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Thread: Which Swiss Watch Manufacturer/Watch Makes The Most Mark-Up.

  1. #1

    Which Swiss Watch Manufacturer/Watch Makes The Most Mark-Up.

    I was reading the Christopher Ward website where they say they will never mark up a watch more than 3 times from production costs, but state some manufacturers mark-up 34 times production costs.

    So it’s had me thinking who are the worst offenders.

    My money is on the speedy at £4K+. I reckon you could make it for less than two hundred lids.

    On a ratio of RRP/production cost, Rolex can’t be far behind. Sorry to suck the joy, but it takes mugs like us to keep the pseudo Ponzi scheme going!

  2. #2
    It’s a nonsense. You would need to take into account ALL costs. I remember reading an article years ago that worked out Rolex marketing spend in the US compared to sales, and it alone added more than $1000 to each watch. Then you have setting up Boutiques, training, service centres, transportation, insurance, taxation and R&D, rather than just buying a Sellita movement etc. after that you can look at the cost of parts and production.
    It's just a matter of time...

  3. #3
    Quote Originally Posted by Omegamanic View Post
    It’s a nonsense. You would need to take into account ALL costs. I remember reading an article years ago that worked out Rolex marketing spend in the US compared to sales, and it alone added more than $1000 to each watch. Then you have setting up Boutiques, training, service centres, transportation, insurance, taxation and R&D, rather than just buying a Sellita movement etc. after that you can look at the cost of parts and production.
    Indeed - to quote only the "production cost" is a little unfair:)

    Having said that, to OP's question, I'd say Roger Dubuis is probably up there along with Tag (at RRP). If we consider "non-swiss" brands as well, then Daniel Wellington by a country mile...

  4. #4
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    Quote Originally Posted by Omegamanic View Post
    It’s a nonsense. You would need to take into account ALL costs. I remember reading an article years ago that worked out Rolex marketing spend in the US compared to sales, and it alone added more than $1000 to each watch. Then you have setting up Boutiques, training, service centres, transportation, insurance, taxation and R&D, rather than just buying a Sellita movement etc. after that you can look at the cost of parts and production.
    Sounds a little high, doesn't it? Unless the marketing spend in the US is higher than the average elsewhere, it suggests their worldwide annual budget would be up around $1bn.

    It's quite a thought, though. Imagine a watch manufacturer approaching you and saying: "Sir, we can offer you this watch for $500 or, if you prefer, we can spend $1000 marketing it to you and then charge you $4000." Faced with such a stark choice, how many of us would choose the latter option?

  5. #5
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    Quote Originally Posted by ColDaspin View Post
    Sounds a little high, doesn't it? Unless the marketing spend in the US is higher than the average elsewhere, it suggests their worldwide annual budget would be up around $1bn.

    It's quite a thought, though. Imagine a watch manufacturer approaching you and saying: "Sir, we can offer you this watch for $500 or, if you prefer, we can spend $1000 marketing it for you and then charge you $4000." Faced with such a stark choice, how many of us would choose the latter option?
    For better or worse though, that’s not the choice. It’s more like, "Sir, we can offer you this watch for $500, and if you sell it you will lose the lot, or, if you prefer, we can spend $1000 marketing it for you and then charge you $4000, then everyone will be impressed with your expensive watch and if you choose to sell it, you may even make a profit.” Faced with such a stark choice, how many of us would choose the former option?

  6. #6
    Grand Master abraxas's Avatar
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    Richard Mille
    "Owning one is almost as satisfying as making one." ~ Rolex 1973

  7. #7
    Grand Master abraxas's Avatar
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    Christopher Ward isn't really in the clique of Swiss manufacturers. Not yet. Not by a mile. And what are mark-ups anyway? Some of these items coming out Switzerland, even at below £10K, are actual works of art. So, the artists will charge whatever they think their market will accept.
    "Owning one is almost as satisfying as making one." ~ Rolex 1973

  8. #8
    Quote Originally Posted by ColDaspin View Post
    Sounds a little high, doesn't it? Unless the marketing spend in the US is higher than the average elsewhere, it suggests their worldwide annual budget would be up around $1bn.

    It's quite a thought, though. Imagine a watch manufacturer approaching you and saying: "Sir, we can offer you this watch for $500 or, if you prefer, we can spend $1000 marketing it to you and then charge you $4000." Faced with such a stark choice, how many of us would choose the latter option?
    It does sound very high to me, and I have no idea if the figure is anything close to accurate. But...

    Swatch Group in 2018 had a net profit of just over 10%, up from 9.5% in 2017. So their markups whatever they are aren’t reflected in huge percentage profits, especially once you are running a global company with thousands of staff on the payroll, including the full marketing departments, central and local - that’s a huge overhead.

    It’s obviously not just the circa $60m that Rolex spends on tv, billboards and magazines etc. in the US each year being divided by each watch, there’s a lot more “marketing” costs involved.
    It's just a matter of time...

  9. #9
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    Quote Originally Posted by Itsguy View Post
    For better or worse though, that’s not the choice. It’s more like, "Sir, we can offer you this watch for $500, and if you sell it you will lose the lot, or, if you prefer, we can spend $1000 marketing it for you and then charge you $4000, then everyone will be impressed with your expensive watch and if you choose to sell it, you may even make a profit.” Faced with such a stark choice, how many of us would choose the former option?
    Yes, but that only applies to an absolutely minuscule proportion of luxury brand watches sold. Otherwise, you're going to lose far more (in absolute terms) than the max loss of $500 on the first option.

  10. #10
    Quote Originally Posted by ColDaspin View Post
    Yes, but that only applies to an absolutely minuscule proportion of luxury brand watches sold. Otherwise, you're going to lose far more (in absolute terms) than the max loss of $500 on the first option.
    Yes, but will it give you the same warm fuzzy feeling in your tummy :)
    It's just a matter of time...

  11. #11
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    Quote Originally Posted by Omegamanic View Post
    It does sound very high to me, and I have no idea if the figure is anything close to accurate. But...

    Swatch Group in 2018 had a net profit of just over 10%, up from 9.5% in 2017. So their markups whatever they are aren’t reflected in huge percentage profits, especially once you are running a global company with thousands of staff on the payroll, including the full marketing departments, central and local - that’s a huge overhead.

    It’s obviously not just the circa $60m that Rolex spends on tv, billboards and magazines etc. in the US each year being divided by each watch, there’s a lot more “marketing” costs involved.
    Agreed, there's a lot hidden behind the headline spend.

    Reverting to the OP's question, in absolute terms, clearly the Rolexes, Omegas, let alone PPs of this world will have the highest margins but, given the almost unbelievably cheap prices at which the Chinese can churn out lower-end stuff, I'd be amazed it it weren't the fashion watches being flogged in the $2-300 price point where the % margins weren't the biggest.

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