The case for buying above MSRP

[askdanny]

Obviously, the ideal Rolex steel-sports purchase is at a duty-free Rolex AD -- at the airport for example. But legally you should be declaring the purchase as you go through customs in your country anyway. (And the odds that the watch is available as you make your way through the airport are slim.)

So realistically, you buy at a local AD where you'll pay full price plus sales tax. In many big cities like Chicago, New York, or Los Angeles, you'll pay close to 10% in sales tax. In many countries in Europe, we're talking 20%. On a Hulk, Daytona, or Pepsi this is big money.

There is no telling when the watch will be available at your AD, and what the sales tax or MSRP will be at when the watch is available, as waiting lists are not made public. The only thing you know is that there will be no discount. With time, MSRP and sales tax are likely to go up, not down. Sales taxes are less unpopular than property taxes because it is a consumer tax. Americans are often cash-poor but land-rich. So sales taxes are more likely to be approved or voted on to bolster state coffers. Rolex MSRP can only go up, as I believe Rolex steel-sports models are currently underpriced; I believe the new movements will be the justification for the price increase.

Online grey dealers are not currently under the obligation to charge sales tax. This might soon change as Internet sales taxes are falling under more scrutiny because brick-and-mortars complain they can't compete. I predict online sellers in all industries will be made responsible for charging sales tax at checkout. Currently online grey dealers will offer no sales tax and free overnight shipping. (I'm not a grey dealer, just a Rolex lover.)

If Rolex shortage is mostly due to increased demand, and more people than ever in the history of the world have the financial wherewithal to buy into such an aspirational brand -- whose reputation constantly ranks first -- the shortage might get worse, not better. I heard Rolex is increasing output, but I don't think we've seen the peak demand yet -- and demand will continue to outpace supply.

Do you want to wait one or two more years for that hard-to-get Rolex and roll the dice to save $500, $1000 or even $2000 depending on the model? MSRP and sales tax are both such unknown variables that paying "grey prices" now can make sense. Plus, in two years, who knows what the market value will be. The Daytona didn't jump straight from $12,000 to $22,000. But it has relentlessly gone up and is standing at $22,000 now.

So go buy that Hulk or BLNR and enjoy them now!

[mistercoach32]

I got lucky with a same day call to an AD on my BLNR, but I wasn't so lucky with my LVc. Love them both equally.

[peterpl]

Your comparing the wrong watches.

If you were around long enough you would know Daytona's have been selling premium for decades already. Long long long long before any of this crazy hype.

Daytona premium has been the norm for decades. But when every SS watch selling above MSRP? Yeah naaaahhhh that is bubble territory

[GradyPhilpott]

I say buy what's available at MSRP and be happy with it.

Aside from some complications that people might need for business or whatever, every Rolex is essentially the same, except for the way it's cased up. They're all solid, durable, and precise machines with timeless designs.

I know that this opinion is outright heresy, but I think that the smart money goes to what's on the AD's shelves at any given moment or to whatever the AD can deliver within a reasonable time-frame.

If it's prestige beyond the Rolex brand or investments that one is interested in, there are better ways to meet those desires.

[ROLMARINER]

Originally Posted by askdanny

Rolex MSRP can only go up, as I believe Rolex steel-sports models are currently underpriced; I believe the new movements will be the justification for the price increase.

Online grey dealers are not currently under the obligation to charge sales tax. This might soon change as Internet sales taxes are falling under more scrutiny because brick-and-mortars complain they can't compete.

I heard Rolex is increasing output, but I don't think we've seen the peak demand yet -- and demand will continue to outpace supply.

Do you want to wait one or two more years for that hard-to-get Rolex and roll the dice to save $500, $1000 or even $2000 depending on the model? MSRP and sales tax are both such unknown variables that paying "grey prices" now can make sense. Plus, in two years, who knows what the market value will be. The Daytona didn't jump straight from $12,000 to $22,000. But it has relentlessly gone up and is standing at $22,000 now.

Great points and exactly why I went grey 3x in the last 18 months and I couldn't be happier with my decisions. No one wants to pay more than they need to, but right now it's the only way for someone who spends like a whale but is perceived to be a guppy by an AD.

[pinkelle21]

If you buy above msrp you have more money than smarts

Sent from my Moto G (5) Plus using Tapatalk

[ragnk]

They look really nice

[Sal_UKSheffield]

Daytonas have always gone for a premium

Everything else is just a temporary phase imo

Only time will tell. If you have a boat load of cash you are more likely to pay over rrp

[westcoastghost]

Seems like either OP is a gray dealer himself or does not understand economic cycles.

"If Rolex shortage is mostly due to increased demand, and more people than ever in the history of the world have the financial wherewithal to buy into such an aspirational brand -- whose reputation constantly ranks first -- the shortage might get worse, not better."

Talk to anyone who works in corporate debt, and look at Asian markets. There are massive red flags of a significant market correction (SHCOMP down 22% YTD). I was only in my first job out of undergrad in 2008, but I remember what watches were selling for on the pre-owned market.

[SamP]

Originally Posted by Sal_UKSheffield

Daytonas have always gone for a premium

Everything else is just a temporary phase imo

Only time will tell. If you have a boat load of cash you are more likely to pay over rrp

Daytonas have not always been popular or gone for a premium.
Daytonas prior to 1988 were particularly bad sellers that sold for discount.
People didn’t want the gaudy dials of the now “Paul Newman” fame. They do now - because they’re rare, and only rare because not many were sold in the first place.
The “Zenith movement” Daytona of 1988 sold much better but were rare not due to demand, but due to lack of productivity. Zenith were making movements for many companies and could not supply as many as Rolex would have liked.
This demand (Originally due to factors out of Rolex’s hands) has continued ever since but is now due to Rolex.
If it weren’t for Zenith’s lack of movement supply, perhaps the Daytona wouldn’t have been in such demand - now perpetuated by Rolex.

[praveen]

Originally Posted by GradyPhilpott

I know that this opinion is outright heresy, but I think that the smart money goes to what's on the AD's shelves at any given moment or to whatever the AD can deliver within a reasonable time-frame

FWIW, the 6 digit Explorer II fits this profile. At ADs as well as the greys there's not much wait or grey premium for this model.

[zengineer]

I think what we are doing here is known as rationalization.

Such an interesting thread topic even though they aren't intended to be about it.

It's no wonder there are 5 threads per week about it.

My favorites:

Life is short, you can't wait 6 months for that new bezel color.

Time is money, ....(actually, nothing that makes any sense ever follows this one)

They are underpriced at ADs, the grey sellers are the ones with it priced to the market so you should be happy paying market price.

[123Blueface]

Originally Posted by zengineer

I think what we are doing here is known as rationalization.

Such an interesting thread topic even though they aren't intended to be about it.

It's no wonder there are 5 threads per week about it.

My favorites:

Life is short, you can't 6 months for that new bezel color.

Time is money, ....(actually, nothing that makes any sense ever follows this one)

They are underpriced at ADs, the grey sellers are the ones with it priced to the market so you should be happy paying market price.

Perfect!
Amazing how the human mind can convince itself of anything.

[ROLMARINER]

Originally Posted by pinkelle21

If you buy above msrp you have more money than smarts

That’s funny, I find that people with money have it because they are very smart. And people with money tend have a discretionary reserve of no less than around $50K just for things like vacations, theater tickets, sporting events, jewelry, dining, clothing, and other recreations where ROI isn’t a consideration or a concern.

The difference between MSRP + tax and current grey pricing on a BLRO or a 500C is about $8K, and on a SS sport model like a Submariner we are talking $3K. That’s what all the angst is about here. And if that’s a hardship for anyone I’d argue that they shouldn’t even be considering a luxury watch purchase until they have the financial stability to do so. It’s the people stretching every last dollar to get into a brand they can’t actually afford that are lacking smarts, not the ones with enough wealth to be indifferent about spending a premium.

[Wahlberg]

Looking at your post history, all you do is discuss the price you paid for your GMT and hoping people will agree with you. Why do you need this kind of validation? I've stumbled upon more people doing this. They got the money to buy whatever they want but are still concerned about the price or pricing strategy.

And there are plenty of dumb people with money.

[ap1]

Originally Posted by ROLMARINER

That’s funny, I find that people with money have it because they are very smart. And people with money tend have a discretionary reserve of no less than around $50K just for things like vacations, theater tickets, sporting events, jewelry, dining, clothing, and other recreations where ROI isn’t a consideration or a concern.

The difference between MSRP + tax and current grey pricing on a BLRO or a 500C is about $8K, and on a SS sport model like a Submariner we are talking $3K. That’s what all the angst is about here. And if that’s a hardship for anyone I’d argue that they shouldn’t even be considering a luxury watch purchase until they have the financial stability to do so. It’s the people stretching every last dollar to get into a brand they can’t actually afford that are lacking smarts, not the ones with enough wealth to be indifferent about spending a premium.

While not my approach, some good points here

[123Blueface]

Originally Posted by ROLMARINER

That’s funny, I find that people with money have it because they are very smart. And people with money tend have a discretionary reserve of no less than around $50K just for things like vacations, theater tickets, sporting events, jewelry, dining, clothing, and other recreations where ROI isn’t a consideration or a concern.

The difference between MSRP + tax and current grey pricing on a BLRO or a 500C is about $8K, and on a SS sport model like a Submariner we are talking $3K. That’s what all the angst is about here. And if that’s a hardship for anyone I’d argue that they shouldn’t even be considering a luxury watch purchase until they have the financial stability to do so. It’s the people stretching every last dollar to get into a brand they can’t actually afford that are lacking smarts, not the ones with enough wealth to be indifferent about spending a premium.

Ha!
Always different perspectives.
I know a lot of people with a lot of money.
They didn’t acquire it by being frivolous and overpaying and then justifying why they overpaid.
This for me is like justifying why ghonerrhea is good for you.

[Fat_ninja]

The premium is basically the premium paid for time and access.


Most people dont have access unless they buy a lot of watches where the AD has made a lot of money on you.

So there is nothing wrong with paying a premium.

[Mystro]

Originally Posted by SamP

Daytonas have not always been popular or gone for a premium.
Daytonas prior to 1988 were particularly bad sellers that sold for discount.
People didn’t want the gaudy dials of the now “Paul Newman” fame. They do now - because they’re rare, and only rare because not many were sold in the first place.
The “Zenith movement” Daytona of 1988 sold much better but were rare not due to demand, but due to lack of productivity. Zenith were making movements for many companies and could not supply as many as Rolex would have liked.
This demand (Originally due to factors out of Rolex’s hands) has continued ever since but is now due to Rolex.
If it weren’t for Zenith’s lack of movement supply, perhaps the Daytona wouldn’t have been in such demand - now perpetuated by Rolex.

I was in the market when you couldn’t give a Daytona away, especially a SS Daytona. Even in the early 90’s, no one wanted it and there wasn’t even a Rolex movement inside. The Daytona was viewed as a bit of a nerd in the catalog.

[ROLMARINER]

Originally Posted by Wahlberg

Looking at your post history, all you do is discuss the price you paid for your GMT and hoping people will agree with you. Why do you need this kind of validation? I've stumbled upon more people doing this. They got the money to buy whatever they want but are still concerned about the price or pricing strategy.

Like many others I post on this topic because I find it very interesting. So many threads and people with different points of view, it’s fascinating.

We are not seeking any validation either. I’m extremely comfortable with the decisions I made. What I am doing is pointing out the other side of the argument; that we’re really not talking about a lot of “extra“ money here. For the privilege of being treated well by a dealer and not waiting a year or more for a desirable Rolex, $2K on most references and $8K on the absolute hottest references is all we’re talking about here.

Originally Posted by Wahlberg

And there are plenty of dumb people with money.

And this is another reason why those of us who shop grey respond in threads like this. It’s not nice to be called stupid.

[Mystro]

Originally Posted by ROLMARINER

That’s funny, I find that people with money have it because they are very smart. And people with money tend have a discretionary reserve of no less than around $50K just for things like vacations, theater tickets, sporting events, jewelry, dining, clothing, and other recreations where ROI isn’t a consideration or a concern.

The difference between MSRP + tax and current grey pricing on a BLRO or a 500C is about $8K, and on a SS sport model like a Submariner we are talking $3K. That’s what all the angst is about here. And if that’s a hardship for anyone I’d argue that they shouldn’t even be considering a luxury watch purchase until they have the financial stability to do so. It’s the people stretching every last dollar to get into a brand they can’t actually afford that are lacking smarts, not the ones with enough wealth to be indifferent about spending a premium.

Exactly. This is like worrying about mpg on a new Bentley purchase. I come from the conservative value system that if you can’t comfortably afford two, you don’t buy one. That way you don’t stress and worry about actually using that item. My most valuable and irreplaceable assets is my time. Money comes and goes but my time is not infinite. This is why I like the purity of buying from our trusted sellers. Proffessional and no games. That alone may be worth a premium to me.

[ROLMARINER]

Originally Posted by Mystro

Exactly. This is like worrying about mpg on a new Bentley purchase. I come from the conservative value system that if you can’t comfortably afford two, you don’t buy one. That way you don’t stress and worry about actually using that item. My most valuable and irreplaceable assets is my time. Money comes and goes but my time is not infinite. This is why I like the purity of buying from our trusted sellers. Proffessional and no games. That alone may be worth a premium to me.

Precisely. Not sure why it's a bad thing to speak highly of a purchase channel that treats people fairly, with respect, lives up to commitments, is in stock, and ships overnight.

Isn't that exactly what everyone wants from their AD?

[MTBer]

Problems with paying above MSRP-

-insuring an item for declared value is more difficult and costly- anybody insure their $9k BLRO for $18k?

-perpetuates inflated pricing, limited availability, and obnoxious retailer behavior (e.g., bundling) by incentivizing opportunistic flipping.

[77T]

Interesting approach - by taking MSRP and adding sales tax - then comparing it to inflated grey market prices for BNIB, you would feel that a 22,000 Daytona 500 is “only” 60%-ish over MSRP instead of 75%-ish over MSRP. If that slakes one’s lust and “FOMO misery index”, then good deal for them.

The only item I’d challenge is the state of play regarding online sellers and sales tax. In States that have enacted the tax again after the Supreme Court decision (and if the grey seller is in that State) then it is due from the seller. Whether they bother to collect it, or even report their sales, is up to them.

As for me, I will not pay the hyped price - but I don’t disrespect those who do.


Sent from my iPhone using Tapatalk Pro

[brandrea]

If paying over MRSP for a watch works for some and they can obtain a reference they want through a gray for what is affordable to them, then to each their own.

My AD has always treated me fairly and that’s why I continue to support them

[123Blueface]

Originally Posted by ROLMARINER

Precisely. Not sure why it's a bad thing to speak highly of a purchase channel that treats people fairly, with respect, lives up to commitments, is in stock, and ships overnight.

Isn't that exactly what everyone wants from their AD?

All for just $8K more, for what is just an object that not only you can live without, and there is an infinite world of other comparable choices.

This thread and the other similar ones to it remind me of an old joke, that I believe everything I read. I write it down, I read it, and I believe it.

In the end, it truly is all about what makes you happy and all do with their hard earned money as they wish. That said, hard to argue that this is not another “I wrote it, I read it, I believe it” attempt.

[123Blueface]

Originally Posted by MTBer

Problems with paying above MSRP-

-insuring an item for declared value is more difficult and costly- anybody insure their $9k BLRO for $18k?

Yes.
Paid MSRP and it is insured for $18,500.
Cost me $50 for the appraisal to do so.

While I don’t support paying over MSRP, I am pragmatic and realize should something happen to my BLRO, won’t be seeing another one at MSRP any time soon. Grey will be my likely route, but thanks to insurance and not my pocket.

[ROLMARINER]

Originally Posted by brandrea

If paying over MRSP for a watch works for some and they can obtain a reference they want through a gray for what is affordable to them, then to each their own.

Thank you! We're not dumb and we're not justifying. It's just the way it is for the thousands of us without the AD relationship. The alternative is not getting the Rolex we want.

Originally Posted by brandrea

My AD has always treated me fairly and that’s why I continue to support them

And that's great, and I wish it were that way for me but despite the fact that I own 8 very nice Rolexes some were bought via private sellers, some are vintage references, and my new models were in such high demand there were none for me to purchase. So while I certainly have a Rolex collection worthy enough to be deemed a 'whale' in any reasonable dealers eyes, I'm unimportant to local AD's because I didn't buy any of the 8 from them.

If I had an AD that could tell me with a straight face that they'd get me a Daytona or a Pepsi within 6 months I'd have bought one from them, I think any rational person would.

[brandrea]

Originally Posted by ROLMARINER

Thank you! We're not dumb and we're not justifying. It's just the way it is for the thousands of us without the AD relationship. The alternative is not getting the Rolex we want.



And that's great, and I wish it were that way for me but despite the fact that I own 8 very nice Rolexes some were bought via private sellers, some are vintage references, and my new models were in such high demand there were none for me to purchase. So while I certainly have a Rolex collection worthy enough to be deemed a 'whale' in any reasonable dealers eyes, I'm unimportant to local AD's because I didn't buy any of the 8 from them.

If I had an AD that could tell me with a straight face that they'd get me a Daytona or a Pepsi within 6 months I'd have bought one from them, I think any rational person would.

Not sure what part of my post implied you were dumb or justifying ...

I’m simply saying if you prefer to buy gray vs AD and pay the price, to each their own

[ROLMARINER]

Originally Posted by 123Blueface

All for just $8K more, for what is just an object that not only you can live without, and there is an infinite world of other comparable choices.

This thread and the other similar ones to it remind me of an old joke, that I believe everything I read. I write it down, I read it, and I believe it.

In the end, it truly is all about what makes you happy and all do with their hard earned money as they wish. That said, hard to argue that this is not another “I wrote it, I read it, I believe it” attempt.

It seems its easy to be one of the lucky ones who gets to pay MSRP for a BLRO, perhaps you should take the time to be more accepting of those of us without that good fortune. I'd guess that 70% of the BLRO's and 500C's are being bought via the grey market and there are a lot of us here.

The BLRO was the one and only watch I wanted, and no other Rolex or other brand was going to be satisfactory. I never liked the old aluminum Pepsi and the ceramic's dynamic and professional red and blue struck a chord and I had to have it even if it meant overpaying. Some would call that being a 'passionate enthusiast' which is exactly what I am.

The cliche of "justification" doesn't apply to people who have the $2K to $8K it takes to buy their way out of the AD favoritism game. To many of us it's not a number that moves the needle. It's not like I dropped $2.5M on a house in a bad neighborhood or invested $3.5M in a weak stock. It's $2K to $8K.