duties are calculated in US Dollars, so you are working with two different currencies (calculations here are approximate and will vary a bit even after accounting for ever-fluctuating exchange rates)
For example, if you purchase a 25cm Kelly in Epsom leather in Paris, your calculation would be as follows:
- VAT refund for Hermès is 10%
- The price is €7,950, so 10% for VAT refund is €795
- Therefore, your Euro cost after VAT refund will be €7,155 (€7,950 – €795)
- Today’s exchange rate (11/11/22) is 1EUR = 1.04 USD, so €7,155 is around $7,411)
- The US Duty is calculated on the US equivalent of €7,950, which is about $8,235
- The first $800 imported is duty-free, so the duty is based on $7,435 ($8,235 – $800).
- The next $1000 is just 3%, which is $30.
- The rest of the Duty is calculated on $6,435 ($8,235 cost – $800 duty-free – $1,000 already calculated above)
- That remaining amount, $6,435, is calculated at 9%
- 9% of $6,435 is $579
- So, for the €7,950 bag ($8,235 in USD), the duty for a single person is $609 ($30 + $579).
Combining VAT Refund and US Duty
- After you get the 10% VAT refund based on €7,950 (€7,950 – €795), you have paid about $7,411.
- After you pay the US Duty based on €7,950 ($609), you have paid $8,020 total ($7,411 converted after VAT back + $609 Duty paid)
- So, your final cost for this bag is approximately $8,020 (more or less, depending on whether you convert everything to USD before you calculate, so this is just a guide).
- Remember that the US price for this bag is $10,600, so paying $8,020 saves you about $2,580.
Further Cost Considerations
While $2,580 is a significant savings, in application, the difference is even greater because the US price is $10,600 before sales tax, so the difference in cost is well more than $2,580 because every state where a boutique is located also has to collect state and local sales tax.
If, for example, you were purchasing in NYC (8.8% sales tax), the actual cost is about $11,534 ($10,600 + $934), so the true difference is about $3,514 ($11,534 – $8,020).
That’s more than $3,500 less to buy the bag in Europe!
Sales tax varies based on location (from 5.75% for the District of Columbia to 10% for Chicago and Seattle), so the range of final cost would be $11,210 (at 5.75% sales tax) to $11,660 (at 10% sales tax), a savings of $3,190 – $3,640.
Note that families can combine duty allowances, so there is even more of a savings if you are traveling with a partner or friend who isn’t interested in purchasing luxury goods (children’s duty allowances may also be used for this purpose). In addition, it should be noted – though never expected – that the airports may be inconsistent about applying the rates.
International Pricing: Where is it the most and least expensive to buy?
Of course, there are far more currency implications than those just involving EU pricing; Hermès has stores worldwide. While it is beyond the scope of this article to analyze all of them, I selected a few additional popular locations to evaluate: the UK, Canada, Australia, China, Hong Kong, and Singapore. EU prices were the easiest to analyze because their prices are reported more than any other foreign currency, but even having a few prices makes it easy enough to extrapolate where their prices are in relation to the others.
Note in the chart below that each price is listed in the local currency; in parentheses is the cost converted to USD as of late November 2022.
Looking at the above prices, it’s clear that US prices lie somewhere in the middle of the range of costs internationally. While it’s definitely less to purchase in Europe, it’s also definitely more to purchase in Asia. Here are two examples:
Mini Lindy in Clemence:
Geta in Chevre:
Here we can see a range of prices across Europe, America, and Asia, with lower prices in Europe and the UK, higher prices in Asia, and in America somewhere in between. Of course, my notes here are limited to countries with reported prices; years ago, the least expensive place to purchase Hermès was purportedly Chile, and this may still be the case, but without any reported prices or even an Hermès website for any of South America, I am unable to report that data to you.
Two further things to note:
Personally, I was surprised to see that it actually costs less to purchase in Canada than in the US; having many Canadian friends who love Hermès, I always felt a bit bad that their prices seemed higher – a 90cm scarf in the US costs $480, while in Canada it’s $500 – but of course, while Canada is our neighbor, just because we both use the term “Dollar” doesn’t make it any less of a different currency. CAD 500 sounds like a lot, but it’s USD 363, not including US local sales tax!
Also, it appears that everything costs the most in China – this, as I have noted in a prior article that China – and Asia in general – is a significant source of Hermès profits, averaging at about 40%, with China itself having about 10% of the extant Hermès boutiques and Asia having more than 1/3 of them. Although the prices in China are not usually as great as with the Mini Lindy noted below, they seem to average about 1/4 – 1/3 more in price.
|Item||EU Price||China Price||EU Price Converted to CN¥||Price Difference – Amount More it Costs in ¥||% More in China|
|Calvi Card Case in Epsom||€282.00||CNY2,950.00||CNY2,103.00||CNY847.00||29%|
|Classic Silk’In Wallet||€1,040.00||CNY10,800.00||CNY7,757.00||CNY3,043.00||28.0%|
|Evelyne TPM in Clemence||€1,400.00||CNY14,550.00||CNY10,442.00||CNY4,108.00||28.0%|
|Mini Lindy in Clemence||€4,700.00||CNY59,600.00||CNY35,055.00||CNY24,545.00||42.0%|
EDITOR’S NOTE: Due to daily currency fluctuations, the bag price calculations are approximate and should be regarded as accurate within a range of about $100.