How much does it REALLY COST to make a Rolex?

[dooder202]

Hey all, on my way to work this chilly morning and a thought ran through my head.

How much do you think it costs Rolex to produce one of their watches? For instance: A stainless steel Sub-C or GMT, Milgauss, Explorer, etc. Not talking precious metal watches because of their fluxuating costs.

Any input, comments or suggestions are welcome!

[psv]

How do you want to measure? Just material + staffing cost involved? Amortizing the cost of R&D that went into it? Include fixed costs for the Corporation?

A good general guidance for mechanical items is that the cost is roughly 10% of MSRP. So if a Sub-C is $7,375 (or whatever it is again), 40-ish % goes to the AD (not that much when you look at their business model and fixed costs as Mall rent in premium locations) etc. Net/net, I'm guessing $700. At most.

[Engi]

Originally Posted by psv

How do you want to measure? Just material + staffing cost involved? Amortizing the cost of R&D that went into it? Include fixed costs for the Corporation?

A good general guidance for mechanical items is that the cost is roughly 10% of MSRP. So if a Sub-C is $7,375 (or whatever it is again), 40-ish % goes to the AD (not that much when you look at their business model and fixed costs as Mall rent in premium locations) etc. Net/net, I'm guessing $700. At most.

I fully agree with such analysis, about 10-15% of the MSRP ...

Ciao

Engi

[EE33]

Originally Posted by psv

I'm guessing $700. At most.

Good guesstimate.
I thought about the same as well, but I have a slight feeling that it could still be much lower, again it's just a guess.

[Lion]

It sure would be interesting and fun to find out how much they really cost. But the intangible quality of the pleasure and enjoyment you feel over owning and wearing a Rolex is priceless!!!

[moviefreak]

I don't want to know.... I don't want to know..or I could stop buying them...:dummy

[DoxaDavid]

Since Rolex is a privately held company, no one will ever know.

[rolexertion]

It's not possible, nor really pertinent, to determine what the raw cost of one Rolex watch is. Each watch has to support its proportion of the entire infrastructure, the ad budget, the millions of Euros worth of annual research, the hugely expensive machinery to construct them, the warranty costs, the charitable donations of the Wilsdorf Foundation; I'm betting there are a few more et ceteras.

[ingoodtime]

Whatever the MFR cost, we know the MSRP and that has become very high for what the product is. Please don't look at my statement as bashing. As Lion stated in an earlier post,
"intangible quality of the pleasure and enjoyment you feel over owning and wearing a Rolex is priceless!!! "

I am glad the value stays high due to frequent price hikes but saddened to know that will limit or stop future Rolex purchases for many people whose incomes don't allow for large expenditures anymore due to frozen, smaller or no more salaries.

[steven.veres]

We can't know exactly but I'm sure we can get a ball park range. 10% of retail sounds reasonable for materials and labor. It very well could be less.

[padi56]

Originally Posted by dooder202

Hey all, on my way to work this chilly morning and a thought ran through my head.

How much do you think it costs Rolex to produce one of their watches? For instance: A stainless steel Sub-C or GMT, Milgauss, Explorer, etc. Not talking precious metal watches because of their fluxuating costs.

Any input, comments or suggestions are welcome!

Well that's the $64000 question on how much a Rolex costs to produce, but to tool up and design a movement cost millions but once you have the tooling etc,you can churn them out just like any other massed produced goods.IMHO the movements would cost perhaps a little more than a say ETA top range chronometer grade movement.Although the 904L cases are made S.steel and that is more costly than say the 316 S.Steel but thats simply down to demand much less demand for 904L S.Steel.But in reality its no better,just sounds good for marketing because it cost more and only Rolex and one other watch manufacture as far as I know uses it.

Many many Rolex fans say it must cost a whole lot more (maybe as much as a few thousand dollars) to make a Rolex chronometer movement compared to the some say humble common ETA. Perhaps so,but it will always remain a mystery to me because Rolex sells movements one part at a time. If the cost of manufacture is reflected in parts prices, the only out of the ordinary (most expensive) parts in a Rolex movement are by-far the escapement and Breguet overcoil hairspring. A balance complete for a Rolex 3135 sold for around $150 in the late 1990s but far more expensive today, and very much harder to find out the true prices. A pallet fork was $32, and a complete reverser assembly was about $28. Average current cost of a balance assembly for the ETA 2824-2 is $20, pallet fork...$16, reverser...$17.Nivarox balance springs now is now owned by Swatch/ETA hence the low escapement price.

The lowly to some non chronometer base model ETA 2824 will cost over well $400 when purchased one part at a time. A complete chronometer grade 2824-2 costs around $115-$150 wholesale when bought in bulk.So IMHO a complete average S.Steel sports model Rolex watch would cost around $1000 to a maxium $1500 for the full package box etc and delivery to AD world wide.

[Dan2010]

Originally Posted by padi56

.
The lowly to some non chronometer base model ETA 2824 will cost over well $400 when purchased one part at a time. A complete chronometer grade 2824-2 costs around $115-$150 wholesale when bought in bulk.So IMHO a complete average S.Steel sports model Rolex watch would cost around $1000 to a maxium $1500 for the full package box etc and delivery to AD world wide.

Being a CFO, this is the kind of stuff I deal with all the time. I would agree that this cost is probably close to reality.

[gimpex]

I wonder if it's to strip it down like they do with electronic gadgets

[Sixxgrand1]

Well looking at perhaps 900,000 completed Rolex watches a year, running those robots 24/7/365 - almost two Rolex (1.71) are made per minute. Yes - per MINute...

Heck even a 2010 Camaro takes a full minute to build as one comes off the assembly line every 60 seconds..

Some time ago I recall an article which detailed an Omega Seamaster costing the Swatch group less then $300 out the door - complete and expect that Rolex has better faster robots.

So I think it is best for all of us not to know actual 'costs' to build...but instead enjoy the peace of mind of great resale value which comes with owning a Rolex timepiece.

[SkyKing31]

Interesting thought .. But I dont think it matters much .. Just having such a wonderful watch is good enough for me

[Roddie]

One could do this type of cost analysis on all purchases. It is what it is. The cost of such items are only priced as such because the items continue to sell. I guess you could say the the consumer plays as much a roll in the increases of cost as the MFR does but like many have said the pride of wearing one is priceless.

Roddie

[Puffy]

I also reckon 10-15% of MSRP

[htc8p]

too expensive...i wonder why i got into this...its irrational

[Tools]

I think that guesses have no basis in reality, so why bother..

Bottom line...... each Rolex needs to pay everybodys wages, pay the power bill, and cover the mortgage..

So, if their annual budget was a billion dollars, and they only made one watch that year........ it would cost 1 billion dollars to make that watch....

[mcjp6]

Originally Posted by Tools

Bottom line...... each Rolex needs to pay everybodys wages, pay the power bill, and cover the mortgage..

So, if their annual budget was a billion dollars, and they only made one watch that year........ it would cost 1 billion dollars to make that watch....

Larry, you have a knack of simplifying the over engineered, I love your "bleeding obvious" answers.......

[axecollector65]

don't forget that majority of Rolex's cost is in their branding and marketing. The price increases and AD's not willing to budge on pricing is part of their branding. we are not only buying a magnificent time piece, but we're also buying tradition and a Rolex life style. There are certain things that you can't try to back into a manufacturing cost to make sense. If that was the case we would try to buy a watch that MSRPed closer to the cost of manufaturing.

[wokafu]

hmmm..to think tat 15-20% is a lil low ..im guessin around 30% of da price..but hey...even tho how much i think its not worth it..i still appreciate em coz it cost me 'a million' in my eye...

[mcubed]

I also would guess well under a thousand for the 14060 or AK, perhaps a bit more for the new sub with the costs of the ceramic bezel. You have to figure if tons of watch companies can make a swiss made stainless steel automatic dive watch with basically the same specs as a sub, and sell it for 300-700 bucks-a Rolex can't cost all that much to make, other value aside..

[Paul B]

Funny this comes up, I was just thinking about the same thing?
Other than the crystal, dial and hands, the watch is basically comprised of machined steel and stainless components that are then assembled. We know that Rolex machines and assembles everything in house, and that their process' are highly automated. Having many years experience in a high volume machined components industry, I would guess that their actual unburdened cost per watch would be quite low, based on the raw materials used, level of automated production, and their volume of output per component.
If a completed quality ETA movement sells in volume for about $150 like Padi says, I would think that it costs them about $100 or less to manufacture it (fully burdened). Let's say we add 50% for Rolex to be generous, that would place the cost of the movement at about $150.
I can't see the case crystal dial and hands possibly costing more than the movement, so let's be very generous again and add the same for them? I would say $300 cost fully burdened for a SS Rolex max?



Paul

[mimisiq]

But the price of a machine that makes the watch cost millions.

So better buying a Rolex made at 10 times the cost than making it by ourselves !

[Joey_V]

Probably 20% of what they're charging - if that.

I wouldn't be surprised if it were 10%.

[asadtiger]

ok, I am quiet surprised at the very low estimates everyone has put u..I really thought it would be more than those very low figures quoted by everyone to make a Rolex watch..but when I got into thinking of it, I was further surprised wondering that Rolex actually practically makes just ONE movement: a no date, then add a date, then add a day, add a GMT and max add a chronograph module...so essential cost of making the movements for a million watches a year must be very very low, cuz it is just ONE process! and the largest part of the 'enhancement' comprises of adding a date :)

but still a major point is that those robots that do all the work have themselves costed a fortune so that cost has to be added too...so actually tools is spot on in that a watch costs Rolex by the following equation: total budget of the company (say for a year)/no produced in that year...since there are so many market assessments of brand values and everything published all the time, may be someone can help us find out the annual budget of Rolex and we'll divide that by a million to get at a rough estimate of what it cost Rolex to make a watch..this can be an interesting activity :)

thanks lot guys for a very informative thread about businesses..i have no idea of cost analysis and business models.

[derekloimer]

The cost of manufacturing any mass produced product is always a fraction of the retail cost. I think it was estimated that a E class mercedes actually cost about $6 000 to make.

If we assume that a real rolex costs $1 000 to produce it says volumes for the fakes on the net that "are identical to the real thing" but cost $200

[radinc]

a bottle of coke cost about 7c in the cost of the bottle and the actual water/sugar/color/flavor. but it costs $1.00 or more to purchase in a store -- same deal. you're buying the brand just as much as you are the physical item.

[lerox]

If replica can be produced and sold at under $300, given the higher spec material used in the real thing, it should be well under $1k ....