Why Do Some Competitor Bags Cost 2 to 3 Times More?


This is an interesting one. Perhaps my favorite to write about. Given that we use the highest quality labor and materials possible, there are only three explanations for why a competing bag would be 2 to 3 times more money. 

First, it could use proportionately more labor and materials. The more leather and labor we use, the higher the cost of our bag. But to get to a multiple of 2 to 3 times more money, you would be talking about a very complicated and large bag. Is anyone looking for a 60" long briefcase? I didn't think so. So that seems unlikely.

Second, the seller could just want to make a lot more profit. While that's certainly possible, it's unlikely given the competitive nature of the market. 

Keystone Pricing Artificially Inflates Leather Bag Prices 

The other explanation is Keystone Pricing. Keystone Pricing refers to the typical retail markup that has the effect of quadrupling prices, or at least doubling or tripling them in most cases. In short, the manufacturer has to set a very high retail price so that they can afford to sell the product at wholesale to a retailer for about half the retail price.

Nearly all bags that cost 2 to 3 times more money than ours will be under the Keystone Pricing model. Want a quick way to confirm that fact? Simply look to see if the bag is offered for sale by a retailer that is not the manufacturer. It doesn't matter if it's a small boutique, or Barney's, if it's in a brick and mortar retailer (or sometimes even an internet retailer), it's almost certainly undergone keystone pricing markup.

Retailers almost never want to pay more than 40-50% for the product. And the manufacturer still needs to make a profit, along with any other middlemen in the chain. So the math is the math.

The key takeaway is don't mistake keystone pricing markup with higher quality. You're paying to maintain the roof and toilets in the brick and mortar retailer.  

Below is a helpful video that illustrates Keystone Pricing. 


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