Pure, Unadulterated Capitalism

Thinking afterward of yesterday’s post regarding baggage and luggage, I could not get over that Hermes bag costing nearly $100k. Now there’s capitalism for you – pure, unadulterated capitalism. Good for Hermes for having a market that supports the prices they can claim for their goods.

In yesterday’s case (no pun intended), here’s a piece of crocodile leather that probably isn’t all that big. It doesn’t have wheels or stands, so it’s small enough to be carried. It’s been dyed and trimmed with palladium – a precious metal.

Checking the price of palladium yesterday, it was less than $1,100 per ounce which is about on par with gold and platinum.

Let’s say there are three ounces of metal on that bag. Let’s give the smith who forged those pieces a bit of the action. He had to melt the metal, cast it, do whatever else necessary to shape it, then it had to be polished. Call it $2,000 for his efforts, which is probably generous.

We’re at $5,300.00 sans the material and labor to make the bag. Again, for the sake of conversation, the crocodile hide costs $1,500. That seems high to me, but we’ll go with it for this. It’s cleaned, tanned, cut to shape and dyed. There was probably some waste, but we’ll put a value on that labor at $2,000. With the $5,300 for the bling, and $3,500 for the material, we’re at $8,800.00.

Now let’s say that the worker who actually puts the pieces together sews them by hand instead of by machine. There’s a lining included in the cost of other materials (even if it’s silk we’re probably not talking more than $50 for that, so we’ll include it). This worker makes $50 per hour (which is ridiculously high in any market) and it takes them twenty hours to sew one bag. There’s another $1,000.00.

Based on these assumptions (which are probably pretty well inflated), it costs $9,800.00 to make one bag. Then there’s shipping and storage and distribution which we can easily call $5,200.00.

So here we are. One bag, valued at $100,000 for sale costs $15,000 to make. That’s quite a profit margin, innit? $85,000 straight to the bottom line and there are probably manufacturers all over the world who are jealous as can be of that kind of margin.

As for the buyer, what kind of person spends that much money on some piece of leather? Isn’t there something better that could be done with that $85,000?

How about donating it to charity or research? How about helping animals by donating it to the local SPCA or a rescue organization? What about charitywater.org, a group dedicated to bringing clean safe drinking water to third world countries? They could probably use the money. Or there are any number of other good charities out there that will use the money wisely.

It's just that there are so many other things I can think of that could put that money to better use than to buy a dead critter’s skin to hang from some woman’s arm.

That’s just my point of view.

Maybe the people who buy stuff like this already do all these things and this money is deemed ‘excess’, although another donation or two wouldn’t go amiss.

Maybe it would be different if I had enough money that $100k looks like sofa change. I don’t know. But, if someone has earned their money, and if they choose to spend it on some unnecessary luxury like this, that’s their business. I don’t get it. I don’t understand it. But that’s on me, not on them. It does make me scratch my head, though.

Have a lovely day!

Best~

Philippa

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