AD Mark-up

[MrTito]

Hi all,

For the last year I have been buying through a local AD, he is predominantly IWC, but sells Rolex, Hublot and several other brands. They are a smallish family run jeweller with a good reputation and I've been really impressed with everything I've seen from then.

Anyway, my first purchase from them was for two watches - IWC Aquatimer and a Chanel J12 (for the lady). They very kindly gave me a 20% discount across the two which is obviously significant. I have just ordered another watch through them and they have been kind enough to maintain the 20% discount.

Sorry for the long intro but this set me thinking - what mark-up must they have to be so comfortable with giving me such a discount?

I have no complaints, I'm just really intrigued by how much they have to play with in the first place. I assume it must be 25% at the very least and possibly considerably more? Would anyone have an idea?

Thanks

[jimbones43]

My guess is 50%!

[buke45]

It depends on the Brand.

[HL65]

Mark up for which brand--all are different. If you are talking about Rolex-do a thread search as this topic comes up far too often!!

[Dweller of the Sea]

I know with Omega, that when an AD gives you 20%, then he has lost half of what he earns.
I would guess it is more or less the same with Rolex.
20% is a huge discount, not normally seen.

[enronforme]

20% is a huge discount, not normally seen.

Really? News to me...

[BeeMee]

It is my understanding that the AD markup on a Rolex is 40%. Other brands may have as much as 50% markup.

20% off on a Rolex SS watch is a very good deal and also a pretty good deal on a TT when buying from an AD.

However, some people have gotten 25% off (possibly more) on 18K. The solid gold ones do not move as fast as the others and because the prices are so high, the AD still makes a decent $ profit.

Also, realize that Rolex recently increased the list prices on their watches. The AD increased the retail price on old stock to the new price, but the AD paid Rolex based on the old price. If the AD still has some stock from before the price increase, 20% off may still give the AD a pretty decent profit as compared to 20% off on new stock.

[fusionstorm]

Originally Posted by BeeMee

It is my understanding that the AD markup on a Rolex is 40%. Other brands may have as much as 50% markup.

Your understanding is wrong. The correct way to calculate "markup" reveals a far higher percentage than that.

[axecollector65]

The mark up for all luxury/high end watches are huge, but little to no discounts for Rolex is part of their branding/marketing which adds value to their name.

[MrTito]

Thanks guys - and sincere apologies I was too lazy to search the threads. My AD has committed to a 20% discount on anything he sells inc Rolex, IWC, Hublot, Omega, Chanel etc. The only brand he cannot currently stock (that I've enquired about) is Panerai.
Cheers

[spuds]

Originally Posted by MrTito

Thanks guys - and sincere apologies I was too lazy to search the threads. My AD has committed to a 20% discount on anything he sells inc Rolex, IWC, Hublot, Omega, Chanel etc. The only brand he cannot currently stock (that I've enquired about) is Panerai.
Cheers

Are you saying that you get 20% off any new Rolex (including SS Sports models) from an AD in the UK?

[MrTito]

Originally Posted by spuds

Are you saying that you get 20% off any new Rolex (including SS Sports models) from an AD in the UK?

Can't answer that really - in the last twelve months I have bought five different watches through them (not all for me!) and they have given me 20% each time without my even reminding them. None of the watches I have purchased have been Rolexes so I can only say that to-date he has said as long as I buy through them he will continue to give me the 20%. Clearly I haven't queried every watch in the store!

[hfchoi]

I keep hearing of these almost mythical 20% Rolex discounts!!!

[Grissom]

Here is how I understand it (and I am eliminating the 2-3% discount for paying within 30 days for simplicity sake):

Retail Price $10,000.00 and Dealer Cost: $6,000.00

One can look at this two ways:

The dealer gets the watch (Wholesale/AD Price) at a 40% Discount (-$4,000.00) $4,000.00/$10,000.00 = 40% "DISCOUNT" from retail

or

The dealer "Marks up" the watch by 67% of his cost (+ $4,000.00) which equates to $4,000.00/$6,000.00 = 67% (rounded up) "markup.

Hopefully I am correct and this is stated clearly enough for all to understand. If I am incorrect, or have not well stated the above I aoplogize....I tried!

[Newportkrieger]

Originally Posted by Grissom

Here is how I understand it (and I am eliminating the 2-3% discount for paying within 30 days for simplicity sake):

Retail Price $10,000.00 and Dealer Cost: $6,000.00

One can look at this two ways:

The dealer gets the watch (Wholesale/AD Price) at a 40% Discount (-$4,000.00) $4,000.00/$10,000.00 = 40%

or

The dealer "Marks up" the watch by 67% of his cost (+ $4,000.00) which equates to $4,000.00/$6,000.00 = 67% (rounded up) "markup.

Hopefully I am correct and this is stated clearly enough for all to understand. If I am incorrect, or have not well stated the above I aoplogize....I tried!

Dont confuse us with facts!

[fusionstorm]

Originally Posted by Grissom

Here is how I understand it (and I am eliminating the 2-3% discount for paying within 30 days for simplicity sake):

Retail Price $10,000.00 and Dealer Cost: $6,000.00

One can look at this two ways:

The dealer gets the watch (Wholesale/AD Price) at a 40% Discount (-$4,000.00) $4,000.00/$10,000.00 = 40% "DISCOUNT" from retail

or

The dealer "Marks up" the watch by 67% of his cost (+ $4,000.00) which equates to $4,000.00/$6,000.00 = 67% (rounded up) "markup.

Hopefully I am correct and this is stated clearly enough for all to understand. If I am incorrect, or have not well stated the above I aoplogize....I tried!

That is the correct way of calculating the definition of "markup".

Your first calculation is also the correct way to calculate "margin", or profit margin. Economists and business analysts care little about markups, but care greatly about rising or falling profit margins.

[Grissom]

Originally Posted by fusionstorm

That is the correct way of calculating the definition of "markup".

Your first calculation is also the correct way to calculate "margin", or profit margin. Economists and business analysts care little about markups, but care greatly about rising or falling profit margins.

Phew!! Glad I got that right! Thank you, Fusion.....

[HL65]

Boring--Next topic please.

[spuds]

Originally Posted by MrTito

Thanks guys - and sincere apologies I was too lazy to search the threads. My AD has committed to a 20% discount on anything he sells inc Rolex, IWC, Hublot, Omega, Chanel etc. The only brand he cannot currently stock (that I've enquired about) is Panerai.
Cheers

Originally Posted by spuds

Are you saying that you get 20% off any new Rolex (including SS Sports models) from an AD in the UK?

Originally Posted by MrTito

Can't answer that really - in the last twelve months I have bought five different watches through them (not all for me!) and they have given me 20% each time without my even reminding them. None of the watches I have purchased have been Rolexes so I can only say that to-date he has said as long as I buy through them he will continue to give me the 20%. Clearly I haven't queried every watch in the store!

I didn't think you had ("queried every watch in the store") but your post implied that you get 20% 'across the board'.
I'd be astounded if ANY AD in the UK gives 20% discount on a brand new SS Sports Rolex.

Originally Posted by SteelerFan1965

Boring--Next topic please.

I don't care what an AD makes I just want to know if AD's in the UK are genuinely discounting Rolex pieces 20%.

[HL65]

Dan--boring as in this exact post--"AD Markup" has become a weekly post. As for 20% dicsount in London--best of luck on your search!!

[sea-dweller]

Rolex margin is 40%, I know this from a colleague who worked at an AD while he attended college.

[khmyjy]

I have been to two AD recently, one in Montreal and one in Toronto, they offered me 25 and 20% off respectively on a D.J. or A.K.

[hsfrank]

As has been stated the margin in Rolex is 40% . That means he pays 60% of MSRP at the time of purchase. So the deal you get and how profitable it is to the AD depends on when he purchased it. Take for example a watch that today sells for $10,000. You get a 20% discount and pay $8000. He has in stock and obtained 2 years ago when the MSRP was $8000. He paid $4800 and makes $3200 profit. The down side is that he now replaces that watch at $6000. That is only Rolex.
Many jewelers sell watches that they list at triple their cost and discount from that.

[HL65]

Rolex AD's buy their watches from Rolex for 60% of the MSRP. That means they get a 40% discount from the MSRP. So- If a watch was to cost $1000 MSRP-the AD would have paid $600 dollars for the watch--or 40% off of the MSRP. If the AD was to pay withing 30 days--then the AD get another 2% off of MSRP--so his total cost is 58% of MSRP. For example- that $1000 dollar watch instead of costing $600--would cost $580-or 2% less. Any questions?? Ok--now that we are straight on this topic-we can call it quits until next week when we see it posted again. Until next time--I am out.

[Cannop]

Just one more point please! The AD's profit is calculated after all costs are deducted. So if he buys at 6k and sells at 10k I would imagine for most "mall" type AD's the actuall profit after all deductions are made (rent, wages, heating/lighting/utilities, insurance, interest on loans etc) would be closer to 10 - 15%. Thats why talk of a 20% discount generates a lot of discussion on here - it's difficult to see how the figures stack up.

[Speed]

[Cannop]

Yawn........