Here is a quick guide on why rugs prices are so inconsistent, and how to zone in the rug you want. The 3 biggest factors that determine the price of the rug are construction, materials, size and origin of manufacture.
1. Construction
There are 4 main types of rug construction. Below are details of these construction type, starting most expensive, going down to the least.
Hand-knotted and Hand-woven Construction
This is the original "Persian" way of making a rug, though there are many techniques including Persian knot, Turkish, Savonnerie, Flatweave, Pile and loop etc. These are rugs can take several months or even a year of between 3-7 people working full time. As they are so labor intensive, this method costs the most. Also because each not is individual, and crated the most reliant foundation, so will last the longest. That's why you have these rugs that are hundreds of years old. These are the highest end rugs, and generally speaking will use the highest quality materials. I.e. Wool, silk or high end viscose.
The greatest variation here is density. How many knots per inch, which can be measure from the back of the rug. More densely woven or "finer" rugs, shed less, and can have more intricate patterns/grades.
These are the rugs that most high end homes use, most Interior Designers shop for. These rugs, if treated well can last up to 100 years or even more.
Hand-tufted Construction
These can a few months to make. This is also considered "Handmade", but a tufting gun is used to make the knot, but looping the material to a net mesh, and then adhering them together using a latex glue.
These rugs can be beautiful, but generally lack the density and character of hand-knotted. They tend to look manufactured. They also cannot be folded so must be rolled for storage/shipping, and having them cleaned/washed may damage the latex backing which is the foundation. Also popular with Interior designers. These have a life span of around 10-15 years.
Below is a video showing the processes involved in hand-tufting.
Hand-loomed Construction
These take weeks to make. Whilst this technique can be traced back to the Jaquard looms of years ago, this has recently gain popularity is it can be considered "handmade", and has the look and feel of handmade. Patterns must be relatively simple, as the loom only goes side to side, but because of recent technology, the designs are getting better. However, they are not knotted, only wrapped around a foundation, meaning the threads can easily come out if pulled. These rugs do not last long and usually use lower end materials so difficult to clean. Generally considered disposable rugs. Life span is around 3-4 years.
Below is a video of how handloomed rugs are made:
Machine-made Construction
These will have taken hours to make, on a machine loom. These are the type you'll see at large retail and online stores mostly. These may photograph well, but once looked at closely is obviously manufactured. The "knots" tend to be blobs distributed over the surface of a rug vaguely resembling a pattern, however. With new technology and modern patterns some of these designs can actually be nice at first.
These tend to only use cheap materials so polyurethane instead of wool, or if it is wool Indian or Chinese wool (which shed a lot). These are difficult to clean, however because they are so cheap, you can just consider buying a new one. Life span is around 5-6 years depending on material and traffic.
2. Material
Natural materials are considered to be the most long lasting, attractive, non toxic, and easiest to clean. Materials are listed below:
Wool
The king of rug materials, used and lasts for hundreds of years. These hold dyes very well, but at the same time, naturally repels stains, just like sheep do in the real world. That is thanks for natural oils like lanolin that exist in the rug. However, stains should be treated asap using our guide on how to treat stains. The longer a stain exists on a rug, the more likely it to to "dye" the rug. Wool is also flame retardant.
The best wools are from mountainous regions such as Afghanistan and New Zealand. These often have a soft, plus, feel and shiny luster. If a rug contains these wools, they usually say it on the description. Lower end wools like Chinese and Indian wools shed a lot, and have an itchy feel to them.
Silk
This soft, shiny and incredibly strong materials has been used in rugs for centuries. It is the most expensive of the materials. The fibers are very fine, allowing for very fine weaves and therefore intricate patterns. Whilst resistant to foot traffic, silk can stain, even by water, so it is often used as an accent material, rather than the whole rug, which would also be expensive.
Viscose
This is a blanket term for faux silk. These can be made from a variety of materials but are all cellulose based, meaning they take a natural plant material (like bamboo), and extract the cellulose which is altered to make viscose. IT is neither purely natural or synthetic, but somewhere in between. The look and feel is like that of silk, but does not strong resistance to wear, nor stainage. The cost is around the same as medium grade wool.
Polyurethane
This fine plastic "tubes" that mimic wool in look and, to some degree, feel. Once dirty these cannot be cleaned, and have a low resistance to wear. The plus side is that they are cheap and easy to replace.
3. Size
Rugs are almost always sold "per square foot" or "per square meter". The more rug you buy, the more it will cost.
Out of the 4 factors this one is the easiest to to calculate into narrowing down your choice of rugs. Always get the right size rug. Too big and you can't see any of the flooring, or the rug will run into a walkway that you would otherwise keep clear. Too small, and you get what designers call postage stamp syndrome, where the rug has defined a space (maybe living area for example), that is small, constricting and looks silly. This does a disservice to your home.
4. Origin of manufacture
Where a manufacture is located makes a huge difference on the cost of the rug. Countries with cheaper labor, and loose environmental regulations are going to be cheaper. If there are tariffs imposed when importing and exporting, these costs will be calculated into the price.
Skills and talent of rug weaving is usually passed down the generations, those countries that have the most history tend to have the most fine rugs. The original country of rugs, is...you've guess it, Persia (now Iran), with their Tabriz's and Sultanabad rugs. Other countries like Turkey and Russia (Caucus regions), and Morocco also have a strong history of rug making. We will save the history for another article.
In the last decade India has emerged as a behemoth in manufacture. Whilst India does have a history of rug making (in Agra and Amritsar for example), new looms are popping up in villages in Badohi, Jaipur and others. Whilst their skills/knowledge on rug making are relatively limited, now that more solid and coarsely knotted rugs are on the rise, they have become a popular choice. These are by far the cheapest rug you can find on the market, but also the lowest quality.
Summary
The more handmade the rug is, the higher the cost, the longevity, and ease to clean, as well as characteristic look. They tend to us better materials, hold their value more, and add more character. However lower end rugs may a better choice if you don't want to clean the rug, and maybe even update the look of your place every few years.