Cost of production for a Rolex

[borlases]

Hi there
what do folk think it costs simply to produce a standard rolex steel sports model - say a Submariner.

I think I read somewhere that Rolex's costs are almost entirely marketing and that the watch production itself is minimal in relation to the purchase price.

thanks
Steve

[emagni]

Raw material wise, I thought 904L steel cost three times as much as 316 steel. Although probably 904L steel usage in a watch is overkill, some can also say the usage of gold and platinum in watches are overkill not from an engineering standpoint but from a value standpoint.

[nektar]

i agree with mr secretbut i stoll like my sub

[B. Doggy]

I've heard the number $1,500 thrown about for the cost to manufacture a SUB. I have no hard proof, however.

[davestan]

A lot less than we pay!! .....but then there is the development and creative costs, marketing, a million middle men etc, etc

[Idle Swede]

Originally Posted by B. Doggy

I've heard the number $1,500 thrown about for the cost to manufacture a SUB. I have no hard proof, however.

Don't worry Bryan, neither has anyone else.

[mb hawaii]

My guess is more in the $1000 range. I would say to manufacture the watch it costs about $ 200 - $300. With advertising, overhead, R&D, etc... it shouldn't be more than a $1000. Just a guess though.

[snow_rocks]

Three monthly payments of 39.95USD, and if act right now

you get two bottles of Polywatch, FREE!!!

[safd09]

IMHO if you own a Rolex, or anything expensive, it's not a matter of how much it cost to produce but rather "how much is it worth?" The "perceived value" is what we pay for... but I understand the curiosity. Would we really want to pay 7k for a GMT if we found out it only costs $500 to produce? Personally, ignorance is bliss!

[emagni]

If SS Rolex watches MSRP is $19.99, would we still desire them the same way? Anything luxury for that matter...

I would still want one...but I probably wouldn't appreciate them the same way. Sad...I know ;-)

[Pep04]

Originally Posted by safd09

IMHO if you own a Rolex, or anything expensive, it's not a matter of how much it cost to produce but rather "how much is it worth?" The "perceived value" is what we pay for... but I understand the curiosity. Would we really want to pay 7k for a GMT if we found out it only costs $500 to produce? Personally, ignorance is bliss!

Picasso only spent maybe $2 on ink and an easel. Yet many line up to pay $60k for a sketch. My wife paid $6,000 for a painting made by Britto because she met him and he personally signed it.

Value is the perception of the buyer. Who cares what it cost to make! What is it worth to you to have it?

[GradyPhilpott]

How much did it cost for Vincent Van Gogh to produce "Starry Night?"

[smc]

More than 1 watch per person per day? I would not have expected that.

[submariner16610]

aside from the materials and the equipments,the labor cost is also expensive. you pay for the quality and the name brand of the watch....

[submariner16610]

we are paying for prestige,quality and the brand name....it's the Luxury!!!!

[lrpepin]

van gohg a ear perhaps might of been smart everyone dosent follow the monkeys to wal mart or starbucks or here in canada tim hortons i hope there
are a few few left that take pride in what they look at instead of throwing it out the window shit will always be shit

[padi56]

Originally Posted by borlases

Hi there
what do folk think it costs simply to produce a standard rolex steel sports model - say a Submariner.

I think I read somewhere that Rolex's costs are almost entirely marketing and that the watch production itself is minimal in relation to the purchase price.

thanks
Steve

Now to tool up and design a movement cost millions but once you have the tooling etc.IMHO the movements would cost perhaps a little more than a say ETA top range chronometer grade movement.Although the 904L case ring steel is more costly than say the 316 S.Steel.But in reality its no better,just sounds good for marketing because it cost more and only Rolex as far as I know use it.

Many many Rolex fans say it must cost a whole lot more (maybe as much as a 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 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. And Swatch ETA make everything now in-house.

The lowly to some non chronometer ETA 2824-2 will cost over well $400 when purchased one part at a time. A complete chronometer grade 2824-2 costs around $115 wholesale.So IMHO a complete average SS sports model Rolex watch would cost around $1000 max $1500.


Well these are the Rolex company figures from late 2006
not many employees to churn out almost a million watches a year.

Corporate Address:
PO Box 1755
Rue Francois Dussaud 3
Geneva, CH 121126
Switzerland

Tel: (41) 223082200
Fax: (41) 223002255
Web Site: www.rolex.com

Number of Employees: 3,000
Fiscal Year End Date: 12/31/2006

State Of Inc.: CH
Business Description:
Mfr & Sales of Watches
Import: No
Export: Yes
NAICS Code/Desc:
334518/Watch, Clock, and Part Manufacturing
SIC Code/Desc:
3873/Watches, Clocks, Clockwork Operated Devices & Parts


Personnel - Rolex S.A. (International)
CEO: Patrick Heiniger


Outside Service Firms - Rolex S.A. (International)
Advertising Agency
DDB Paris
Corporate Address:
55 rue d'Amsterdam
Paris, 75008
France

Tel: (33) 1 5332 5669
Fax: (33) 1 5332 6347
Email: [email protected]
Web Site: www.ddbparis.fr
JWT
Corporate Address:
1 Knightsbridge Green
London, SW1X 7NW
United Kingdom

Tel: (44) 20 7656 7000
Fax: (44) 20 7656 7010
Web Site: www.jwt.co.uk

Brands & Products - Rolex S.A. (International)
CELLINI - Fine Watches
CELLISSIMA - Watch
DAYTONA - Fine Watches
OYSTER - Fine Watches
ROLEX - Fine Watches

Overview - Rolex Watch U.S.A., Inc. (International)

Corporate Address:
665 5th Ave
New York, NY10022

Tel: (212) 758-7700
Fax: (212) 223-7443
Web Site: www.rolex.com

Number of Employees: 500

Business Description:
Mfr. of Watches
Import: No
Export: No
NAICS Code/Desc:
423940/Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers
SIC Code/Desc:
5094/Jewelry, Watches, Precious Stones & Precious Metals-Wholesale



Personnel - Rolex Watch U.S.A., Inc. (International)
Chm: Walter Fischer

CFO & Sr VP: Michael Elms



Outside Service Firms - Rolex Watch U.S.A., Inc. (International)
Advertising Agency
JWT U.S.A., Inc.
Corporate Address:
466 Lexington Ave
New York, NY10017-3140

Tel: (212) 210-7000
Fax: (212) 210-7299
Email: [email protected]
Web Site: www.jwt.com



Brands & Products - Rolex Watch U.S.A., Inc. (International)
OYSTER COLLECTION - Watches


Hierarchy - Rolex Watch U.S.A., Inc. (International

[bcacncnc]

I read that a sapphire crystal costs about $20 each.

[Rikki]

Back in the mid 90's we had a Seiko Rep come to speak at one of our guild meetings and brought some show and tell stuff. One of the watches was an aviator watch their most expensive watch at the time the movement was a double digianalog with 2 dichroic lcd windows with multiple functions and then some, he asked us to quess the manufacturing cost of the movement, most of us guessed between 1 and 2 hundred dollars. When he told us you could hear a pin drop are you ready here it comes 4.95 cents we were obviously flabbergasted.If i had to buy every part to build a 3135 it would probably come in around 12 hundred dollars give or take movement dial and hands. Case and band couldn't say can't buy so if there is a profit in the parts actual cost maybe 6 to 8 hundred just a guess but who cares we all love our Rolexes no matter what they cost do you really want to see what's behind the curtain?????? Rik

[Omega_Precision]

Perhaps....I can buy Rolex parts and put together my own Rolex for half the price used?

Is it possible?

[Speed]

Perhaps I will manufacture my next car and raise a cow for my next hamburger....nah!

[Pep04]

I don't think this question is asked, so as to make Rolex a money grubbing whore that marks up their product by 1,000 folds.

Rather, out of curiosity. It is irrelevant how much Starry Night actually cost to paint. That is not the question or even a proper analogy. A better juxtaposition, would be to ask how LONG it took to paint the piece of art.

No doubt that Rolex makes huge, and I mean huge, profits. Every luxury designer makes a killing. Lacoste shirts are made in Bangladesh where they pay workers cents per hour with no fringe benefits or labor/unemployment tax to speak of. However, I have paid $130 for a shirt that couldn't cost more than $5 with delivery to the end retailer.

In Rolex's case, you are paying for quality, craftsmanship and yes a bit of exclusivity. As common as the are, not everyone has one.

Just my two cents.

[Maxtor]

If you look at cost of manufacture v. cost of purchase it will drive you crazy.

If you take out design, tooling and marketing costs the raw cost of the watch might be 10% of retail, maybe less. However, compared to things like designer eyeglass frames or software, I would guess that is still a higher percentage of cost of raw materials in a Rolex.

If it gives you pleasure and you can afford it then it is good value.

[rc42]

I've heard that the out of the factory cost of a steel Rolex Submariner is about $500 which covers all materials, parts and labour. Obviously their marketing machine has to be fed and they need profit on top of that too, as does the distributer and the AD. Not sure where the division of profit lies but the same watch will probably come out of the AD at around $6000.

Clearly the normal market forces rules do not apply to luxury goods, you can get some superb, accurate and well made watches for a lot less cash but there is only one way to get a new Rolex and that's an AD. Clearly the power of that huge, expensive marketing machine is that people perceive the cost of a new Rolex to be about right and as long as enough people are willing to pay it then it is about right.

[Dakotajz]

Sorry for the revival of the thread. I never understood why Rolex can ask for such a high mark up. If you look at the average costs which is around 7k per watch. Then you look at the price of a depreciated Ferrari 40-80k. Where does Rolex justify it's mark up with its production numbers around 950k compared to late 1990's Ferraris with production numbers at 7k? Just wondering and you don't have to compare Ferrari to Rolex I just used that as an example.

[airchitect]

$800 or so. The vast majority of the tech in these watches has been bought and paid for by Rolex many times over. At the end of the day, a SS watch is a SS watch..... yes they are Rolex' and have the name, movements, resale value (???? hehe), etc, but to think that they cost much more than any other SS watch to produce is just silly.... when it all boils down, the only thing that keeps us all from being financial imbeciles is the fact that the market Rolex has created perpetuates high (even if somewhat artificial) resale values.... I still love me some GMT's though!!!

[joe100]

Originally Posted by Dakotajz

Sorry for the revival of the thread. I never understood why Rolex can ask for such a high mark up. If you look at the average costs which is around 7k per watch. Then you look at the price of a depreciated Ferrari 40-80k. Where does Rolex justify it's mark up with its production numbers around 950k compared to late 1990's Ferraris with production numbers at 7k? Just wondering and you don't have to compare Ferrari to Rolex I just used that as an example.

That's comparing two dissimilar items in two different industries.

A Rolex is expensive because it's a Rolex. Search Veblen Goods. Rolex has to pay for not only the manufacturing costs, but electricity, advertising, employees, etc. Pile on top of that the Veblen theory and you'll see why the prices are what they are.

If a Ferrari costs $300k and loses $80k in value, that's nearly 1/3. Show me a Rolex SS sport model which does that. Also, a Rolex will last for decades, running all day, every day, perfectly with only minor input from the user. A service ever 5 to 7 years, and that's it. No Ferrari or any car for that matter can run without service for 5+ years. Especially Ferrari. A Rolex from the 1950s will run just as well today as it did when it was made... I'll bet a vintage Ferrari will require a little more than an oil change and a new spring to keep it on the road.

Don't get me wrong, Rolex watches are bloody expensive and the cost to manufacture them is a fraction of what they charge but you can't fault the fact they've built a cult of personality behind them which keeps the value high. I won't get into it but there are only a few Rolex watches which I feel are sold second hand at close to their "actual" value but this really is a moot point. No one forces you to buy a Rolex and they can charge whatever they like. The secondhand market proves they've got a good balance going.

[SUBversive]

One of the questions to make you crazy because you will never ever get to buy a rolex for cost.

[mjclark32]

They can justify it because people keep paying for them...

[Concord]

I've heard it said with watches, cars, fancy resort destinations, fur coats, jewellery, and in particular, pricey real estate developments. High price keeps the riffraff out of the neighbourhood!