How much is a Rolex really worth....no really

[Gaijin]

Originally Posted by wildsidemtb

Mikey and Tombstone gave me the answers I was after, their true mechanical cost to build.
We all know why they are priced the way they are,
However I agree they are worth every cent of their marked up price, I don't know of any other product that holds it's value as well as a Rolex.

Holding thier value is the main selling point for me in getting more than one. Can't say that about almost any other big ticket item.

[mlb]

]The watch is worth $1 under the amount I'd sell it for. If you were strolling along and someone offered you cash for your watch... at wat point would you stop walking?

That's what it's worth


I don't stop walking, unless the amount is some obscene amount, like enough to retire To much sentimental value

Mike

[nko51]

I will field this question! I know exactly what your asking. Let's use a SS Sub Date as an example. Retail price is $5175, if you remove all profits made by people just to shuffle it around, and allow just Rolex to make a reasonable profit, I estimate the worth of the watch to be around $2025. If you excuse me now I'm gonna head for the hills, before the middle men have me executed.

[cbrenthus]

Originally Posted by KansaiVet

Holding thier value is the main selling point for me in getting more than one. Can't say that about almost any other big ticket item.

I'm another one. If they didn't hold their value so well, I probably wouldn't have bought one. But, keep in mind that it is their constant price hikes that make them hold their value so well!

[sub2004]

Hi Guys

General cost ratio is around 1/3. If you buy for a $1 you should sell at $3. This is not a rule of thumb but pretty standard for retail stores of "name brands" and "high end goods".

When i was a law student, i worked part-time on weekends and semester breaks at one of NZ flash boutique stores on Queen St. We had the exclusive licence to Giorgio Armani suits.

The cost price on an Armani suit was about $600-$800 and we would put a retail tag on of about $2000-$2500. Looking back to this period, the US Dollar cost would have been about $350.00 US Dollars for an Armani Suit.

I definitely know for rolex, the cost is under 50% becuase i have been offered about 45% off on a tt model, and on this there was still a profit margin.

[jaycee]

Originally Posted by diablojota

I could go into the economics of the supply and demand curve to discuss the value, but I probably bore my students with that enough, so I'll avoid it.
The AD probably marks up the watch at least 30%.

Presumably you discuss Veblen's theory of conspicuous consumption and Bourdieu's theory of distinction to explain the supply and demand curves relating to items such as a Rolex? I could definitely see my own habits, not only in watches but in other things such as cars, tastes in music etc. when I studied these theories!

I find it quite interesting that the economics course I'm currently doing (I'm a part-time student) mentions that firms like Rolex, if they dropped their prices to an "affordable" level, would sell loads of watches for 6 months or so, then they'd probably sell none and go out of business! Probably true as well. The price of a Rolex is one of the main reasons they are desirable. I have one, I desire another one and within a year or two I hope this desire will be met

[Arturo]

I spoke to one of my friends in international finance today, and he says that Rolex is indeed a non profit company. That does not mean that they do not make a profit. But it is what they do with the profits that gives them that definition. There are considerable legal and ethical restrictions on the distribution of profits to owners and/or shareholders as what fundamentally distinguishes a non profit company for a commercial enterprise.

Rolex walks the walk. It makes a big profit and keeps almost all of it for charity. The charities are the owners and benefit as opposed to having those profits distributed to shareholders. The money goes back into the company, R and D, pays its overhead and a small percentage to the Wilsdorf heirs as is common... and then to the charities. I would wager that 1% to the Wilsdorfs is still many many millions for their lifestyle. The other 99% to charity (AFTER OVERHEAD). The company is controlled by 2 charitable trusts which distribute the moneys to many many charitable organizations, scholarships and endeavors. One example is at http://www.littledreamsfoundation.com . Check it out.

This is a cool company. I agree. Once you start reducing the prices of these watches, the company would probably lose its standing. Again, it is not a charity, but a not for profit company. That does NOT mean that they do not make a profit, but defines where the profits go. They go back into the overhead of the business first and the research and machinery to keep this company in perpetuity, THEN, after OVERHEAD, the rest goes a little to the Wisdorf heirs, and then to the charities of which there are hundreds or thousands.

[sevykor]

I can live with Rolex's prices considering the cost in making them (parts, labor and other related expenses). What really drives me nuts is how it can cost $1 - $3 to make a branded shirt, shoes, shorts, etc and they charge $60+.

[pcarson]

Value is complex, as all of the above show. No question that everything is worth what it fetches on the day, but I think the question about the build price of the Rolex stands. I've seen estimates from US$600 to US$1500 for Subs, but those figures a) come from the Rolex ambivalents and b) don't take into account how much it costs Rolex to run its Foundation and create the very canny marketing mix that makes it a such a desirable brand, and one that historically has retained value in the event of re-sale. This latter is probably the best test of "value" in pure economic terms.

The direct cost of assembling a Sub might be US$1300 but it's a meaningless figure, because you wouldn't want one if it didn't have all the value-add that we perceive. The value-add (including sponsorships, advertising, AD accreditation, product placements, training, the Foundation and the maintenance of in-house movements and foundry, not to mention R and D) are the things we use to subconsciously assign the price we're willing to pay.

No doubt from a build-cost perspective, Rolex is overpriced. So is everything that's marketed for prestige. If Rolex wanted to make easily affordable watches, they would have outsourced movements to ETA and then we'd all be wearing Swatches! Bugger it, I say. Fork out and enjoy. If you saw what ADs go through to get and maintain accreditation you'd give 'em a 10% tip!

Now, as for the YMII, I think if we all just wait a bit, Rolex will send us all one with a thank-you note for our support over the years. We can put it next to the New Coke ads as reminders of things that seemed like good ideas at the time...

[Arturo]

I agree with the 10% tip IN THEORY. I am far less concerned about negotiating discounts with Rolex watches than I am with cars or other forms of jewelry or real estate or clothing or shoes. AD's are not getting rich on Rolex watches for the most part. They have to bear the cost of accreditation and maintaining a hefty overhead to own them. I think digging for discounts on them is OK, but not my cup of tea. I have no problem asking for 5%, but over that, I know how I feel when clients ask me to discount my fee. I am a guy who likes to tip a lot to waitservers....like 20% or more because I know that they have a harder life making money, and I have always done that and will always do that.

A great lawyer once told me that when I discount my fee, I do my future clients a disservice because the insurance industry or the parties who settle cases with me will know that they can lowball my clients because their lawyer will take a hit. So I don't negotiate fees. They are what they are. I feel I am worth my own MRSP so to speak. So do the AD's I am sure feel that way about the MRSP of their watches.

A bit off point, but I think the watches are worth what they fetch even absent discount.

[pcarson]

Arturo, excellent point. No argument from me about fees and valuing one's time. I'm at my most productive when I feel fairly paid for providing skills and service to people who need them. Interestingly, people are not very price-sensitive when they trust what they are getting, and are given it fairly.
I think that's the basis of value. And it gets us back to Rolex; they do all that, and a bit more.

To pick up the marketing point, I think the only view of marketing that works is where form and function are weighted appropriately to the product. The total offering must match the performance, since the performance is part of the offering.

Now about that 10% for the AD; that WAS highly theoretical. I have a tendency to be illustrative, you see...

[Arturo]

Look at my post number 18 on this thread. I do not know how to import a thread to another, but when I saw something about Swatch buying Rolex I almost rolfed. In America today there are only, ONLY 2 remaining high quality hand made dress shoe companies.....Alden and Allen Edmonds. That is it. You can find a few cowboy boot companies, but in terms of true family run HIGH quality, this is it. Alden is the Rolex of men's shoes in my view.

And to see companies lose their charter and definition makes me sick. If anyone knows how to import post number 18 from this post into the discussion about Swatch, then this will all make more sense.