Well there’s a multitude of reasons. But the answer can be distilled to two words: Material and craftsmanship.

Firstly, the Material: Full Grain Leather and Top Grain Leather.

Full Grain Leather is considered among the best quality leather available. Top Grain Leather is the second high quality leather. So full grain leather in more expensive than top grain leather.

Full Grain Leather choose the leather form captive breeding cow and be castrated cow, their leather are more dense than the other, with larger sheets and less scars. In addition, Full Grain Leather made from the top layer of the animal’s leather which side that grows or scales, this part is the strongest and most durable part of the animal. The Full Grain Leather is the strongest, most durable form of leather.

In most cases, there are some scars on animal’s skin, so we have to remove a slight section of the upper skin, if the animal's skin is thicker, the workers will cut it into two parts, and the upper part which has high density fibrous tissue will be processed into Top Grain Leather, the other part will be processed into Genuine Leather. Top Grain Leather is durable, not easy to break.

Secondly, the craftsmanship: 

You have to understand grades and tanning methods of leather. Vegetable tanned and Chromium tanned. Vegetable tanned leather is green and good for your skin, but needs a long time. So Vegetable tanned leather is more expensive than Chromium tanned leather.

An important reason is the craftsman. For some handmade top brand leather bags, each bag is made entirely by hand by a single craftsman who trains for almost two years before he or she is allowed to build a bag. It takes more than ten hours to produce one bag, which means a limited number can be made each year.