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Thread: Why are high end watches so expensive?

  1. #1
    Master
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    Why are high end watches so expensive?

    Easy answer, eh? Probably a mixture of AD profit margins, brand positioning and advertising/marketing costs accounts for a fair percentage of a luxury watch. But is the actual watch itself intrinsically worth more? I've heard people mention that eg. a Rolex Submariner's indices are made of white gold - that must add to the price, I suppose.

    Firstly,where do people get this sort information and is it true?
    Secondly, are other parts of that watch (or indeed any other high end watch) particularly special in terms of material used? (Clearly I exclude obviously more expensive gold/diamond cases/bracelets)?
    Thirdly, how "hand made" are watches in this price bracket? I understand that a Patek and northwards will have more human input but what is the case with a high output luxury watch eg a Sub?

    Or is the pricing simply a function of (apparent) desirability and nothing else?

    cheers,
    David

  2. #2
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    Re: Why are high end watches so expensive?

    Super, interesting post, because for a lot of watches fan it's THE question. But I would present it in a slightly different way : why are prices increasing so much ?
    Yes, it's hand made, but in all every industry the longer you produce a same produt, the cheaper the last output is; you have productivity gains, the research and developpement is already paid, having an established market size, your advertisement cost are lower per unit...
    But in the watch industry it's the contrary, the same mechanical watch than the one made 10 years ago is far more expensive today. I'm not discussing about confidential brands (in terms of volume produced, not quality) such as Patek Philip but Omega or Rolex produce heavily.
    I think the answer is that watch industry obey to the law of the luxury market, a lot of brands are the property of luxury groups and they tend to use the same marketing approach : artifial rarity, excessive margins, overvaluation of the brand name...

    Regards, Nicolas

  3. #3
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    Re: Why are high end watches so expensive?

    I forgot, a lot of people buying a watch are looking for the resell value, as for a car it's a point that people buying a high end watch are considering. Limited production,increased price of the BNIB, is a way to keep the second hand market high enough to justify part of the price (it's an investment, sir...).

    regards, Nicolas

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    Grand Master gray's Avatar
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    Re: Why are high end watches so expensive?

    Depends what you mean by "high end" I suppose.
    If you mean luxury brands then they are expensive because that's part of what defines a luxury brand. Part of the exclusivity is the price itself and, while quality, materials and service are of a high standard, that is not in proportion with the cost.
    By way of illustration:
    A luxury cake is made with fine materials, say costing 30 pence by someone who gets £30 an hour, the standard cake 25 pence and made by a machine.
    The luxury cake is available in limited supply, through prestigeous outlets and costs £5, the standard you can get anywhere and costs perhaps 50 pence.
    You make your choice and pay your money.
    Personally I like £5 cakes but rarely spend more than say £2 :roll: Although sometimes I enjoy a 50 pence cake and feel reasonably satisfied afterwards :wink:
    So, to answer your question directly, they are so expensive because that's what customers are prepared to pay for them - simple supply and demand.
    Gray

  5. #5
    Master
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    Re: Why are high end watches so expensive?

    Because idiots like us will pay the prices? :bom:

    Mark.

  6. #6

    Re: Why are high end watches so expensive?

    Quote Originally Posted by gray
    Depends what you mean by "high end" I suppose.
    A luxury cake is made with fine materials, say costing 30 pence by someone who gets £30 an hour, the standard cake 25 pence and made by a machine.
    The luxury cake is available in limited supply, through prestigeous outlets and costs £5, the standard you can get anywhere and costs perhaps 50 pence.
    Never mind watches... I feel like some cake now :D
    Good analogy.

  7. #7

    Re: Why are high end watches so expensive?

    I suppose the idea of "perceived " value comes into play, to enjoy an extended lifespan a brand must have some sort of reputation normally supported by it's A list type users. So we keep on wanting what people who apparently can choose from the whole market have chosen to wear. Yes I know that such types are either paid to wear the watch or more likely get it as a freebie.

    Regards

    Peter

  8. #8
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    Re: Why are high end watches so expensive?

    Market segregation sounds like part of the answer and it feels as if recessions make for bigger differentiations in all markets, but enough about that, who mentioned cake? :albino:

  9. #9
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    Re: Why are high end watches so expensive?

    Hi

    Nice post.
    Do a wee search on Watch Makers and In house movements.

    M

  10. #10
    Craftsman CamCG's Avatar
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    Re: Why are high end watches so expensive?

    Great post - Wouldn't it be interesting to get a run-down of the comparative costs of some of the best know watches (impossible, I guess)?

    I imagine that a significant proportion of a watch’s RRP is due to marketing costs as well as perceived value. After all, many (I believe to be) unbiased reviews have found minimal difference in quality and materials between the Rolex Submariner and the Omega PO or Professional. Yet one is priced around £1,800 to £2,000, whilst the other is well north of £3,000.

    If the findings of such reviews are actually true, and the RRPs so different, then why do many people (myself included) hanker for the Rolex rather than the Omega?

    Many factors, I guess, including (amongst other possibilities) effective marketing by Rolex, each potential buyer’s aesthetic predispositions, personal history of exposure to the brand, residual values and, maybe, the use of in-house movements. The more of these factors that a brand or model can hit, the higher the RRP the manufacturer can get away with charging.

    Regarding models incorporating “precious” metals like gold, I believe (and correct me if I’m wrong) that the RRPs charged for models like the white gold Submariner (around £17K?) are simply too astronomical to even attempt a materials-based reasoning.

    You can purchase a brand new family saloon for less than £17K, and I don’t believe that the research and development, materials and manufacturing costs etc. would be in anyway comparable on a per model basis. I would guess that this would be true even with far lower production runs of something like a white gold Sub vs. a car produced in its hundreds of thousands. A crude comparison, perhaps, but I believe (without any concrete figures, I admit) that it only goes to show how the pricing of watches can be very arbitrary.

    That said, I might well still buy the white gold Sub if I was in a position to do so (says it all, really!).

  11. #11
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    Re: Why are high end watches so expensive?

    I was once told (By one of 'dem fancy Horologists) that a Rolex consisted of £27 worth of moving parts... :shock:

    But... I guess it's about having something that's built to a standard rather than a price.

    From there, it's the satisfaction of ownership. An appreciation of the effort that's gone into it.

    Maybe that's what defines the WIS(Watch is Special) rather than "Watch Idiot Savant" on this forum.

    Just a :occasion5: :drunken: :shaking2: :love9: :love4: thought...

    Mike. (time for bed, i think... :P )

  12. #12
    Craftsman CamCG's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by miked10270
    I was once told (By one of 'dem fancy Horologists) that a Rolex consisted of £27 worth of moving parts... :shock:...

    ...From there, it's the satisfaction of ownership.
    An interesting (though, perhaps, far-fetched) extension of the experience and statement that you made here would be to take the example of the human body...

    Looking purely at the elements and minerals found in each human body, the monetary value per body would equate to around $5! (Equivalent to your 'Rolex parts' example listed above).

    However, when you consider the value of organs etc. on the legitimate market, a body's value would rise into the millions (At a stretch, we might equate this to the market value of a watch on the new or used market).

    Nevertheless, the above is all immaterial as a “body's” true value is unquantifiable when you consider the love (and other emotions) shared between human beings, and what we would give up for a loved one should they require it (We might, at a massive stretch, equate this to the price and lengths that some people would go to acquire a certain watch; a price, perhaps, totally unreasonable when the only factors taken into consideration are ones like the cost of parts).

    (Figures: http://www.ehmac.ca/everything-else-eh/ ... worth.html).

  13. #13

    Re: Why are high end watches so expensive?

    Agree with you. But why are we not paying top $ for watches that are not so high end?

    I really think it a matter of personal choices and how the top end makers can sway us into parting our $ for these creations.
    Tourbillions, minute repeaters but are they really worth that much? It is subjective to individuals just like Paintings I guess.



    Quote Originally Posted by tredders
    Because idiots like us will pay the prices? :bom:

    Mark.

  14. #14
    Grand Master markrlondon's Avatar
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    Re: Why are high end watches so expensive?

    It all depends on what the market will bear.

  15. #15

    Re: Why are high end watches so expensive?

    I would like to express my gratitude to you for using an analogy other than cars. Well done to you, Sir! :)

    Quote Originally Posted by gray
    Depends what you mean by "high end" I suppose.
    If you mean luxury brands then they are expensive because that's part of what defines a luxury brand. Part of the exclusivity is the price itself and, while quality, materials and service are of a high standard, that is not in proportion with the cost.
    By way of illustration:
    A luxury cake is made with fine materials, say costing 30 pence by someone who gets £30 an hour, the standard cake 25 pence and made by a machine.
    The luxury cake is available in limited supply, through prestigeous outlets and costs £5, the standard you can get anywhere and costs perhaps 50 pence.
    You make your choice and pay your money.
    Personally I like £5 cakes but rarely spend more than say £2 :roll: Although sometimes I enjoy a 50 pence cake and feel reasonably satisfied afterwards :wink:
    So, to answer your question directly, they are so expensive because that's what customers are prepared to pay for them - simple supply and demand.

  16. #16
    Grand Master Glamdring's Avatar
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    Re: Why are high end watches so expensive?

    You can take the cake analogy only so far. The difference between a top quality confection and supermarket packet cake is clear as soon as you taste it.
    The difference between Omega and Rolex is less clear. Both are made mainly by CNC machines with a bit of hand-finishing and assembly. Rolex make 800,000 watches a year you can't have them all hand made by Swiss gnomes.
    Considering that there is a keen market for vintage Omega and Rolexes suggest that the longevity of both is high.
    Perceived value then, as has been suggested. For me then the fairly simply fact is that there are a lot of people with a lot of spare cash to spend on an obvious luxury item. That's fair enough; they need only justify it to themselves.

    Question: both Rolex and Omega produce mass-market watches (as opposed to a few hundred or a few thousand pieces [Glashütte produce about 8000 pa]). How do you accurately judge the real quality of their respective movements?

  17. #17

    Re: Why are high end watches so expensive?

    I am consiering buying an IWC Portuguese 5001-09. This is a steel version, so apparently the major part of the price regards the movement. Correct?

  18. #18
    Grand Master 100thmonkey's Avatar
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    Re: Why are high end watches so expensive?

    Its much the same as the car market, the components don't justify the price but the look, build, and marketing copled with the kudos make us want them and accordingly warrant the price.
    "When You Go Home, Tell Them Of Us And Say,
    For Their Tomorrow, We Gave Our Today"

  19. #19
    Grand Master markrlondon's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by cruz
    I am consiering buying an IWC Portuguese 5001-09. This is a steel version, so apparently the major part of the price regards the movement. Correct?
    I would have thought the major part of the price regards the fact that it's an IWC. ;-)

  20. #20
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    Re: Why are high end watches so expensive?

    I used to think that spending more than a couple of grand on a watch was ridiculous. However, just out of interest I've recently been looking at the top brands (especially Breguet). It seems to me that those who are able to afford a really high end watch are looking for something that they can't get anywhere else, usually, history and exclusivity. Yes, it's still about branding and marketing, but even to talk about 'quality' for the very top end is to misunderstand the market. Nor do I don't think it's got anything to do with how much something costs. Aside from the best materials, there is real passion and expertise that goes into making the very best there is in any field. Musical instruments is another analogy (ie Steinway pianos)

    As always it's subjective. There are some really awful designs (Graham, anyone?), but there are some stunning pieces too (Breguet). Once you appreciate what really goes into these watches (aside from precious metals) where the very best people at every stage have been involved in producing the very best watches, they're still amazing value. At this level, what you're really buying is a work of art.

  21. #21

    Re: Why are high end watches so expensive?

    Quote Originally Posted by markrlondon
    Quote Originally Posted by cruz
    I am consiering buying an IWC Portuguese 5001-09. This is a steel version, so apparently the major part of the price regards the movement. Correct?
    I would have thought the major part of the price regard the fact that it's an IWC. ;-)
    Correct, just these 3 letters allready cost money. But what would the 5001 movement (7 day reserve) cost, separately? At cost price obviously.

  22. #22
    Grand Master markrlondon's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by cruz
    Quote Originally Posted by markrlondon
    Quote Originally Posted by cruz
    I am consiering buying an IWC Portuguese 5001-09. This is a steel version, so apparently the major part of the price regards the movement. Correct?
    I would have thought the major part of the price regard the fact that it's an IWC. ;-)
    Correct, just these 3 letters allready cost money. But what would the 5001 movement (7 day reserve) cost, separately? At cost price obviously.
    I am not an expert but I'd be surprised if it was more than a couple of hundred pounds, at the very most.

  23. #23

    Re: Why are high end watches so expensive?

    You pay for quality......

  24. #24
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by alcmeonide
    I forgot, a lot of people buying a watch are looking for the resell value
    A lot of WIs do, perhaps, but that isn't remotely true of the watch-buying populace in general, whose disinterested members outnumber resale fanatics by thousands to one. 95%+ of people buy a watch because they want to tell the time and look good while they're doing it. The < 5% who treat them like cars - and who aren't dealers, which probably makes the number even lower - are statistically insignificant.
    ...but what do I know; I don't even like watches!

  25. #25
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by markrlondon
    Quote Originally Posted by cruz
    Quote Originally Posted by markrlondon
    Quote Originally Posted by cruz
    I am consiering buying an IWC Portuguese 5001-09. This is a steel version, so apparently the major part of the price regards the movement. Correct?
    I would have thought the major part of the price regard the fact that it's an IWC. ;-)
    Correct, just these 3 letters allready cost money. But what would the 5001 movement (7 day reserve) cost, separately? At cost price obviously.
    I am not an expert but I'd be surprised if it was more than a couple of hundred pounds, at the very most.
    Would that include labour and other direct costs? Labour-related social costs (such as contribution to pension, payroll tax, union payments)? What about indirects? Costed using ABC? Or just material costs? Do you cost the bought-in balance and hairspring etc at the original manufacturer's cost of materials, or the price they sold the component at? Much depends on the agenda of the person asking the question.

    Such a loose question leads to many answers, and they can all be as correct as you like - depending on where you're coming from :).
    ...but what do I know; I don't even like watches!

  26. #26
    Grand Master markrlondon's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by andrew
    Quote Originally Posted by markrlondon
    I am not an expert but I'd be surprised if it was more than a couple of hundred pounds, at the very most.
    Would that include labour and other direct costs?
    I was referring solely and specifically to the unit item invoice cost of the movement from the point of view of the watch manufacturer (i.e. where they are purchasing movements from a separate movement manufacturer). I believe that was the specific context of the question I answered.

    Quote Originally Posted by andrew
    Labour-related social costs (such as contribution to pension, payroll tax, union payments)? What about indirects? Costed using ABC? Or just material costs? Do you cost the bought-in balance and hairspring etc at the original manufacturer's cost of materials, or the price they sold the component at?
    These are cerainly all relevant questions in terms of the total price of the watch at retail. Everything you allude to contributes to a minimum possible retail sale price, alongside bare purchase costs of parts and raw materials.

    However, it seems to me that the key parameter that really drives up the retail price of a watch in the luxury market is none of these things! Whilst total costs, both direct and indirect, set a minimum possible retail unit sale price, it is how much the watch manufacturer can get away with charging in their market segement that primarily determines what is shown on the retail price tag.

    Can they charge £5000 for an item that costs £1500 (all direct and indirect costs included)? If so then they do so. Can they charge £50,000 for the same item? Then they do so.

  27. #27
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by markrlondon
    I was referring solely and specifically to the unit item invoice cost of the movement from the point of view of the watch manufacturer (i.e. where they are purchasing movements from a separate movement manufacturer). I believe that was the specific context of the question I answered.
    Ah OK, you mean if IWC was to sell the completed movement to another watchmaker, what would the wholesale price be?
    However, it seems to me that the key parameter that really drives up the retail price of a watch in the luxury market is none of these things! Whilst total costs, both direct and indirect, set a minimum possible retail unit sale price, it is how much the watch manufacturer can get away with charging in their market segement that primarily determines what is shown on the retail price tag.
    Marketing costs and profit cost a ton. Omega has a litany of brand ambassadors to pay off and a private jet fleet to fuel, and then profit to return to shareholders for example. So unit cost price, however you measure, already starts to shrink as a proportion of the overall "cost".
    Can they charge £5000 for an item that costs £1500 (all direct and indirect costs included)? If so then they do so. Can they charge £50,000 for the same item? Then they do so.
    Yep - value pricing is not illegal. Except in North Korea and a few other places. ;)

    BTW I read somewhere that the mark-up to a wholesaler was 100%, and to the retail customer, another 100%. How VAT figured in there I don't know. It implies an Aqua Terra costs SwatchCo £700 to make, and a Rolex Submariner costs Rolex £800. Sounds about right, as I bet their marketing costs are similar. SwatchCo brand units benefit from a much greater economy of scale - they make 60 times the number of watches Rolex does - and previously held an absolute monopoly over balances and hairsprings, which cost a lot of money to develop yourself.

    Also this document tells you that of the cost of a Swatch Group (Nivarox SA) hairspring/escapement, only 5% is attributable to the material cost.
    ...but what do I know; I don't even like watches!

  28. #28
    Craftsman CamCG's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by markrlondon
    Can they charge £5000 for an item that costs £1500 (all direct and indirect costs included)? If so then they do so. Can they charge £50,000 for the same item? Then they do so.
    This seems a pretty reasonable account of the pricing strategy of many wtch manufacturers.

    It also presents the clearest difference with the cars, as used in my analogy earlier. When a Merc S Class is priced at £50K plus, whatever Merc's margin might be, it is fairly easy for the layman to appreciate where the extra money goes in relation to, say, a Ford Mondeo (as much as I appreciate Mondies!).

    Now looking at watches, it is pretty hard to equate the price difference of an Omega SMP / PO with a Sub date, on materials alone. It is also hard to equate the prices charged by some Swiss manufacturers when one considers what manufacturers like Seiko can produce for a fraction of the money.

    As you say, it largely comes down to public perception of the brand (amongst the general public for popular high end manufacturers like Rolex, and amongst watch enthusiasts for brands like Glashutte) and what said brand can get away with charging.

  29. #29

    Re: Why are high end watches so expensive?

    If the findings of such reviews are actually true, and the RRPs so different, then why do many people (myself included) hanker for the Rolex rather than the Omega?
    You've hit the nail exactly on the head. You hanker for the Rolex because it costs that much more, and because of very clever marketing by Rolex you are led to believe that by paying that much more you will be getting a superior product to the Omega.

    I have a Planet Ocean which I love but I would still prefer a Submariner. So am I victim of clever marketing? Probably

  30. #30
    Craftsman CamCG's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by sevvy
    You've hit the nail exactly on the head. You hanker for the Rolex because it costs that much more, and because of very clever marketing by Rolex you are led to believe that by paying that much more you will be getting a superior product to the Omega.
    Well, yes and no. I hanker for the Rolex over the PO because I prefer the looks of the Sub, the fact that its movement is tried and tested over many more years and the residual value.

    I've done enough research to know that there is minimal difference in terms of the Sub's superiority. The reason that I would be willing to pay the extra £1,500 is that a Sub, for me, would be a keeper and, given this, I want the watch to meet my requirements bang-on (however unreasonable that extra £1,500 may seem in order to do so).

    I imagine that this is true for most watch enthusiasts, but the belief of getting a superior product is, I would guess, true for the majority of those buying a Sub over a PO.

  31. #31
    Grand Master markrlondon's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by andrew
    Quote Originally Posted by markrlondon
    I was referring solely and specifically to the unit item invoice cost of the movement from the point of view of the watch manufacturer (i.e. where they are purchasing movements from a separate movement manufacturer). I believe that was the specific context of the question I answered.
    Ah OK, you mean if IWC was to sell the completed movement to another watchmaker, what would the wholesale price be?
    The other way round. In the specific context of the question as asked it was: If IWC was buying in movements, what would be the cost to IWC? As I understand it, that was the question that was effectively asked (although not in those exact words) and so that was what I answered.

    Quote Originally Posted by andrew
    Quote Originally Posted by markrlondon
    However, it seems to me that the key parameter that really drives up the retail price of a watch in the luxury market is none of these things! Whilst total costs, both direct and indirect, set a minimum possible retail unit sale price, it is how much the watch manufacturer can get away with charging in their market segement that primarily determines what is shown on the retail price tag.
    Marketing costs and profit cost a ton.
    Oh, for sure. Marketing costs, together with all other direct and indirect costs, set a minimum possible retail sale price. I agree that marketing must be a significant part of the cost base for most luxury wartch brands.

    But, for luxury watches, I still think that the primary deciding factor on retail prices is whatever the market will bear, and not the cost structure itself.

    Quote Originally Posted by andrew
    Quote Originally Posted by markrlondon
    Can they charge £5000 for an item that costs £1500 (all direct and indirect costs included)? If so then they do so. Can they charge £50,000 for the same item? Then they do so.
    Yep - value pricing is not illegal. Except in North Korea and a few other places. ;)

    Quite. ;-)

  32. #32
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by CamCG
    Quote Originally Posted by markrlondon
    Can they charge £5000 for an item that costs £1500 (all direct and indirect costs included)? If so then they do so. Can they charge £50,000 for the same item? Then they do so.
    This seems a pretty reasonable account of the pricing strategy of many wtch manufacturers.

    It also presents the clearest difference with the cars, as used in my analogy earlier. When a Merc S Class is priced at £50K plus, whatever Merc's margin might be, it is fairly easy for the layman to appreciate where the extra money goes in relation to, say, a Ford Mondeo (as much as I appreciate Mondies!).

    Now looking at watches, it is pretty hard to equate the price difference of an Omega SMP / PO with a Sub date, on materials alone. It is also hard to equate the prices charged by some Swiss manufacturers when one considers what manufacturers like Seiko can produce for a fraction of the money.

    As you say, it largely comes down to public perception of the brand (amongst the general public for popular high end manufacturers like Rolex, and amongst watch enthusiasts for brands like Glashutte) and what said brand can get away with charging.

    Yup, totally agree
    Analogy : every perfume maker who tried to pick up a bigger market size trough price war had it wrong. Even if in blind test most of the costumers like it, they won't buy a 10 € perfume; because perfume is associeted to luxury and has always been. Industrially, a Perfume is cheap to produce the "jus" is just a really little part of the final price.

    What I wanted to say (but my english is not good enough) is that for mechanical watches, this marketing approach where almost all (except some Japanese like Seiko and Orient) brands consider the market as a luxury market is quite new.

    Some brands already had this position in the past (Rolex, JLC, Breguet, Cartier) but it was a minority, most of the swiss brands were making mechanical watches for everyday life (Girard Perregaux and YES Omega...) at affordable prices. With the japanese quartz watch makers, the surviving brands (and the reborn ones with the big developement of luxury industry) revamped themself as luxury brands overpricing the same product they did for cheaper a few years ago.

    One example of this overpricing are the chronograph (and not chrnometer, thanks boys :wink: ), a quick look at Wikipedia indicate that Omega, Longines, Breitling, Oris, Appella, TAG Heuer, IWC, Porsche Design, Sinn...Used this movement for chronograph. Even with different dials, bezels, cases...The price differences beetwen them is hard to explain.

    In the fight for recognition as a high end luxury brand some were more successfull, and are rewarded (by costumers) with a higher final price.

    Regards, Nicolas

  33. #33
    Craftsman gerard's Avatar
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    Re: Why are high end watches so expensive?

    As with most things, once you factor out rarity value of materials (eg gold) the cost is marketing costs and scarcity value.

    Companies like Rolex Omega etc have very expensive advertising, full page colour ads in Vogue, National Geographic, The London Times etc...these pages costs £1,000s.
    Then there is the artificial scarcity as mentioned before...If IWC produced as many watches as Seiko the price would reflect this, but as the produce so few, the cost of production is high as whether they produce 1,000 watches per year or 100,000 they will still need a marketing dept, Accounts, sales etc etc. There are some economies of scale.

    Many of the companies are owned by bigger groups, Swatch, Richemont etc. so there is the benefit of economies of scale, the marketing ability to sell the "life style" (come on we really don't need watches rated to 3,200m...anyone been that deep :lol: ) and also sell the scarcity, which allows for the high prices charged.

    Who'd be interested in a Rolex if it cost £99???? :D

    Just some of my thoughts on the subject

  34. #34
    Craftsman
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    Re: Why are high end watches so expensive?

    Who'd be interested in a Rolex if it cost £99???? :D

    Just some of my thoughts on the subject[/quote]


    I would be...If there is a seller anywhere ??? :bom:
    Ok, 149 £, nobody ???

  35. #35
    Grand Master
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by markrlondon
    But, for luxury watches, I still think that the primary deciding factor on retail prices is whatever the market will bear, and not the cost structure itself.
    I don't think anyone disagrees at all - not in any market except the most non-premium consumables (vegetables? bread? Unbranded MP3 players?) does cost price have much to do with retail price. Luxury watches are super-duper premium products for the world's top 0.1%. They can be, and are, priced at the highest level the market will bear. They are not necessary, nor does anyone possess a "right" to own a luxury watch. If you want to play, you gots to pay :)
    ...but what do I know; I don't even like watches!

  36. #36

    Re: Why are high end watches so expensive?

    But what about labour cost, especally in the EU and for labour intense watches? I have been told that some (extreme) watches take months or even longer to assemble. Based upon Dutch labour cost (including social charges) I imagine a skilled watchmaker to cost EUR 75k per annum.

  37. #37
    Master
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    Re: Why are high end watches so expensive?

    Its not about the price but value for money. While I am not a big Rolex fan I would consider them good value, still, thanks to automated mass production of the highest scale and close to perfect performance and quality controll. Cost to produce a stainless steel Rolex is only about 10-15% of the sales price :lol: So is it a rip off?
    Compare a few high end brands with similar spec (Free sprung balance, inhouse movement, blah blah blah......) and suddenly they are good value...... which means they loose out on status symbol. And exactly that is what a lot of the newcomers in the business are trying to create and ride the wave. To achieve this the price has to be at a certain level, be endorsed by certain people and associated with other high end products. Its not about the watch, movement or time telling any more. Its a different dimension, as Jean Claude Biver, "Mr Big Bang" the CEO of Hublot says: A watch is an instrument of communication and no more to tell time.
    The best example is Seiko who have always tried to be good value while highlighting their technical achievements in their ads and campains. Now that they are going more upmarket its no more the watch, timekeeping or accuracy that is featured. Seiko wants to go upmarket, charge more and justify it; the emphesis is on financial sucess for the wearer of the new dive watch and of course status. Nothing with the fact that it is a dive watch, a very expensive tool turned luxury product for desk divers.

  38. #38
    Master worlok's Avatar
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    Re: Why are high end watches so expensive?

    I read in a few places that the indices on the Steelfish are white gold as well but look at what you get for the cost of that watch as compared to the more expensive "luxury" brands. You can pick them up for a song on the used market, or you could have as I haven't checked what they go for used these days....

  39. #39
    Master MuRph77's Avatar
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    Re: Why are high end watches so expensive?

    You are buying a brand, pure and simple. Same can be said of pretty much anything.

    VW Touareg
    Porsche Cayenne

    Both pretty much the same car, but the sporting history and luxry branding of the Porsche name, puts it into a different price bracket.

    (Although the vw..... HAS BETTER RESIDUALS :lol: :lol: :lol: :lol: ..... so thats wrong then :roll: )


    The car thing made no sense.... ignore me.

  40. #40

    Re: Why are high end watches so expensive?

    Sir Attenborouhg did a cool item on bbc radio the other day about collecting.

    Bottom line it came down that collecting makes the hunt more enjoyable, and in my opinion, in "our inner ape" the bigger the price off the watch, the bigger the trophy (and the better the hunter), so the bigger the status on the monkey rock.. So the more the likelyhood for women to know that the man is a great hunter, and will bring food to the table this day, and tomorrow!

    So high end watches are so expensive so we can get more pussy!! :D (and the watch companys shamelessly take advantage off this knowledge.. think about it, why else would we need perpetual calendars (don't you know the year we live in?) chronographs alarms etc.)

    (would also explain why watches tend to go to hockey pucks size, some alpha apes misstake the "price" with "size" ...but that's a different subject :wink: )

  41. #41
    Grand Master Mrcrowley's Avatar
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    Re: Why are high end watches so expensive?

    I worry for the likes of Breguet now. They are in the hands of the big groups.

    Apparently there are only 3 brands still in the hands of the original families. Can't remember one, but Patek and AP are the others.

    Rolex as mentioned, make knocking on a million watches a year. Patek not sure. However being an AP groupie I know they do a maximum of around 11,000-less some years.

    I've learnt some of them take up to 10-11 months each to build.

    Why while some Rolex are still great, they take the P re prices. Especially now they have a case making plant in China.
    Paul

    GOT...TO...KILL...CAPTAIN STUPID!

  42. #42
    Master Robertf's Avatar
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    Re: Why are high end watches so expensive?

    Excellent thread this.

    Everything comes down to marketing in the end. Can Sinn offer similar products for less, hence better value because it spends less on marketing than say Tag? But is a Tag more desirable in the market (perhaps not to the typical WIS) because of marketing?

    As to value of the products themselves, as a retailer, though not of watches, I know that what we buy in from the wholesalers is 50% of retail. So if the manufacturer sells at 50% and makes good money, thats nearer what they are really worth arguably!

    And did someone mention cakes....

  43. #43

    Re: Why are high end watches so expensive?

    becase watch companies ell them at that price :?

    Value is an individual perception so you may think something is exspensve and wuoldnt buy it where others would!

    So thats "your perception" however the problems only start to occur when most ofthe target market find the product exspensive

  44. #44

    Re: Why are high end watches so expensive?

    because people have more money then sense ,
    why pay 1000 far a brand name when 100 will do the same job and still look good , and keep good time

  45. #45
    Grand Master Glamdring's Avatar
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    Re: Why are high end watches so expensive?

    There aren't many mechanical watches that will be as well make at £100 as they are at £1000. If Eddie were to allow, say, Tag to add it's name to the new £347 PRS-3 then the price would double instantly. At least.

  46. #46

    Re: Why are high end watches so expensive?

    A watch is no different to a pair of jeans.....................Armani 's cost twice as much as Levis, same cloth etc...but you feel better in the Armarnis.

    I had a Ollech watch that looked just like a Rollie sub...............but it was nt and thats the point.

  47. #47
    Master
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by thusspoke
    A watch is no different to a pair of jeans.....................Armani 's cost twice as much as Levis, same cloth etc...but you feel better in the Armarnis.
    Can't let that pass - Armani jeans fabric & construction is far superior :D

  48. #48

    Re: Why are high end watches so expensive?

    Quote Originally Posted by Dapper
    Quote Originally Posted by thusspoke
    A watch is no different to a pair of jeans.....................Armani 's cost twice as much as Levis, same cloth etc...but you feel better in the Armarnis.
    Can't let that pass - Armani jeans fabric & construction is far superior :D

    Alan yes marginally but the name adds more to the price than the slighty different fabric/construction...I guess its the same with a watch, made of steel with an ETA base describes must MID and high range watches. The extra comes from percieved value of the brand and image............just a thought.

  49. #49
    Journeyman
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by gray
    Depends what you mean by "high end" I suppose.
    If you mean luxury brands then they are expensive because that's part of what defines a luxury brand. Part of the exclusivity is the price itself and, while quality, materials and service are of a high standard, that is not in proportion with the cost.
    By way of illustration:
    A luxury cake is made with fine materials, say costing 30 pence by someone who gets £30 an hour, the standard cake 25 pence and made by a machine.
    The luxury cake is available in limited supply, through prestigeous outlets and costs £5, the standard you can get anywhere and costs perhaps 50 pence.
    You make your choice and pay your money.
    Personally I like £5 cakes but rarely spend more than say £2 :roll: Although sometimes I enjoy a 50 pence cake and feel reasonably satisfied afterwards :wink:
    So, to answer your question directly, they are so expensive because that's what customers are prepared to pay for them - simple supply and demand.
    I think this could form a much better comparative scale than the usual Omega = Audi, Rolex = Mercedes, Patek = RollsRoyce etc. My thoughts -

    Greggs = Seiko
    Waitrose Patisserie = Omega
    Peyton + Byrne = Patek

  50. #50
    Craftsman CamCG's Avatar
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    Re: Why are high end watches so expensive?

    Quote Originally Posted by alancc
    I think this could form a much better comparative scale than the usual Omega = Audi, Rolex = Mercedes, Patek = RollsRoyce etc. My thoughts -

    Greggs = Seiko
    Waitrose Patisserie = Omega
    Peyton + Byrne = Patek
    Interesting, but I think you do Seiko a disservice.

    Greggs (cheap, almost certainly bad for you and barely worth the measly pence that they charge) is probably a better match for the cheapo knock-off brands out there!

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