Cost vs value vs worth of a Rolex.

[travisb]

Originally Posted by PenDelicate

Before you build your first Rolex you've to build a factory and hire thousands of people.

So that first watch will _reeeeeeally_ sting.

Originally Posted by enjoythemusic

Yup ^^^^

But WAIT, there's more!

Setup distribution, deal with various import regulations.... and of course service locations and staff.

So, how are people to find out about your company's newest Thingamajigger?

There's so much more behind the process and resulting price.

[alphadweller]

Rolex said in an interview their profit margin was 30%.
We know ADs get around 38% margin on the retail price.
That leaves us with 32% total cost to put a watch on the market (all included: facilities, machines, materials, labour, overheads, R&D, marketing, distribution logistics etc.)

e.g.: cost of $3,200 for a $10k Sub

[clubrcr]

I think the discussion should be how great the marketing of the ROLEX watch is vs. the cost. We all know that every luxury brand has a high margin of profit. Rolex has done a great job of creating an "environment" of low supply and superior quality which in turn has created a huge demand. I wonder how many people take their name off a the waiting list after every price increase? Price has not deterred the buying public and creates a higher profit margin. Good job ROLEX.

[BraveBold]

The 30% (cost of msrp) estimate seems right to me as an average. Likely a wide range based on models, however - lower percentage for PM watches and higher for SS. Higher still for those watches produced at lower volumes and more complications.

The rising msrp at a pace below market demand helps drive secondary market strength and a stable brand halo. It provides a buffer to make Rolexes inflation stable (if not inflation proof).