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15 December 2010, 03:11 PM | #1 |
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Rolex prices
Someone recently posted a question about Rolex cost vs. MSRP and the discussion got me thinking: why does Rolex price their watches so much higher than others? Yes, Yes, I know, quality, craftsmanship, etc. but Rolex consistently raises its prices annually and the increase at times seems extraordinary.
Please don't misunderstand my post. I love Rolex, I own a Rolex and it's my primary watch. But anyone with a reasonable mind must see that Rolex charges substantially more than its competitors, who arguably produce the same quality of product. Take Omega and Breitling for example, excluding their base ETA movement watches (which are admittedly good movements), their in-house movements are equal in quality, durability, reliability and precision to Rolex movement; yet you can regularly find one of these watches for much less than you can a Rolex. I have an Omega hour vision, it matches second for second with my Rolex and debatably has comparable or dare I say superior movement to my Rolex, but I paid $2,000 less for it than my LV. Ultimately, it's Rolex' prerogative to charge what it wants - after all, Rolex sells every watch it releases to the public. And, more importantly, we, including myself, seem to be willing to fork out the money to buy these watches - price increases notwithstanding. I'm interested to hear your thoughts on this. |
15 December 2010, 03:19 PM | #2 |
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I don't know what to tell you, when i was shopping for a new watch my wife wanted to buy me a fossil or citizen. I went to look to appease her but I was not impressed. We stopped at a local AD and I tried on a few Rolex watches and was instantly in love. It was just looked sharper and cleaner then any other watch I ever wore. I have mine on my wrist typing this and I honestly can tell you nothing else will ever go on this wrist again.
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16 December 2010, 03:39 AM | #3 | |
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For instance, I'm sure most people would agree that a BMW 5 or 3 series, is a much nicer looking car than let's say a Ford Focus or a Ford Taurus, but just because the design is nicer does not mean it COST the MANUFACTURER more money to produce. Lines are lines, basic design elements on the car are just as cheap as on a drawing board with the artists. (Of course the materials and processes are much, much different, but that's a difference in WHY it costs more) It seems that the better the design, the higher the price of course, and we pay it because we know we can only get that design in one place. Sometimes when I step out of the box and realize how much money a Rolex really is and how much I paid I sometimes feel its crazy! But at the end of the day, no other watch appeals to me like a Rolex, maybe it's because it says "Rolex" and is a mental thing, but to each his own. |
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15 December 2010, 03:20 PM | #4 |
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Your Hour Vision is Omega's Halo product, in much the same way that Audi makes the mid engined R8. I wouldn't just say the movement is as good, I'd say its considerably more advanced than almost anything on the market today, which is what you would expect when swatch group spends a massive chunk of change developing a new base movement to reposition the Omega brand around.
I don't have any illusions that the majority of Omega's lines fall somewhat short of Rolex, while still being superior to most of the likes of TAG etc, but the Hour Vision, PloProf, and Liquid Metal PO were designed and built to standards above the average Rolex. It wouldn't surprise me if Omega actually lost money out of any of those three watches because of it either. The way I look at it, Omega made the better watch in the 50s and 60s in the form of the Constellations as they compared to their Rolex competitor, the datejust. Then Rolex took the sports watch market, and never let go of it, while Omega lost steam, stopped making in-house movements (their biggest mistake as they were extremely good at it) and eventually lost their way in a sea of ETA movements and mediocrity. The Hour Vision is old Omega in terms of quality, and I get the feeling they're moving towards old Omega's pricing too (on par or higher than Rolex). There's no need to qualify your post tbh, claiming a SMP is better than a sub will get some strange looks but its hard to fault your impressions of the HV, its a different animal altogether. Rolex charge what they charge because they can, Omega's prices are going up rapidly, and I expect them to reach or exceed Rolex's before too long for some if not most models. Their new boutiques are now refusing to discount in many cases, holding the same hard line most Rolex AD's do.
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15 December 2010, 03:22 PM | #5 |
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I suggest a college course in pricing, especially of luxury goods with irrational buyers. Perception is everything.
Additionally, I wouldn't quite put Omega, Breitling and IWC on the same level as Rolex. Nor is Rolex on the same level as Patek Philippe, Breguet, VC and AP. |
15 December 2010, 04:12 PM | #6 |
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my guess is supply and demand. I might be wrong. I love mine though!!!
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15 December 2010, 04:24 PM | #7 |
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Look up Veblen goods.
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15 December 2010, 04:25 PM | #8 |
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You are going to get the standard answers here: "supply and demand", "because they can", "they sell every watch they make", "what are you a commie? Go take economics 101". These are valid points, except the last one which is a joke. However, I can't stand the ridiculous bi-annual price increases to models that haven't changed even slightly. Some models get increases twice in 12 months despite no changes to the model at all. The plat yachtmaster got nearly a 35% increase over a two year period and yet was unchanged. Same goes from the no-date sub. Sorry, justify it all you want, that's crazy. Its almost like they throw darts at a board to decide which models will be increased and by how much. Judging by the current trend, most SS models will be around the 10k mark within 5 years.
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15 December 2010, 05:39 PM | #9 |
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Yes, definitely 'demand & supply'. Certain sports model are tagged at premium price due to demand in the region.
The new sub seems to cost more than the GMT2? |
15 December 2010, 06:06 PM | #10 |
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16 December 2010, 11:22 PM | #11 |
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Back in 2008 when my brother bought his sub. it was definitely cheaper than the gmt then.
For the new sub c, it has been priced above the gmt2c. Anyway, few weeks ago. i bought an ss gmt2c from an AD in Dubai. It was a saving of usd1k++ as compare to my local AD premium price tag! |
17 December 2010, 10:09 AM | #12 | |
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15 December 2010, 06:11 PM | #13 |
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Can I guess the reason why the watch that you current owned retained it value so well is because new watches kept on increasing. That why I dont mind forking out some $$$ now and sit on it for a while.
Wouldn't you like to buy a house and 20 years from now sells it for more than what you original paid for? In the rolex case, Its like that. I think it all come to supply and demand. There is only one Rolex company in the world., not in China, not in Hong Kong, not in Mexico or Thailand. A Rolex is a Rolex is a Rolex, Nothing else is a Rolex. Rolex supplies the world population of almost 10,000,000,000 people. As long as we are willing to buy'em they keep making'em. Its a great feeling to know that my watch worth more next year than this year! |
15 December 2010, 06:42 PM | #14 |
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The same could be asked of Panerai or Patek in the world of watches, or of Porsche or Ferrari in the world of cars. Or for ladies fashion, Louis Vitton and Chanel.
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15 December 2010, 06:48 PM | #15 |
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all luxury goods must be priced accordingly, and price increases are needed to keep the brand desirable...
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16 December 2010, 11:33 PM | #16 |
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15 December 2010, 06:56 PM | #17 |
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Its only for Brand Positioning purposes. think about it this way,reducing the price of a Rolex to match Omega or Breitling will only undermine its perceived value.
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15 December 2010, 07:04 PM | #18 |
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I tend to look at it as a way of keeping the brand somewhat exclusive. A bit like drinking in an expensive wine bar as opposed to the public bar in a pub. It keeps the riff raff out
Seriously, it may be true that Rolex are more affordable these days to a larger proportion of people as most of us are in fairly well paid nowadays. But there is always that element of keeping the watches just slightly out of reach to give the impression of a little bit of grandeur. Work a bit harder son and you too could own a Rolex...thats seems to be the ethos. I personally think it is money well spent and generally a good investment. I bought a TT Breitling Crosswind in 2002 for £3,330. Its now worth about £1200. I could have bought a Rolex for the same price and probably hardly lost anything. You pays your money and makes your choice. |
15 December 2010, 07:10 PM | #19 |
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Rolex does it to protect your investment, by keeping it desirable.
It maintains the perception of value they have ingrained in the masses.
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17 December 2010, 07:46 AM | #20 |
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Trust me, the only investment Rolex gives a bloody damn about is their own.
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15 December 2010, 07:28 PM | #21 |
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They still sell, year after year after year. If the formula your complaining about doesn't work they wouldn't sell and they would have to make adjustments eventually.
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15 December 2010, 09:09 PM | #22 |
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Short answer: Because they can.
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16 December 2010, 03:54 AM | #23 |
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Personally I think if you compare Rolex to brands we might consider direct compition I don't see much difference. The Ploprof and liquid metal Omegas are good examples as well as several in Panerai line.
The real difference I see is the raw numbers of watches Rolex pumps out for the same price as other brands whose numbers are much smaller. I have to admit though, as long as people buy them Rolex isn't about to cut pricing. |
16 December 2010, 10:05 AM | #24 |
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The other brand Rolex is now brushing up against more and more is JLC, used prices for Rolex are often above JLC and new isn't far off anymore. Make that comparison, from the Datejust to the RDM, or the Daytona to the MCC/EWC and Submariner to Navy Seal Alarm and Rolex is on the losing end in quality and engineering.
The new sub is still a huge leap forward but JLC is in a different category for the most part and presents incredible value for money.
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-- Omega Cal 320 Chronograph 18K Gold OT2872 '58 -- -- Omega Cal 321 Speedmaster Pro 145.012 '67 -- -- Rolex Submariner 1680 "Ghost" '79 -- -- Rolex SS Daytona 116520 '04 -- |
17 December 2010, 02:55 AM | #25 | |
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Supply v. Demand That's it. |
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17 December 2010, 06:13 AM | #26 |
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Items of quality will alway cost more no matter what the market will bear. I was always taught to buy quality over quantity so I buy less but when I do I am always happy. It's very hard to put a value on happiness but isn't that what will all strive for???
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17 December 2010, 08:10 AM | #27 |
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Have you been following the price increases of other brands? On a percentage basis, I would stronly surmise that Omega has increased its prices more than Rolex. Yet, Omega does not hold its value in the pre owned market compared to Rolex. Check out the results of the watch auction held by Christies on Tues., paying close attention to Rolex.
The question is not what, but why? Why does Rolex cost a lot and hold its value? All of the previous posters have answered this very well, except I don't believe it's supply and demand as Rolex has a huge supply, both new and used. It's primarily the name. Rolex stands for a luxury item just as Kleenex stands for tissues and Scotch tape stands for cellophane tape. To my mother, Frigidare and refrigerator were synonmous. Rolex stands for watch- "the" watch. Are there better watches? Better movements? Yes. But to most people, that doesn't matter. Ask a person to quickly name a watch brand, and the first word will be Rolex. It's highly probable that this same person doesn't have a clue what one looks like, but that doesn't matter. Rolex knows this, so they can charge (almost) anything they want and we'll keep coming back. Lastly, don't get me wrong. I love Rolex and have two. |
17 December 2010, 08:50 AM | #28 |
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they consistantly increase their prices to maintain a certain price point to achieve the right balance of desireability while maintaining their prestige within their target audience. In short the higher price is part of their branding.
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17 December 2010, 09:05 AM | #29 |
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"what are you a commie? Go take economics 101".
Quality. |
17 December 2010, 09:53 AM | #30 | |
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In fact, I have about 13 watches that retail for under $500 that can do the same thing. Let's face it. A Rolex is a Rolex and nothing else is. What more do I need to know?
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