Prices: where will it end?
Our own dr. Watch shares his ideas about the value and prices of watches. An interesting timing if we consider the second yearly price increase was just announced by Rolex and the Swiss National Bank promises to weaken the Swiss Franc.
It was at least 7-8 years ago that a watch collector told me he stopped collecting recent Swiss watches. German watches, vintage watches, OK, but the new products from the country of eternal bank secrecy and Heidi, no, just too darn expensive. At that moment, I thought of the average AP ROO (Audemars Piguet Royal Oak Offshore), which was entangled in a fierce battle with the likes of the BP FB (Blancpain Flyback) and PP´s Nautilus to decide once and for all who was the most expensive in steel. I also thought shortly about the moment that I realized what a blessing the introduction of the Euro was for the sales of watches in the Euro zone: in the Netherlands a watch that seemed slightly overpriced at 10.500 Dutch Guilders was suddenly priced just below 5K Euro and that price already added some sneaky extra Euro´s… (5k Euro is equal to a little more that 11k Dutch Guilders).
It was also the time that Zenith was still considered an interesting brand for watch brands (hm, maybe it was even longer ago than 7-8 years…): the prices were very decent for a manufactured watch and the designs were appealing. After Nataf got his hands on it, their watches AND prices were beyond reason, but that’s not the topic of today. It seemed like the Swiss realized that the quartz crisis was really over and they were back in the game. What is more, they were leading the game and could change the rules during the match: the early examples of high-priced or just plain expensive watches as mentioned above have now almost blended into the crowd. Well, they created a league of their own, slightly out of reach for the others, as we can conclude today.
It was only a few weeks ago that respected journalist/blogger and watch collector Kristian Haagen asked his connections on Facebook if they could still understand the price of a steel Nautilus. He even owns one of these watches (I can’t judge it and wouldn’t wear one if they were a third of the historic price), so he has a right to ask. And why is Patek asking such outrageous prices for these watches, almost making you wonder if you’re looking at a platinum watch? The easy answer and semi-Obama-quote is: “because they can, yes, they can!”. Why can they produce watches that might be unsellable for everyone else and can sell them at stupefying prices? Why can they (I’m repeating myself, I know I wrote this before, but I still can’t get my head around it) ask 300K+ for a steel chronograph rattrapante watches? Because they can, yes, they can!
This is not just the usual suspect: when a friend of mine recently asked me if a certain Breitling had its own (he meant manufacture) movement, I had to tell him that not only was this not a manufacture movement, but it was one of the most basic movements in the industry (Breitling Calibre 17 is actually an ETA 2824) that can also be found in watches costing about 1/8 of the price of this Breitling. Sure, the parts have been polished and finished and decorated and it now reads Breitling all over the place, but it doesn’t justify the complete price difference.
Is this all in the marketing? Are consumers paying for the efforts of the brands to get so well known that people don’t tend to ask questions anymore about the ratio behind the price? Sure, partly. Are we paying for the investments in new movements and improvements on current models? Let’s hope that’s part of the price as well. Are we paying for the war against counterfeiting and parallel trade, mostly caused by people that are of course far from our inner circle of watch friends and enthusiasts (right?)? Probably. In any case, it doesn’t hurt to ask yourself, your retailer or a fellow watch freak from time to time why he thinks the price is reasonable, acceptable or maybe even inevitable. It might filter out the truly outrageous ones and teaches us something in the process.
In the end, beauty is in the eye of the beholder and if someone simply has an expensive taste, who am I to say the watch of his choice is overpriced? All I´m saying is, watch brands should ask themselves from time to time if they can explain the price when a watch collector is puzzled. I´m quite sure there are many people in the trade, and I don´t mean only the brands mentioned above, who would have a hard time to justify the price tag on the watch they´re selling. In the end it´s only the consumer who will decide and he´ll vote with his wallet.
This is a very salient and important discussion. One that most educated watch lovers and writers will stand behind and have deep feelings for. I agree that the larger issue in the watch industry today is the gap between price and value. That isn’t the case all the time, but most of time when you see a nice watch and then learn the prices… you are like “well, that would have been nice if I can afford it.” The problem is that the issue might be even worse at the lowest end of the market – when a $600 watch for example only cost $40 or so to make.
Though I must mention that a number of brands do their best to price fairly. Brands that upped their prices can’t really go back down, that is just too hard to do. Maybe they should, but they are likely afraid. There is also the issue of volume. If a brand makes only 1,000 watches a year – then they really need to get a lot of margin per watch to keep their businesses going.
I think that there are some brands out there that genuinely want to price fairly. At the same time there are those that really go out of their way to price unfairly for notoriety’s sake. I don’t think there are any million dollar watches anywhere near worth a million dollars. So are prices crazy? Yes. Are they out of control? Maybe.
Watch industry execs can be clever brutal bastards and know how to extract emotion and money from rich buyers. The concept of “too rich to care” really does resonate with them. It is much easier to get money from people like that versus most educated watch lovers. I mean, to be honest, we expect a damn lot from out watches. If they satisfy us while making marketable watches for others, then the big brands are happy.
With bloggers like us gaining ground, the brands are slowly figuring out how to please us while still doing business the old fashioned way. With timepieces no longer being “necessary” to the greater population, the average consumer just isn’t as technically sophisticated in terms of price and value, as they might need to be to spot ridiculous prices.
So if anything is going to change with the prices of watches is going to be due to a mass educational effort on part of the consumer to know just what they are paying for, as well as the marketing ability for large and small brands alike to make nice watches in limited amounts and still make a good living.
@Ariel… thanx for your comment and I think you describe the situation very well. Although this article is written by our contributor dr. Watch I do agree with his amazement. Price vs value is something that keep amazing me and for me this has been one of the reason to keep a good eye on what independent watchmakers are doing.
I was amazed to learn about the recent announced from Rolex. The second price increase will bring the price of a steel Submariner from 6300 Euro (after the first price increase, earlier this year) to around 6800 euro. I always wonder how these price increases are calculated… is this the Swiss Franc vs the Dollar/Euro, are labor costs increasing that much (not my salary for sure) or are there other reason for the yearly or bi-yearly increases?
Ariel, Mono and Dr. Watch,
First off, great post and analysis of an important issue in the watch trade: cost versus value. It comes down to the power of the brand. Rolex, Patek Philippe and to use your example Breitling can get the dollars because of their branding and marketing. Sure, we bloggers can educate but the question is do we have the ear of the average consumer who goes in without knowledge and buys the watch because his friend has it or because it’s cool.
The majority of people reading our blogs are already savvy buyers and know a thing or two about watches. While we and our readership have an advantage and can make more educated decisions, the average consumer does not.
And to be honest, who isn’t swayed by the mystique and history. And let’s face it, branding is a seductive mistress. Go on the forums, and yes, blogs and you’ll see people drooling and going gah-gah over certain pieces in the astronomic range, particularly in steel. While many can’t quite afford them (yet), it’s clear they would be happy to lay their hard earned cash down for one of the pieces if finances permitted.
Great topic of discussion by Dr.Watch.
Your article made me digg my little Patek catalogue(2005/2006) which also includes a handy retail price list(I have a fair amount of catalogues from that time period I’m glad I kept the price lists)>cross referencing their current collection it seemed that PP have changed their nautilus reference numbers and model range but here are some examples with price listed both in francs and euros for clarity since the chf has risen in value compared to the other big currencies
3711/1 white gold case and(presumably same material for the) bracelet : 41300 chf /26993 euros
3712/1a(which seems identical to the current5712/1a right down to the caliber) 22800 chf/14902euros :
Hi Ted, thanx for digging this up. Interesting to know the 5712/1A is priced almost 15k€, while today, 5 years after your catalog was printed, it has a price tag of roughly 24k€. Inflation, CHF vs. Euro and several other factors influence the prices of course, but it still makes me wonder.