How much does it really cost to make a ROLEX watch???

[Z-Sub]

I say about 1/10th of the MSRP.

Regarding the math, I think you guys all know what Robert was talking about.
if not, let me take the liberty to explain: 40% of the MSRP is AD's profit. Of course you can count the other way around and the mark up is 2/3 of the AD's cost. or you can just think the mark up is 40% of the MSRP.

[bodybump]

Originally Posted by Z-Sub

I say about 1/10th of the MSRP.

Regarding the math, I think you guys all know what Robert was talking about.
if not, let me take the liberty to explain: 40% of the MSRP is AD's profit. Of course you can count the other way around and the mark up is 2/3 of the AD's cost. or you can just think the mark up is 40% of the MSRP.

40% WOW!!!! no wonder!!! imagine if you sell just 20 watches a month

[gone-rolex-mad]

Rolex have us all by the short and curlies!! They know that addicts like us will pay whatever crazy price they dream up. Having said that i think the high price is part of the appeal. Fairly sure that the mark up is 40% on the retail.

[WaltherPPK]

There is a lot of disregard for the value of engineering, design, and operation of a large corporation like Rolex. Accounting for merely the raw material costs in any of their watches will result in scorn from everybody. But, that is most definitely not the cost of producing these watches.

Rolex makes nearly everything in-house. This means they have to purchase raw materials, the cost of which is wildly speculated about. They then have to store that material. Storage space costs money, as do the employees operating the storage/shipping facilities. Then, they must process this raw material into its respective components. This requires more staff, machinery, and space, as well as electricity, fuel, and tooling. Now you say they already own their machinery? True, but the machines will be upgraded constantly, and have costs tied to maintenance and tooling. Now that the components have been manufactured, they must be assembled into the actual watch. Of course, this takes MORE space, tools, and personnel. Then how about cleaning, packaging, and shipping?

Now that we've covered the hard costs (in an extraordinarily inadequate paragraph), we need to account for the "soft" costs. Engineers get paid well. There is a lot of work that we never see that makes it possible to build these watches. Every component and assembly produced must have current documentation describing the raw materials, manufacturing process, final shape, quality assurance procedures, assembly methods, and so on. How about the other staff like management, advertising, PR, along with the machine operators and assemblers mentioned above? They all cost money and require space.

The actual cost to Rolex per watch can't be accurately estimated here. Yes, they produce in large volumes. Yes, they're a large corporation. However, I very much doubt that they're raking in a massive per-watch profit, gold, stainless, platinum, or otherwise.

Of course the effect of supply/demand manipulation as well as the prestige of precious metals is evident in their pricing structure. But, take the average, and what you're likely to get is a reasonable profit per watch that allows Rolex to continue operating, paying its staff, and probably growing. Beyond this, what you've asked is a question that can't reasonably be answered by anybody other than Rolex's management.

[SLS]

Nowhere near what they charge. Makes you feel pretty good doesn't it!!!
~Scott

[mailman]

It's all relative. How much did your house, car etc cost to build? At the end of the day everyone has to make a living and we all pay for the above stuff. So the question is really who cares?

[padi56]

Originally Posted by The Mole

As quoted from the Rolex USA product training manual;

Each movement takes 14 months to produce. Over 200 technicians will work on the movement effectively combining "High Tech" with "High Touch"."

Just put above quote into the equation they now produce almost 1000000 watches a year.But 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 in reality its no better,just sounds good 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 thousands of 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 escapement and Breguet overcoil hairspring. A balance complete for a Rolex 3135 sold for around $150 in the late 90s 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 spring now is now owned by Swatch/ETA everything now made 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)

[Jimbits76]

I can't believe it takes 14 months and 200 Ooompa Loompas to make each movement.

Perhaps the text applies to the development of a new movement such as changes to new B.P hairspring etc?

J

[Lol-x]

What if you look at it this way:

Take over a period of 1 year:
1. every man hour it takes in extracting the raw materials from the earth and delivering them to Rolex +
2. the total man hours in making all the synthetic materials +
3. the total hours of labour of all Rolex employees not otherwise included in 1 and 2
= X hours
Then divide the total hours (X) by the number of watches produced in one year by Rolex.

The result represents the number of hours required to produce a watch per year.
Divide that by 24 to get the number of days it takes to manufacture 1 watch.

[Alcan]

Originally Posted by WaltherPPK

I very much doubt that they're raking in a massive per-watch profit, gold, stainless, platinum, or otherwise.

Here's where the numbers get fuzzy. A SS Sub retails for $6,260 Cdn. vs $9,720 for a TT Sub. The difference is $3,460 or an additional bump of over 50% in retail price for a few hundred bucks worth of gold, keeping in mind that the rest of the watch is exactly the same as the SS Sub.

I'd say they are doing ok on some models.

[padi56]

Originally Posted by Alcan

Here's where the numbers get fuzzy. A SS Sub retails for $6,260 Cdn. vs $9,720 for a TT Sub. The difference is $3,460 or an additional 50% bump in retail price for a few hundred bucks worth of gold, keeping in mind that the rest of the watch is exactly the same as the SS Sub.

I'd say they are doing ok on some models.

Well Al I would say they are doing a little more that OK especially precious metal and precious stone watches.Even if it is quite labour intensive to set stones etc by hand, instead of robot machine.

[Jimbits76]

Originally Posted by Lol-x

What if you look at it this way:

Take over a period of 1 year:
1. every man hour it takes in extracting the raw materials from the earth and delivering them to Rolex +
2. the total man hours in making all the synthetic materials +
3. the total hours of labour of all Rolex employees not otherwise included in 1 and 2
= X hours
Then divide the total hours (X) by the number of watches produced in one year by Rolex.

The result represents the number of hours required to produce a watch per year.
Divide that by 24 to get the number of days it takes to manufacture 1 watch.

Are we talking about raw material extraction and processing for the movements?????????

I still call BS on 14 months...my AD reckons they can put a DJ together dial type, bezel, bracelet etc.. and have it delivered from Geneva in four months.

J

[Welshwatchman]

Take a UK Daytona 116520 at the new silly price, £5730.00

Remove VAT - £4876

Remove Dealer Margin (assuming the often cited 40% less than retail and NOT 40%
mark up and NOT the more commonly used profit on return, "retailers margin") - £2925

Assume distribution costs inc Rolex UK infrastructure contribution of £500 - £2425

Assume manufacturer infrastructure contribution of the same £500 - £1925

Assume actual physical component cost of the watch - £100 - £1825

Minus the COSC certification charge - £75 - £1750

In truth the actual component cost of a Daytona is "pennies".

There again an extremely expensive 1,000 user SQL server licence and box only costs about £1 in DVD/Box terms. The infrastructure cost per licence is HUGE.

[Lol-x]

Jimb you have to add in the time it takes to do everything, including the time it takes to make and maintain the machines that punch out the parts. There are a lot of hidden labour hours and costs that go into a part.

The problem is if you take the average labour cost of say $30 per hour and multiply that by 14 months at say 40 hours per week you get $30 x 40 x 60(weeks) = $72,000 as being the cost of a watch,

On that basis, Rolex watches are the best value for money watches in the world

And that $72,000 is just the labour cost, then you have the cost of materials on top of that: WOW!

[frostie]

Personally i believe that rolex has already manufactured all the watches needed for 2009 and at the moment they are manufacturing the watches needed for 2010 that is why they are always trying to predict demand on the market so that they can produce the desired output

And that's the explanation why some of the watches are hard to obtain so that they can have some control over demand just my humble opinion

Logically thinking it is nearly impossible to manufacture the watches needed for 2009 at the beginning of 2009 you have to start manugacturing in advance if you want to cover the demand

[CKay]

Cost of making a watch -- $2k. Smile on my face and sense of well-being when wearing it -- priceless.

[vjb.knife]

Originally Posted by RossInIllinois

Lets take it one more step. You can buy an automatic Fake Rolex for $350 with a Swiss ETA movement, same size same SS just thats its a fake. Think about that one!


click here edit: We Don't Link To Fake Sites Here........

If you really believe that the quality is similar for the 'fake' then you would be insane to buy a Rolex.

I am somewhere in the middle on this on the one hand I think there is a significant amount of high technology as well as hand work that goes into the production of a Rolex but I do not believe that it takes a year or more to produce a Rolex watch or any portion of it. Now I think it may be possible that it takes a year for a watch to make it from the beginning of manufacture to final shipping, but that does not mean that someone is working on the watch the entire time. However I still find it a bit exaggerated.

As far as the cost of manufacture for a typical SS Rolex Model that would retail for $5000, I would have to guess under $1000, if you don't include items like advertising, charitable contributions, sponsorship of events like golf matches and sailing races, promotions, etc.

Typical markup on retail luxury items at the store is, as stated earlier, from 80% to 100%. In other words the store pays about half of what the retail price is. So Rolex sells the $5000 retail watch to the store for about $2500 to $3000, but the store may discount about 10% and has advertising and other capital costs as well so it isn't all gravy for them either. And the Rolex profit margin is less than $1500 to $2000 because their manufacture cost is around $1000 plus ads, et al. Also as stated earlier the profit margin is much higher for both Rolex and the retailer on the TT, Gold, Platinum and precious stone models. The actual spot cost of the Gold, etc. in a watch is nowhere near the marked up retail cost and the manufacturing cost is only slightly higher for these precious metal models.

[bradleyb]

Originally Posted by The Mole

Combine that with the 14 months it takes to manufacture a movement, and I think most Rolex's should cost more.

I've heard this urban legend before. Where did it start? I love my DJ, but Rolex makes, what, 3/4 million watches per year? That's 2,885 watches a day, allowing for 52 work weeks. I just can't make 14 months compute, either in man-hours (couldn't a watchmaker hand-cut and build a movement from scratch in fewer than 14 months?), or in the space to inventory 7/8 million (14 month supply stream) watches in process.

Any one else?

Brad

[Howie]

You guys are only addressing direct manufacturing costs. If this was the only cost, then why do we pay $2 (in NYC at least) for a slice of pizza that costs about 15 cents to make?

Let's not forget overhead, distribution costs, marketing, warranty repair costs, and most importantly, R&D which would need to be amortized into each watch.

[Flash Gordon]

When you sell any premium products, Rolex. LV handbags, Aston Martin, paintings, coins, etc, cost has nothing to do with the selling price. The important thing is the perceived value of the consumers. Rolex probably spends more on ads than any other premium watch makers. Therefore, it establishes the exclusive perceived value with the consumers. They do make a fine watch with the top designs to match it. The cost of making it, including the overhead, is probably a fraction of the selling price.

Therefore, as a matter to protect its interest and profits, Rolex has very strict rules for the dealers to follow. Heavy discount will reduce the perceived value and is not tolerated. Many dealers lose their license to sell Rolex because of heavy discounts to gray dealers. But then consumers like us are willing to part big bucks (for a watch) to have the priviledge to wear it because we perceive the watch is worth that much and because most other people can't offer it or not willing spend that much on a watch that only tells time, which a Casio can do for 20 bucks. Cost has nothing to do with selling price when heavily advertised, high priced, products are marketed.

[Trurolexer]

Around 2000-3000 for regular movement.
Around 4000 for Daytona.
I guess...

[meloncap78]

Originally Posted by RossInIllinois

Lets take it one more step. You can buy an automatic Fake Rolex for $350 with a Swiss ETA movement, same size same SS just thats its a fake. Think about that one!


click here edit: We Don't Link To Fake Sites Here........

The SS in replicas do not have the nickel content as in 904L. You can literally smell the difference. I kid you not.

[Jimbits76]

I have thought long and hard about this and have came up with the answer...

Who cares????????????????????

We are all daft enough to pay our hardearned for them...every time I open a bottle of beer I don't think how much said beer cost to make include the sand extraction, refining and the blowing of the glass to make the bottle.

I just enjoy the brew...should be the same for our watches!

J

[elijahenoch]

GOOD QUESTION ,BUT ONE THAT WE WILL NEVER GET A CORRECT ANSWER TO.

[mcoccia]

Originally Posted by meloncap78

The SS in replicas do not have the nickel content as in 904L. You can literally smell the difference. I kid you not.

Smell the difference? 904L has about 4 or 5% Nickel. I regularly use an alloy which has 55% Nickel and I can't smell a thing.

In Australia 316SS costs about $7/kg. Far more exotic alloys than 904L could go as high as $70/kg. How much metal is in a rolex case and bracelet? Maybe 100grams so $7 dollars at the most but probably closer to $1.

[BigHat]

We sure spend lots of time opining on what we're never know.

As was said a ways back, cost is only loosely related to price in the luxury goods realm.

I will say this, they probably don't spend +/- 10% of what it costs others to make similiar watches.

[James T]

Originally Posted by astcell

The markup by the AD is 40% across the board. A $10,000 watch costs your AD $6,000.

But they need that $4,000 for advertising, payroll, rent, insurance, etc.

Now when they send Rolex the other $6,000, how much of that is profit? Well when you think about it, the metal in the watch is about worthless on the SS models. You pay for the thought, design, prototype, testing, production, distribution, and warranty of the metal.

you also pay for the popularity of the brand...you pay for it being a staus symbol!

[BigHat]

Originally Posted by meloncap78

The SS in replicas do not have the nickel content as in 904L. You can literally smell the difference. I kid you not.

Is that your picture or are you a basset hound and that's your master? How different is the taste?

[James T]

Originally Posted by RossInIllinois

I would say a 10K watch is about $2500 no more. The only fluctuating factor is Gold prices. A Stainless case is the same cost Casio and Timex Pays. You know the movement isn't more than $500.00 You can buy similar ETA movements for next to nothing so even if the Rolex movement costs 3X more its still not a lot. I bet an all Stainless Datejust isn't more than $700 cost. A Stainless GMTII maybe $1200

now, this compution just about sounds right...you pay for that extra 66-68%, whatever it is, is because of the brand

[James T]

Originally Posted by bodybump

so every bezel and parts they sell here in the US are from Europe??

last time i checked the map, switzerland was part of europe... so yeah, i guess all parts come from europe. LOL