Prices in anticipated 2023 recession ...

[mountainjogger]

Originally Posted by Skabadi

Rolex is not a publicly listed company so again nobody knows about their true financials but irrespective my point was about supply. Reducing supply and upping msrp by at least 10% each year is not entirely unrealistic imo.

Never has been their business model. And Rolex is conservative with regard to change. Not going to happen.

[eijiboy]

Originally Posted by Skabadi

I don’t disagree with you except for the last paragraph. My point is there’s absolutely nothing stopping rolex cutting supply to their ADs but half tomorrow.

Rolex will not cut supplies to their ad. Ads have a very expensive rent, employees, utilities to pay.

[Andad]

You can check out the 2023 Rolex prices on David SW’s thread.

Then rewrite this thread?


As for the cost to manufacture a Rolex being 10% of retail.…….pure conjecture Skabadi.

Unless you can back this up with facts?

And then you suggest that there is nothing to stop Rolex cutting supply to AD’s by half?

[GGGMT]

A hilarious thread! 10% production cost of retail. Cutting supply to ADs. Martians coming in from Uranus to steal all rolex watches on earth. The best!! Keep em coming wise people!


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[Skabadi]

Originally Posted by Andad

You can check out the 2023 Rolex prices on David SW’s thread.

Then rewrite this thread?


As for the cost to manufacture a Rolex being 10% of retail.…….pure conjecture Skabadi.

Unless you can back this up with facts?

And then you suggest that there is nothing to stop Rolex cutting supply to AD’s by half?

please read my messages carefully before making accusations. I was replying to another person with pretty much what you are saying. Nobody knows what it costs for rolex to make a rolex because rolex don’t publish their financials.

Example of cutting production by half was hypothetical as I have mentioned earlier. My point was rolex can control supply and up msrp anytime

[Skabadi]

Originally Posted by mountainjogger

Never has been their business model. And Rolex is conservative with regard to change. Not going to happen.

I disagree but guess only time will tell…

[Skabadi]

Originally Posted by eijiboy

Rolex will not cut supplies to their ad. Ads have a very expensive rent, employees, utilities to pay.

Why not, cut production, up msrp just like Patek. Will achieve the same thing covering ADs costs but now their products are even more exclusive

[Rickkk]

Originally Posted by Skabadi

Why not, cut production, up msrp just like Patek. Will achieve the same thing covering ADs costs but now their products are even more exclusive

Have you ever seen a patek?

[Skabadi]

Originally Posted by Rickkk

Have you ever seen a patek?

I meant in terms of supply

[Rickkk]

Originally Posted by Skabadi

I meant in terms of supply

Listen! You CANNOT sell a Rolex for anywhere close to what a patek would sell for. Patek is the pinnacle of watchmaking! No Rolex would ever be equivalent to a Patek and they’re not meant to me.

[Skabadi]

Originally Posted by Rickkk

Listen! You CANNOT sell a Rolex for anywhere close to what a patek would sell for. Patek is the pinnacle of watchmaking! No Rolex would ever be equivalent to a Patek and they’re not meant to me.

your missing the point. I’m not saying rolex will be selling in the same category as Patek. What I was inferring to was that rolex can adopt a similar business strategy as Patek, I.e. low supply, high demand, higher msrp

[Swiftneck]

Originally Posted by Andad

As for the cost to manufacture a Rolex being 10% of retail.…….pure conjecture Skabadi.

Unless you can back this up with facts?

Everything in this thread is pure conjecture .. Which was also the reason i did write properly.

Maybe i should have written around 10% instead of less though, which would have been more acurate.

It was just in regard to say that cutting production to 50% was not realistic as the cost for Rolex to do so would be very big.

[Swiftneck]

Originally Posted by GGGMT

A hilarious thread! 10% production cost of retail. Cutting supply to ADs. Martians coming in from Uranus to steal all rolex watches on earth. The best!! Keep em coming wise people!

Great that you enjoy

I don´t think that 10% production cost on SS watches, and other luxury items is unrealistic though.

I wasn´t talking about Rolex´s total cost pr. watch, only about the pure production cost in regard to cutting production to half tomorrow(materials and production salary).

Lots of their cost would be the same with half the production. Development, marketing, management, administration, etc. Some cost will fall but not 1/1 with the sales number. sale cost, warehouse, maschinery, delivery etc.

The calculation could be like this

Production
Production cost non fixed (materials and salary) 10% - 1.000
Production cost fixed (Mascinery, property etc.) 10% - 1.000

Sale and distibution
Development, marketing, other sales cost
administration, management, warehouse/stock cost 20% - 2.000

Rolex margin 20% - 2.000

AD margin 40% - 4.000

Msrp 100% -10.000

I don´t think that´s a totally unrealistic calculation. Other watch brands do sell watches of similar quality at half the price or less than Rolex. I can´t see how that should be possible if they had a cost just for materials and production salary on +20%

I do run a sale/production company with a calculation close to the above. Not in the watch industri unfurtune :-)

But if you can educate me, I would love to listen and learn.


Enjoy the Christmas..

[mwc5k]

Originally Posted by Swiftneck

Great that you enjoy

I don´t think that 10% production cost on SS watches, and other luxury items is unrealistic though.

I wasn´t talking about Rolex´s total cost pr. watch, only about the pure production cost in regard to cutting production to half tomorrow(materials and production salary).

Lots of their cost would be the same with half the production. Development, marketing, management, administration, etc. Some cost will fall but not 1/1 with the sales number. sale cost, warehouse, maschinery, delivery etc.

The calculation could be like this

Production
Production cost non fixed (materials and salary) 10% - 1.000
Production cost fixed (Mascinery, property etc.) 10% - 1.000

Sale and distibution
Development, marketing, other sales cost
administration, management, warehouse/stock cost 20% - 2.000

Rolex margin 20% - 2.000

AD margin 40% - 4.000

Msrp 100% -10.000

I don´t think that´s a totally unrealistic calculation. Other watch brands do sell watches of similar quality at half the price or less than Rolex. I can´t see how that should be possible if they had a cost just for materials and production salary on +20%

I do run a sale/production company with a calculation close to the above. Not in the watch industri unfurtune :-)

But if you can educate me, I would love to listen and learn.


Enjoy the Christmas..

I would have guessed lower than 10%.

[Swiftneck]

Originally Posted by mwc5k

I would have guessed lower than 10%.

I don't disagree in regards to SS watches, and I did write less than 10% in the first place. But PM pieces will be higher, so i guess an average around 10% is a fair bet..

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[BrunoMalik]

Originally Posted by Swiftneck

I don't disagree in regards to SS watches, and I did write less than 10% in the first place. But PM pieces will be higher, so i guess an average around 10% is a fair bet..

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Gents, pls don’t speculate on Rolex costs when you have absolutely no idea about the topic.

The gold weight alone in a PM Rolex is 8-10k which accounts for 20-25% of its cost. Add to it the cost of other raw materials, machining and the very very expensive Swiss labour and i would be shocked if its under 40%. Not to mention all the overhead, sports sponsorships etc. Federer is not cheap.

Even for steel Rolexes I would be shocked if the total cost is under 30% of retail.

I am the shareholder in one of the well know independents so i have a decent understanding of margins. Our steel sports watch costs 8k to make. Its sold to retailers for 12k which sell it to the end client for 20k. The company keeps 4k/20k which is 20% margin. Add to that tax and depreciation and it gets very thin.

Rolex has much bigger economies of scale but don’t think for a second they have anything above a 35% net margin.


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[Swiftneck]

Originally Posted by BrunoMalik

Gents, pls don’t speculate on Rolex costs when you have absolutely no idea about the topic.

The gold weight alone in a PM Rolex is 8-10k which accounts for 20-25% of its cost. Add to it the cost of other raw materials, machining and the very very expensive Swiss labour and i would be shocked if its under 40%. Not to mention all the overhead, sports sponsorships etc. Federer is not cheap.

Even for steel Rolexes I would be shocked if the total cost is under 30% of retail.

I am the shareholder in one of the well know independents so i have a decent understanding of margins. Our steel sports watch costs 8k to make. Its sold to retailers for 12k which sell it to the end client for 20k. The company keeps 4k/20k which is 20% margin. Add to that tax and depreciation and it gets very thin.

Rolex has much bigger economies of scale but don’t think for a second they have anything above a 35% net margin.


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You should start reading the hole thread before starting to educate other.

The cost price we are talking about is the production cost (materials and production salary) not the total cost pr. watch and in regards to how expencive it would be for Rolex to cut production by half.

I did make a calculation in this thread as well, which actually fits quite fine with the numbers you mention your self.

i did also write that PM pieces have higher cost prices.

Please read it all and lets discuss then.

[BrunoMalik]

Originally Posted by Swiftneck

You should start reading the hole thread before starting to educate other.

The cost price we are talking about is the production cost (materials and production salary) not the total cost pr. watch and in regards to how expencive it would be for Rolex to cut production by half.

I did make a calculation in this thread as well, which actually fits quite fine with the numbers you mention your self.

i did also write that PM pieces have higher cost prices.

Please read it all and lets discuss then.

I dont need to read the whole thread, you just said 10% cost sounds right for all Rolexes, and you are wrong.

As I said, the gold alone in PM pieces is in excess of 25% of the cost.

Even steel models are well in excess of 10% cost. Do you really think a steel DaytonaC costs $1400 to make? The movement alone in that watch cost more than $1400 to make. A similar Vaucher movement (VF6710) costs 5k to buy wholesale fyi. Machining steel cases and bracelets in multiple finishes is very expensive. White gold hands are very expensive. Ceramic bezels with platinum inserts are very expensive. Not to mention that insane Swiss labor cost and the very tight Swiss labor law.

No, you cannot just cut production by 50% overnight. This is not Bangladesh making sneakers, this is Switzerland. Salaries start at $50/hour and the Swiss labor law would not just let you put people on the streets because you want to control 2ndary market value. Be real people


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[Swiftneck]

Originally Posted by BrunoMalik

I dont need to read the whole thread, you just said 10% cost sounds right for all Rolexes, and you are wrong.

As I said, the gold alone in PM pieces is in excess of 25% of the cost.

Even steel models are well in excess of 10% cost. Do you really think a steel DaytonaC costs $1400 to make? The movement alone in that watch cost more than $1400 to make. A similar Vaucher movement (VF6710) costs 5k to buy wholesale fyi. Machining steel cases and bracelets in multiple finishes is very expensive. White gold hands are very expensive. Ceramic bezels with platinum inserts are very expensive. Not to mention that insane Swiss labor cost and the very tight Swiss labor law.

No, you cannot just cut production by 50% overnight. This is not Bangladesh making sneakers, this is Switzerland. Salaries start at $50/hour and the Swiss labor law would not just let you put people on the streets because you want to control 2ndary market value. Be real people


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I did not state that you could cut production by 50% I on the other hand said that Rolex could NOT cut production to 50%. And if they did/could, the cost of doing would be extremely high, because they would still have most of their cost left. (production facility, maschinery, marketing, development, management, sales an administation cost etc.)

And that the only cost they would save by reducing sale was the direct production cost for materials and salary. which i estimated to around 10% and some direct cost related to sale/delivery etc.

I did state that PM watches had a higher cost.

In my calculation i did state that Rolex total cost pr. watch was 40%, Rolex margin was 20%, and AD´s was 40% The exactly same numbers that you did mention in your 20.000 watch

Cost 8.000 (40%)
Comapny margin 4.000 (20%)
Retail margin 8.000 (40%)

That gives both your company and Rolex a net margin of 33%, which are also in line with your numers.

About the Vaucher movement (VF6710) i expect them to have quite a big net margin when selling these. If we just expect them to have the same net margin of 33% their total cost pr. movement is 3.350 if we take out cost for development, sales, adminstation, reklamation, production facility, mascinery etc. i think it´s realistic that the material/salary cost pr. movement is about 1.000-1500 and with these movement being made in smaller numers (from 50 pieces) and with Rolex´s automated production facility i expect Rolex to be able to produce their movement with a lot less expences for salary. With that in mind i find it realistic that Rolex would be able to produce a SS Daytona for 1.400 in pure production salary and Raw materials.

If we say Rolex have 5.000 production employers with a salary each of 100.000 CHF a year, that´s 0,5 billion CHF of a 12 billion retail price, which is 4,16% of the retail price, or 416 CHF on a 10.000 CHF watch. Which leaves 584 CHF for raw materials alone. Again i think that´s realistic for a SS watch.

Do i know for sure, No. Did i ever claim it was, No. Do it really matter in the context, about it not being realistic for Rolex to cut production with 50% i used it, if it was 10 or 15% i don´t think so.


Hoped it help you understand my point of view, even without reading the hole context.

[DentalFloss]

Actually Rolex is not increasing prices because of costs but to prevent price differences between countries. :/

Do not worry about big brands, their margins are big enough and their war chests are full.

Margin and cash flow is a future real subject for independent small watchmakers. Especially if their sudden "new inflow" of customer will disappear.

[321Forever]

I do not have any direct knowledge of Rolex operating practices or watchmaking or manufacturing or economics or Switzerland. But I know I am right in saying that 2023 will be different than 2022. For starters it’s one unit higher. Then we have the reality that Rolex does not have an online store like Grand Seiko or IWC. Nor does the Deep Sea have a display back. Finally, they do not respond to us fans by offering up a Rolex Club model.

Sad!

[GGGMT]

Originally Posted by jakemeister

I do not have any direct knowledge of Rolex operating practices or watchmaking or manufacturing or economics or Switzerland. But I know I am right in saying that 2023 will be different than 2022. For starters it’s one unit higher. Then we have the reality that Rolex does not have an online store like Grand Seiko or IWC. Nor does the Deep Sea have a display back. Finally, they do not respond to us fans by offering up a Rolex Club model.

Sad!

Rolex will never have that stuff. It’s just not the deal. Seems like Panerai is your brand. Has some of that stuff.




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[321Forever]

Originally Posted by GGGMT

Rolex will never have that stuff. It’s just not the deal. Seems like Panerai is your brand. Has some of that stuff.




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California dial, sweet! -Already got 118.

I was joking about that stuff I wrote. Don’t know how to run a watch factory for real tho. It’s pretty funny to imagine the Rolex Club annual watch like Grand Seiko offering 200 with the “Lugano Pink” dial.

[Apples24]

China opening its borders is good news.

[psm11]

Originally Posted by Apples24

China opening its borders is good news.

Good news for what? Is this another China opening is going to drive prices back up post? Doubt that is going to happen. Prices are going to continue to slide downward. Nothing is moving (despite price cut after price cut).

[Vince_76]

Originally Posted by Apples24

China opening its borders is good news.

This does nothing. Lol

[Fifteen]

Lol I stil understand the fundamental logic behind the “China is opening up” argument. They have always been able to order watches online.

Prices going down, and that’s a great thing

[GGGMT]

Originally Posted by Apples24

China opening its borders is good news.

Awesome!!

Wait, whoa, why is this good?


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[911AP]

Originally Posted by GGGMT

Awesome!!

Wait, whoa, why is this good?


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They are the ones who bought most of the watches at 2-5x retail.

[GGGMT]

Originally Posted by 911AP

They are the ones who bought most of the watches at 2-5x retail.

And so, once again, my question stands: why is it good it China is opening up? Won’t that just drive demand, and prices, up? I was kind of looking forward and excited for more moderate pricing.


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