The document discusses factors that contribute to the high prices of luxury handbags from brands like Chanel, Hermes, Louis Vuitton and Prada. Production costs, including materials, manufacturing, marketing and real estate are high. Raw material costs have increased significantly. Brand image and perception of exclusivity also drive prices higher each year. Luxury brands avoid markdowns to maintain profits, so they increase prices to account for potential future discounts. Demand remains strong despite price increases, so luxury brands are able to continually raise prices.