Crazy Prices

[Fleetlord]

Originally Posted by Submaster

The increase in prices by all the brands mentioned is caused by a decrease in supply so demand was clearly not strong enough to keep pieces from being heavily discounted and most others available at retail. Even the 116520 which once sold at a premium was hit hard when supplies became more plentiful as many will remember. If value retention is a concern than one should question how long the current supply shock will last which leads one to also question why it is deemed necessary now and what this may tell us about the future value of these watches. While nothing is certain, I do not see this supply shock as a healthy sign. If the market is growing and strong, no need to intervene.

Good post and insights.

Rolex was far too available and the grey market prices reflected that, it was ridiculous. Rolex is better than that. They needed to get control and sell a more diverse mix of references. Limiting distribution works wonders for brand integrity in the luxury goods space.

[joespeed29]

contagion... if the markets correct next year like people are expecting (self fulfilling) maybe some pullbacks on these outlandish prices? maybe just wishful thinking on my part

[daemonix]

Originally Posted by Zakalwe

Not a stupid question. Hopefully this isn’t a stupid answer, I’m not an expert.

A VAT-registered business that is reselling goods notionally pays VAT on the purchase of the good (input VAT) as well as on the sale of the good (output VAT). The VAT actually paid to HMRC is the difference between the input and output VAT.

So for example a scalper buys a BLNR from an AD for £6600. The AD foolishly fails to remove the stickers and withhold the warranty card and the scalper sells the watch to Watchfinder the next day for £7.5k. The input VAT is therefore £1.5k. WF immediately list the BNIB watch for £9.5k and some poor sap/rich bugger ponies up the full amount. The output VAT is £1.9k. Therefore WF owes the taxman £1.9k - £1.5k = £400, meaning if we ignore the various business costs they incur, WF have made a profit of £1.6k and the scalper made £900. Everybody’s a winner expect the poor buggers who just want a BLNR at retail.

Now I just made the figures up to illustrate the point, I’ve no idea how much flippers are flipping for, but you get the idea.

It makes more sense now! Thanks
Hopefully ill be getting the sd43 next week from an AD :) not WF

[Robbyman]

Rolex should increase its prices if it is worried about the grey market. It could take the extra revenue of it wanted.

[Speedbird-1]

116719 BLRO Used, less than 2 years old, and selling for less than list.

[Becca1]

Guilty as charged,paid well over mrsp,don’t care ,I love it


Sent from my iPhone using Tapatalk

[jonski]

Its Instagram... everyone sees these hot watches on instagram daily causing EVERYONE to want the same model!

Also, Rolex reducing supply to cause even more hype and frustration.

[wytrader]

Cannot see it ending until MSRP comes into line, do not see it going the other way. I think the grey market is a more realistic pricing mechanism than Rolex's random guessing across currencies. Due to CHF move a couple of years ago I think Rolex has backed off playing around with prices too much so I truely think grey market prices are a future reality.

[doctorstrange]

Originally Posted by Lee66

When will this madness end? The crazy prices being asked for the Batman, Hulk, James Cameron and the new ceramic Daytona are just depressing. What's driving the demand?

people starting to realize money can be printed in a matter of seconds, but each Rolex need a year to produce.

[doctorstrange]

people starting to realize that money can be printed in a matter of seconds, but every Rolex needs a year to produce.

[AK797]

Originally Posted by No SUBctitute

I don't know that we have any evidence that these watches are Veblen goods. Why would you think that demand increased only because the price went up?

I think they are now uber Veblen goods, as before they were bought because they were expensive with traditional conspicuous consumption, but now they and PPs are being bought because they are also profitable, and so you have lots of speculators buying at retail and lots of genuine buyers now even buying at large premiums making them uber Veblen goods.

[AK797]

Originally Posted by HL65

Actually smart collectors are not selling their watches because they actually bought them to wear and enjoy and paid retail from an AD.

Amen, brother. Temptation might be high but you have to have something else you want even more to buy into otherwise no point just having a few extra grand in the bank and a bare, longing wrist.

[TeddyS]

Originally Posted by AK797

Saw a grey priced TT CHNR for £14.7K I think it was today, not worth that cash at all, nice at retail though, then had the opposite at an AD who asked if I would sell my RG Nautilus, almost felt like he was offering, but I told him I'd have nothing else I'd rather buy with the profits so no point. He said I passed the flipper test and then asked if I'd like my name put down for anything and I said no, you don't get my number that easy, love.

Haha nice. That’s an AD in the bank if you get desperate though


Sent from my iPhone using Tapatalk

[No SUBctitute]

Originally Posted by AK797

I think they are now uber Veblen goods, as before they were bought because they were expensive with traditional conspicuous consumption, but now they and PPs are being bought because they are also profitable, and so you have lots of speculators buying at retail and lots of genuine buyers now even buying at large premiums making them uber Veblen goods.

I don't agree. But I guess that's why we are on the interwebs, to hear varying opinions.

[AK797]

Originally Posted by No SUBctitute

I don't agree. But I guess that's why we are on the interwebs, to hear varying opinions.

I thought some Rolexes were textbook Veblen goods, esp in today's market, so I'd be interested to know why you don't think they are?

[DaytonaTT]

When the global economy goes back into a recession


Sent from my iPhone using Tapatalk

[achievement_unlocked]

Originally Posted by beshannon

People

People who can’t wait

[enjoythemusic]

Originally Posted by MTdweller

World economy is great, consumer confidence is high. Plus, lots of people with access to credit.

Yup, keep the money lending going... QE4EVER.

[Robbyman]

Originally Posted by Onikage

Captain Sheitters might know the answer.

Only of you want a pepperoni pizza from free via superchat. Lazy sod.

[No SUBctitute]

Originally Posted by AK797

I thought some Rolexes were textbook Veblen goods, esp in today's market, so I'd be interested to know why you don't think they are?

We are talking here about SS sports models. Prices have gone up because demand has begun outstripping supply. However, I don't think absolute demand has gone up--more likely its stayed relatively flat. I think that the relative demand has gone up compared to the supply (which has decreased). Therefore, I think the current increase in price is explained by principles of supply and demand. Of course, this is a little difficult to assess with certainty since we don't have validated data about sales numbers and prices. However, based on the anecdotal evidence here of limited supply, I believe my assessment to be accurate.

I would be less confident making assessments about higher priced models which are sold at lesser volume, thus providing less anecdotal evidence (which we have to use in place of actual sales numbers and prices since we can't access that data).

[AK797]

Originally Posted by No SUBctitute

We are talking here about SS sports models. Prices have gone up because demand has begun outstripping supply. However, I don't think absolute demand has gone up--more likely its stayed relatively flat. I think that the relative demand has gone up compared to the supply (which has decreased). Therefore, I think the current increase in price is explained by principles of supply and demand. Of course, this is a little difficult to assess with certainty since we don't have validated data about sales numbers and prices. However, based on the anecdotal evidence here of limited supply, I believe my assessment to be accurate.

I would be less confident making assessments about higher priced models which are sold at lesser volume, thus providing less anecdotal evidence (which we have to use in place of actual sales numbers and prices since we can't access that data).

Well we have direct evidence in the shape of Brexit here, which led to a huge demand surge, supply did not change one bit ofc, and this was principally because the price was lower, not higher, to foreigners, but then as prices moved up to reflect this, the foreigners were driven out of our market, and yet still prices climbed higher as UK demand kept rising even unto this day in a true Veblen manner. I think it is mostly a demand driven issue, supply is secondary.

[superstarmar]

Originally Posted by Lee66

When will this madness end? The crazy prices being asked for the Batman, Hulk, James Cameron and the new ceramic Daytona are just depressing. What's driving the demand?

It will stop when buyers refuse to pay over MSRP!!!!
When buyers decide to either pay msrp or a discount would be in order ...
Probably a pipe dream but it is madness ...
The Rolex marketing machine has really brain washed quite a bit of folk ...

[superstarmar]

In actuality I believe Rolex reduced supply intentionally and artificially created this
mess of a surge in demand for brand and status retention...
Yes , these are popular models and you think Rolex doesn’t know this ?
I tell you !!!! It’s all a manufactured crisis ...

They don’t want to be the next Richemont!!!!

[Farsh14]

Originally Posted by tyler1980

then why are retail prices not up? Too much money printed implies there should be quite a bit of reduction in buying power. 6 years is a long time to wait to raise prices.

Tyler: How do you have so many PP but only one Rolex? was just curious haha

[Mangas]

First few UK Pepsi / Jubilee pieces just a shade under £20 K lol

[Mangas]

Originally Posted by xspect

I'm so tempted to sell my kermit that I paid a little over $5k for.

Don't do it !!!

[Mangas]

Originally Posted by daemonix

my question might be a bit more stupid :S
How do people make money with flipping SubC or SD43 when for example in the, UK final grey prices (chrono24 certified or watchfinder) are around 12000-11000 (the top end) minus 20%VAT... and watchfinder has to make profit too?!?

They make it when they are flipping their Retail Price piece that they bought from an AD . Assuming they have their Warranty cards

[tyler1980]

Originally Posted by Farsh14

Tyler: How do you have so many PP but only one Rolex? was just curious haha

Pateks are easier to get

who knows but my next watch is a Rolex for sure.

[Uggi]

Originally Posted by AK797

Amen, brother. Temptation might be high but you have to have something else you want even more to buy into otherwise no point just having a few extra grand in the bank and a bare, longing wrist.

Which ironically is one of the factors driving the prices up. Disposable income levels are high, debt is cheap and savings earn nothing. So if I have £15k sitting in a bank account earning nothing maybe it would be nicer to get an SS Pepsi now before I die waiting. Life is short.
(For the record I would not pay £15k for a Pepsi but many would / will / are. Money isn't worth much and gratification is a driver).
Also Rolex is definitely a Veblen brand.

[Why1504]

What drives demand?

Marketing and Advertising
Perceived Value
Desire
Available Funds

What drives supply?
Manufacturing

Now, you will notice I didn’t touch MSRP which most here believe is low (I am not advocating a price increase).

Rolex continues to pump mega dollars into Marketing and Advertising. They continue to offer new watches which are highly desireable.

Perceived value continues to drive secondary market prices higher and higher

I for one believe demand has increased significantly while supply has shrunk or stayed constant. Consider this we now have multiple models where multiple AD’s have claimed they are only receiving 2-3 watches per year. Now, let’s say there are 3000 AD’s world wide that’s 6,000 watches out of a reported million watches produced per year. Do the math. Something is broken.

FWIW I would expect a minimum of 60% of Rolex sales come from the SS watches and 80% of tool watches. That would come in around 500,000 SS tool watches. So, with the new SS Pepsi GMT they only plan to produce ~1% of the SS inventory for this model. Look at the Ceramic Daytona. Again 1%.

Crazy. As a business guy it makes no sense to me.