Rolex Profit: SS v. Precious Metal

[mountainjogger]

I apologize in advance if this question has been posted before.

Does anyone know (or care to opine) on the difference in the amount of profit Rolex makes on a stainless watch versus profit on a precious metal watch?

I have always assumed that the dollar for dollar profit on a precious metal watch is a lot higher. But this is just an assumption. And you know what they say about assumptions.

[adg31]

Massive v. Enormous would be my guess!
Very best wishes to everyone for 2018 :)


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[NLYogi]

Good queston! I will ask my boy Jean-Frederic and let you know soonest. Will also tell him to discontinue the Submariner because it is such a dull model and everyone has one!

[mountainjogger]

Originally Posted by NLYogi

Good queston! I will ask my boy Jean-Frederic and let you know soonest. Will also tell him to discontinue the Submariner because it is such a dull model and everyone has one!

Sacrilege.

[Nikrnic]

Do you think a BLRO has 30k worth of gold in it ?

[HogwldFLTR]

It's generally accepted that the PM Rolexes are marked up much more than the sum of their parts would add up to. Rolex makes greatest profit on its PM models!!! As a matter of fact there is an entire counterfeit Rolex business based on taking SS movements and placing them in PM cases and reselling them.

[mahefa]

Originally Posted by mountainjogger

I apologize in advance if this question has been posted before.

Does anyone know (or care to opine) on the difference in the amount of profit Rolex makes on a stainless watch versus profit on a precious metal watch?

I have always assumed that the dollar for dollar profit on a precious metal watch is a lot higher. But this is just an assumption. And you know what they say about assumptions.

Here is a calculation with very rough estimates, but might be on the right track so to speak.

AD price is about 62% of the MSRP. Movement is the same, Rolex has own foundries and gold is easier to mold than steel or Rolesor. It comes to weight of the PM material. Steel price is almost nothing, making it to Rolesor maybe adds hundred or so.

MSRP of SS Daytona is 11800 and WG 35000.

WG Daytona has about 150g of gold, it costs about 5600.
So price difference for making and SS and PM is about 5500.
Manufacturing cost of the watch is maybe 2000, parts about 500.

Rolex sells WG for 22000
Manufacturing cost about 8000
Margin per unit 16000

Rolex sells SS or 7300
Manufacturing cost about 2600
Margin per unit 4700

So PM unit would have about 3,4 times the margin of SS.

[Danny83]

Well since AD makes 38.5% of MSRP im thinking Rolex makes 50% all across the board.

[robbonds]

Originally Posted by mahefa

Here is a calculation with very rough estimates, but might be on the right track so to speak.

AD price is about 62% of the MSRP. Movement is the same, Rolex has own foundries and gold is easier to mold than steel or Rolesor. It comes to weight of the PM material. Steel price is almost nothing, making it to Rolesor maybe adds hundred or so.

MSRP of SS Daytona is 11800 and WG 35000.

WG Daytona has about 150g of gold, it costs about 5600.
So price difference for making and SS and PM is about 5500.
Manufacturing cost of the watch is maybe 2000, parts about 500.

Rolex sells WG for 22000
Manufacturing cost about 8000
Margin per unit 16000

Rolex sells SS or 7300
Manufacturing cost about 2600
Margin per unit 4700

So PM unit would have about 3,4 times the margin of SS.

so SS is actually slightly more profitable for Rolex
sell gold for 22k - cost them 8k, so ratio is 2.75
sell SS for 7300 - cost 2600, ratio is 2.807
point is - with a finite amount of money - Rolex is better off selling all SS (strictly by the numbers that is - AND based on your assumptions...

[mahefa]

Originally Posted by robbonds

so SS is actually slightly more profitable for Rolex
sell gold for 22k - cost them 8k, so ratio is 2.75
sell SS for 7300 - cost 2600, ratio is 2.807
point is - with a finite amount of money - Rolex is better off selling all SS (strictly by the numbers that is - AND based on your assumptions...

Totally assumptions, no exact info avsilable for me, but this is about the level jewellery businesses do. Swiss work hour of this expert level in Geneva and Biel salary costs starting about 55-65 dollars with employers cost included. High level engineers salary cost is about 110-120 dollars per hour.

But i think there are more accurate calculations available. I am not too interested of this so maybe someone with more interest can find out

[mountainjogger]

Originally Posted by mahefa

Here is a calculation with very rough estimates, but might be on the right track so to speak.

AD price is about 62% of the MSRP. Movement is the same, Rolex has own foundries and gold is easier to mold than steel or Rolesor. It comes to weight of the PM material. Steel price is almost nothing, making it to Rolesor maybe adds hundred or so.

MSRP of SS Daytona is 11800 and WG 35000.

WG Daytona has about 150g of gold, it costs about 5600.
So price difference for making and SS and PM is about 5500.
Manufacturing cost of the watch is maybe 2000, parts about 500.

Rolex sells WG for 22000
Manufacturing cost about 8000
Margin per unit 16000

Rolex sells SS or 7300
Manufacturing cost about 2600
Margin per unit 4700

So PM unit would have about 3,4 times the margin of SS.

Nice work

Thanks

[mahefa]

Originally Posted by mountainjogger

Nice work

Thanks

Thanks but these are just estimates based on common knowledge of Swiss jewellery and watch business etc. As said, there are more accurate calculations available, but i think these are at least on the ball park (if ball park is really huge)

[Bill_H]

I recall reading that PM is much more expensive to machine than steel. Why's that? Because someone has to carefully collect all of the PM shavings whereas steel shavings can just be thrown away!

[locutus49]

Platinum is very dense (atomic weight) and thus hard to machine. Of course 904 is hard to machine too. Gold is soft and easier to machine.

[Bigblu10]

Originally Posted by HogwldFLTR

It's generally accepted that the PM Rolexes are marked up much more than the sum of their parts would add up to. Rolex makes greatest profit on its PM models!!! As a matter of fact there is an entire counterfeit Rolex business based on taking SS movements and placing them in PM cases and reselling them.

Please elaborate. A 3135 caliber movement is the same whether placed in a stainless 904L case or an 18K gold case per example of a Sub correct?

[HogwldFLTR]

Originally Posted by Bigblu10

Please elaborate. A 3135 caliber movement is the same whether placed in a stainless 904L case or an 18K gold case per example of a Sub correct?

I don't fully remember the story as it was about five years ago. Sorry.

[adg31]

Originally Posted by Bigblu10

Please elaborate. A 3135 caliber movement is the same whether placed in a stainless 904L case or an 18K gold case per example of a Sub correct?

Correct according to the Rolex website.


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[douglasf13]

Originally Posted by mahefa

Here is a calculation with very rough estimates, but might be on the right track so to speak.

AD price is about 62% of the MSRP. Movement is the same, Rolex has own foundries and gold is easier to mold than steel or Rolesor. It comes to weight of the PM material. Steel price is almost nothing, making it to Rolesor maybe adds hundred or so.

MSRP of SS Daytona is 11800 and WG 35000.

WG Daytona has about 150g of gold, it costs about 5600.
So price difference for making and SS and PM is about 5500.
Manufacturing cost of the watch is maybe 2000, parts about 500.

Rolex sells WG for 22000
Manufacturing cost about 8000
Margin per unit 16000

Rolex sells SS or 7300
Manufacturing cost about 2600
Margin per unit 4700

So PM unit would have about 3,4 times the margin of SS.

There have been some pretty great threads on here and other forums over the years in regards to SS manufacturing costs. It's possible that they cost less than $1000 US to manufacturer.

Don't forget, the SS Sub nearly doubled in price over the course of a decade, from 2005-2015, so they're raking it in!

[daveo5]

Go back in history, when Rolex first produced certain watches in SS. Then Rolex rolled out those same models in gold. Why Wilsdorf and company realized they could make more profit from all gold than SS. The two-tone, gold and SS soon followed for the same reason. What exactly is Rolex profit margin, they'll never tell. ADs markup is generally 100 % over their cost, same as jewelers in jewelry. Best price is on SS.

[Secondhandunwinds]

I imagine profit is higher on PM.

[mahefa]

Originally Posted by Bill_H

I recall reading that PM is much more expensive to machine than steel. Why's that? Because someone has to carefully collect all of the PM shavings whereas steel shavings can just be thrown away!

They are actually panning for gold in Swiss sewers :) There is so much of it, it is actually quite lucrative to do so

All because watch companies have not been that careful with cleaning the shavings.