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Why do some luxury designer brands hold their value better than others? And which brands hold their value the best? For example, it’s common to hear someone say a Rolex is as good as cash, or a when you buy a Rolex you are not buying a product but rather investing in an asset. Why is that? And why when you buy a Michele watch that costs $1,500 when you go to try and sell it again, you’re lucky to get a couple hundred dollars for it? The answer is actually pretty simple. But before I answer let’s talk about what I mean by luxury brand.
So a luxury brand is any company that sells a product at a premium price. For example. The average price of a watch worn by most people is around $100. But an Audemars Piguet can be $20,000 or more. A handbag is $50, but a Chanel Classic Flap is $6,000. This is what I mean by a luxury brand. When you are paying more for the name of the product than the actual product itself, then you are buying a luxury product.
So why do some luxury brands hold their value better than others? When I ask that question, here is some background info. If I get a piece of Van Cleef Alhambra in the store, even though it’s pre-owned I can sell it for almost retail price. But a Gucci handbag that sells for $2,500 in the store might not even fetch $1,000 pre-owned. What happens to the value of those two brands?
In my eyes it’s simple. Some brands put items on sale and others don’t. For example, you will never see a Louis Vuitton outlet, a Chanel outlet, a Tiffany outlet. You will however see a Gucci go on sale, Prada outlet, TAG Heuer sale. In my opinion these sales or outlets dilute the brand because the same bag you paid $1,500 for is now on sale for $895. You always have to go by the lowest price, not the highest, to see what something is worth. So even if that bag was only sold for $895 one day, the value of that bag retail wise is $895.
Of course marketing plays a large role in luxury brands holding their value but I think the biggest factor is when brands like Hermes stick to their guns,never sell anything on sale it shows the consumer they believe in what they are selling 100%. It means that they will never design a product for sale that they think won’t sell. They stand behind everything they put on the floor. When you have a sale or an outlet you are admitting, buy this for less because it didn’t sell like we thought it would. Whether you consciously think about this or not, it dilutes the value of the brand.
That’s it guys for episode 22 of #AskBRP. Thanks again for watching. Follow me on instagram @bocaratonpawn, like us on facebook.com/bocapawnshop and follow our snaps every day, our username is brpluxury. Thanks again and see you next week!