Where do AP's hold their incredible value?

[mpwatch]

Hello,

Pardon the simplicity of this question...I am curious as to where these watches are generating massive monetary value. I understand materials, craftsmanship, and precision come into play, but it seems like AP's lower end models are leaps and bounds ahead of many other luxury brands as far as pricing goes. Is there something I am missing? Secondary market strength? Lucrative crafting?

I appreciate all answers/references/resources & would like to state I am here to learn.

- Thank you

MP

[Hairdude1]

Lower production and high craftsmanship

[BlueIn2Red]

Originally Posted by Hairdude1

Lower production and high craftsmanship

Right - another way to put it is that there is high demand for a limited supply.

[PJ S]

It has very little to do with materials and there is no craftsmanship in CAD/CAM – it’s nothing more than brand cachet value and what they believe the market will bear.
Almost half the price is the dealer’s grab and sales tax.

When it comes to luxury goods, manufactured cost plus reasonable profit margin goes out the window, which is the traditional method and where a general rule of thumb applies – retail = cost x 7-10.

[masterserg]

^^^ as much as I love the brand, I have to agree.

[singe89]

Brand, history, what the market will bear and for AP much of the cost comes from hand finishing of the case, bracelet and especially the movement. I forget the exact number but it was like 40% of the cost of the product comes from the skill and time it takes to apply angles, brushing, polishing, etc.

What it really comes down to is perceived exclusivity.

[watchucallit]

Assuming the cost x 7-10 is correct but probably in the ball park--- there is some recovery for design and movement "research and development". Think of an s extreme -- pharmaceuticals-- much of the cost of the drug is the result of the research and testing not the actual manufacturing. Same with developing new techie devices-- e.g. smart phones-- the difference is that many of those items are sold in mass numbers so smaller profit per piece made up on volume.

I guess "manufactured cost plus reasonable profit margin"-- define reasonable

Originally Posted by PJ S

It has very little to do with materials and there is no craftsmanship in CAD/CAM – it’s nothing more than brand cachet value and what they believe the market will bear.
Almost half the price is the dealer’s grab and sales tax.

When it comes to luxury goods, manufactured cost plus reasonable profit margin goes out the window, which is the traditional method and where a general rule of thumb applies – retail = cost x 7-10.

[texex91]

Go try one on.

[masterserg]

Originally Posted by texex91

Go try one on.

This is it ... once you put one on ... all logic goes through the window! Spot on Paul, as usual.

[Manofsteelpt]

Originally Posted by texex91

Go try one on.

Originally Posted by masterserg

This is it ... once you put one on ... all logic goes through the window! Spot on Paul, as usual.

EXACTLY!!! I bought my 1st RO sight unseen. When I got it, I was like "WOW". Pix alone can NOT explain them.

[benlee]

Craftsmanship, image, brand equity etc... The be honest, I think the actual production cost is probably relatively low and we are likely all paying inflated price relative to the actual cost. However, luxury goods are emotional purchase and one cannot apply logic in explaining how it's worth. What the watch is worth is how much people are willing to pay to buy them.

[mpwatch]

I appreciate all responses! I've learned a lot through reading all of your replies. It makes me wonder how many middle-mans we're dealing with on that transaction.

Thank you,

- MP

[beer]

rolex have 1 million watches to spread the yearly cost of ambassadors, advertising and R+D over, AP have around 50 thousand...while AP probably doesnt spend the same in a year as Rolex do, i am sure their budget is not as little as 1/20 of Rolex's... in other words each AP sold has to absorb more of these costs than each rolex

[descartes]

Craftmanship is unreal. Just take a look at the Royal Oak bracelet, which is finished by hand. Can't really compare that to Rolex, which is basically utilitarian. Costs $ to produce such a thing, plus the other factors people have mentioned.

[jjnd08]

Originally Posted by texex91

Go try one on.

This. Once I put one on for the first time, it was a game changer in my watch collecting desires.

[mpwatch]

This responses are wonderful! Looking forward to handling one of these pieces in the near future.

Thank you,

- MP

[GB-man]

Originally Posted by mpwatch

This responses are wonderful! Looking forward to handling one of these pieces in the near future.

Thank you,

- MP

Bring your wallet

[APAP]

Originally Posted by descartes

Craftmanship is unreal. Just take a look at the Royal Oak bracelet, which is finished by hand. Can't really compare that to Rolex, which is basically utilitarian. Costs $ to produce such a thing, plus the other factors people have mentioned.

Couldn't agree more

[lapince]

They are made in small numbers, most regular production models are made of 200-300 per year, the black ceramic diver was made of around 600 pieces, the white surely way less, the work on them is art, on the ceramic angles, brushed and polished surfaces show that many hours went into this, but like with all brands not all models maintain value the same, in any case you need to buy well, what I like is that they discontinue certain models even if they were good sellers, I must say I am happy to know that I have a watch that was not made in industrial quantities, that is a huge plus for me. In any case they are clearly very high end time keepers, probably the best sport watches with RM with their ROO line, maybe I don't get it but for me AP is a sport brand, when I think AP I think RO and ROO, but really not their dress watches, if I wanted a dress watch I would not for a second consider AP dress watches

[lapince]

Originally Posted by benlee

Craftsmanship, image, brand equity etc... The be honest, I think the actual production cost is probably relatively low and we are likely all paying inflated price relative to the actual cost. However, luxury goods are emotional purchase and one cannot apply logic in explaining how it's worth. What the watch is worth is how much people are willing to pay to buy them.

Very well said Ben, luxury goods prices don't have any logic, my wife has a Celine croc handbag which cost a lot of $$$ but the same thing from Hermes costs 3 times more, no logic in that, but since people are ready to pay that price the brands are ok to sell them at those prices by making some pieces in small quantities to keep prices and demand high, if Patek wanted I am sure they could make 3 times more 5711/5167 than what they do, but they don't want to as it gives a sense of exclusivity and justifies the high prices...