How much profit does an AD make selling a new Rolex?

[Spartacus]

I think the more important question is, why some ADs say Rolex does not allow discounts while clearly other ADs are discounting.

[Kevin of Larchmont]

Originally Posted by GardenState

For simplicity let's use an example with a MSRP of $10,0000.

Dealer cost $6,000
Discount sale price vs MSRP -20% 8,000
------------------------------------------------
Top line profit $2,0000

Less:
Cost of store front: $400
Cost of Staff: $350
Employee Benefits $100
Insurance $200
Cost of Advertising $150
Cost of utilities $300
Municipal Tax $200
State Tax. $200
Federal Tax. $500
------------------------------
Total Expenses $2,400

They actually lose $400 per watch... It's all about love of the brand. God bless these philanthropists!

The numbers here might be used here for comic effect but the premise is solid. No one is getting rich just selling Rolex watches. Rolex gets them in the door and exposed to higher margin items.

[sergenubretsuisse]

Originally Posted by Watchgeek5000

Having Rolex in your store brings customers with money into your busseness and leads to other high end sales. So the profit doesn't end with sale of the watch......the watch is just the beginning!

Yes get approved to be AD means many people have more trust for your other product and will buy

[DPE]

They may make a 40-50% margin but then only a 10-14% net profit margin after all the running costs.

[Louis (Toronto)]

Being a Rolex dealer is a big deal. The watches basically sell themselves and if the store is in a half decent location, which most of them are, the profit potential on Rolex watches alone based purely on the high volume is enviable by many jewellery/higher end watch store owners.

The are not just selling SS models. Many of the watches are priced similarly to entry level luxury German car models and the profit on those cars is only approx 8%-9% before discount - likely 4-5% profit if you negotiate well. In my estimation, selling one PM Rolex would net an AD (even assuming around 20% discount) the equivalent of a BMW dealer selling 2 perhaps 3 entry level BMW 3 series (depending on discount) !!

[MonBK]

Originally Posted by DPE

They may make a 40-50% margin but then only a 10-14% net profit margin after all the running costs.

There are three kinds of people in this world.

Those that can count and those that can't.

[billnj]

There is a substantial difference between gross profit and net profit; I am a car dealer and am all to aware of this.

I would gather that the Rolex line is profitable, especially as so many of them sell for list or darn close to it.

[rollyp]

Originally Posted by HL65

AD's pay 62% of the retail price. As for profit of course that depends on how much they sell watch for, expenses etc. Every AD is clearly different so who knows exact profit.

I can confirm what Ken said: AD profit margin is 38%. I had a discussion once with a very cool salesman at a Rolex AD and I was telling him that Patek AD margins are 50%. He was surprised and asked if I knew what Rolex AD margins are, to which I replied, "37.5%" (because that's what I had heard)... he said that was close, but 38% to be exact.

Looking at profit margins only paints part of the picture though. You also have to look at return on investment and that will vary greatly from dealer to dealer based on what they've paid for the buildout, how much they're leveraged with inventory, interest rates, etc.

So trying to figure out how much money an AD makes is an exercise in futility.

[sergenubretsuisse]

Originally Posted by rollyp

I can confirm what Ken said: AD profit margin is 38%. I had a discussion once with a very cool salesman at a Rolex AD and I was telling him that Patek AD margins are 50%. He was surprised and asked if I knew what Rolex AD margins are, to which I replied, "37.5%" (because that's what I had heard)... he said that was close, but 38% to be exact.

Looking at profit margins only paints part of the picture though. You also have to look at return on investment and that will vary greatly from dealer to dealer based on what they've paid for the buildout, how much they're leveraged with inventory, interest rates, etc.

So trying to figure out how much money an AD makes is an exercise in futility.

It is not called profit margin per watch. Simply call "mark up" or "keystones" profit is figure after all sales of everything subtract all expense. Can be figure quaterly, month, or year. But not per watch.

[TickTockChuck]

Always a popular discussion, as many want to know how low they can go when buying. 38% margin seems reasonable for the stainless steel models given the AD's risk factors and operating costs. Sure, we all love the sports models, but the AD has to buy a wider selection from Rolex and some models may sit for a long time collecting dust. Seems like a 5-15% discount is reasonably common, except for the hottest references such as the Daytona, so what's left covers the operating costs for those times when no customers are around. Fair profit for good service is okay with me. Cheers!

[peterpl]

Do the ADs that have the watches on display pay for the watches upofront? I dont think so right? Rolex gives them the watches to display until sold then Rolex gets paid?

[bmrisko]

Originally Posted by peterpl

Do the ADs that have the watches on display pay for the watches upofront? I dont think so right? Rolex gives them the watches to display until sold then Rolex gets paid?

They buy them upfront...

[peterpl]

Originally Posted by bmrisko

They buy them upfront...

Are you 100% sure about this? That would mean millions and millions of dollars invested and just sitting there.

[Timesurfer]

Originally Posted by visualplane

Is the profit the same throughout their entire line?

Always wondered this as well, always heard that they have more wiggle on TT, gold and platinum than on SS, never known if its do to demand, margin or other factors... also they tend to move less on prof. Models (Subs, GMT, Daytona, etc.)

[bmrisko]

Originally Posted by peterpl

Are you 100% sure about this? That would mean millions and millions of dollars invested and just sitting there.

100% sure...

[sergenubretsuisse]

Originally Posted by bmrisko

100% sure...

AD practicly beg to be able to buy up front. Serious approval process and many are turned away. Rolex say no to many who beg to give Rolex his money

[behardt]

Originally Posted by peterpl

Do the ADs that have the watches on display pay for the watches upofront? I dont think so right? Rolex gives them the watches to display until sold then Rolex gets paid?

Yep, they are floor planned like a lot of car dealerships. Unless that's changed in the last couple years.

[Maltie]

I think you have to take in the equation the VAT that is being charged.

In Belgium 21% so this makes this calculation for the new Daytona 116500LN

Listprice : 11.400 EUR
Ex VAT : 9.421 EUR
Minus dealer discount 40% : 5.653 EUR >> goes to Rolex

The dealer makes in this case if he does not give any discount : 3.768 EUR which is actually a gross margin to listprice of rounded 33%, which is low in the luxury market space.

[CLTRolex]

So if the AD pays Rolex up front - how much say do ADs have on which pieces they receive?

[MonBK]

Originally Posted by CLTRolex

So if the AD pays Rolex up front - how much say do ADs have on which pieces they receive?

None.

[RGAmos]

Originally Posted by Watchgeek5000

Having Rolex in your store brings customers with money into your busseness and leads to other high end sales. So the profit doesn't end with sale of the watch......the watch is just the beginning!

Not in Rolex Boutiques.

[Watchgeek5000]

Originally Posted by RGAmos

Not in Rolex Boutiques.

OP said AD, an AD can sell many things as well as Rolex. Had he said boutique, my response would have been different.

[EDL7]

38% isn't a great profit margin in any business..unless you do high volume..
By the time the govnt and the credit card gets done w/you...and you meet all related expenses..well..
They probably make their real $$ off of jewelry..as that is a good profit item..
Keystoning is a joke too..
A gift store needs to 3x's minimum to make it happen..across the entire line..
1 for expenses...1 to replace the item...the other 33% for profit..

[Lordofrolex]

Not sure how people know exactly but I would say at least 40%

[masyv6]

Originally Posted by rollyp

So trying to figure out how much money an AD makes is an exercise in futility.

Won't stop TRF from trying

[MonBK]

Originally Posted by Lordofrolex

Not sure how people know exactly but I would say at least 40%

Originally Posted by masyv6

Won't stop TRF from trying

TRF knows!

[The GMT Master]

Originally Posted by CLTRolex

So if the AD pays Rolex up front - how much say do ADs have on which pieces they receive?

I can't speak for other countries, but in the UK there is an allocation of watches offered to an AD each month, you can choose what you want from that. This is outside of the agreed orders placed at Basel

[Working4better]

Very interesting information indeed, it seems to me, that for AD selling Rolex brand means a potential to bring about more prospects to sell other jewelry items.

Sent from my SAMSUNG-SM-G935A using Tapatalk

[Boaters]

I think the only way to really find out is to start an AD which I have heard is quite costly

[AK797]

.