How do these economics work? I’m guessing they’re a maker of very expensive low volume products. But are there that many buyers?
https://www.hodinkee.com/articles/video-vacheron-constantin-...
Same with Richard Mille. Never heard of them but they’re rich enough to sponsor the Ferrari F1 team.
- A real Rolex dive watch costs $5k-15k.
- A similar Swiss-made dive watch from a less famous brand costs $2k-4k.
- A similar Japanese-made dive watch from a famous brand costs $500-1000.
- A Chinese-made replica/fake Rolex, mechanically identical to a real one, and only distinguishable by an expert under high magnification, costs about $400-800.
- There are some low-volume watches that are sold for 4-6 figure sums to repeat buyers. Richard Mille in particular has done one-offs for celebrities in the range of 7-8 figures.
As you can imagine you don't need a high volume with margins that large.
Likewise, long ago, Rolex was a toolwatch brand and their products were relatively affordable. They are still great, but prices are insane. Vacheron Constantin is on a different class, though, as they sell lots of watches in the high horology category. Insanely complex and difficult to produce. Some similar brands have had financial issues or gone bankrupt.
The actual raw material has to be a fraction of the worth.
It’s actually a good case study. It no longer makes sense to buy a fine watch from an American retailer. The tariffs incentivise a trip abroad. (I’m seeing something similar happen with skis.)
Not really. I’m bringing back a few thousand dollars of mounted, probably lightly-used, skis. Nobody expects to declare random purchases made abroad. Much less an article of jewellery on their wrist.
Hypothetically, one could simply wear the watch on their wrist on the flight home. Personal jewelry is not subject to duties.
And let's not even get into how much money they spend on marketing and sponsorships ..
They make the parts.
> A real Rolex dive watch
Some example dive computers, for those interested:
- Suunto Zoop [1] - Shearwater Perdix [2] - Garmin Descent [3]
[1] https://www.suunto.com/en-gb/Products/dive-computers-and-ins...
You’re paying for time. Seiko make great watches with cnc machines under the orient brand. They cost about £150-300.
In terms of watch, it’s the same type of parts and accuracy as a base Rolex.
Rolex you are paying for the name. Yes, they are better quality than an orient, but not much. There is better QC, and more people looking at the watch before it’s sent out, but in terms of precision of manufacturing, or amount of cnc machine used, it’s mostly the same.
There is a thriving scene in small watch producers, spinnaker, holthinrich, de ryke and co, vortic, Weiss, lorier to name a few. Some are sub £300, others not.
But after that tier the quality increase to price ratio pretty much drops to zero.
There's more interesting brands like Moritz Grossman and Bovet that make even rarer pieces but fewer people have heard of them.
* Margin. A relatively low prestige Swiss brand (Tag) has stated they charge 3x bill of materials for their watches. The more exclusive the brand, the higher this number goes.
* Volume might be higher than you think. Popular Swiss models sell in the tens of thousands of units a year. Not bad if you’re charging four or five figures per unit.
* Consolidation. There’s a handful of actual parent companies for watch making that are responsible for most sells. Swatch, Citizen, Rolex. They share resources between each other.
* Common suppliers. Some movements are used in multiple brands, even across multiple parent companies. Sometimes a company will buy a movement, modify the movement, and completely rebrand it. This allows better economics of volume for the most complicated aspects of watches.
* Marketing works. There’s no practical reason to buy a $10k (or $40k) Rolex compared to a $25 Casio. There’s a reason James Bond wears expensive watches and that reason is product placement. Some watch conglomerates are publicly traded, so you can look at how much they spend on marketing.
* The fact that you haven’t heard of the brand is part of the point. If you’re wearing >$100k on your wrist you probably don’t want everyone to know. Even at this price point, it’s a highly liquid asset in some cities.
Only since Goldeneye when Omega started paying for product placement. Bond had worn Rolex since the original novels, which were written before their big pivot to luxury, so him wearing expensive Rolexes in later films was more of a historical accident. Rolex never actually paid a cent to appear on screen.
In certain circles, all of these brands are as common as Nike or Mercedes are to the general public.
I'm assuming the two latter categories are sponsored to get the first category to buy?
I just know these brands from F1 where the drivers are sponsored, which is very obvious from the way they wear them.
As I'm saying this, I realize selling a thousand of them probably isn't a crazy volume.
https://en.m.wikipedia.org/wiki/Richemont
It works like any other luxury company, charge an arm and a leg, control the supply so you don’t overproduce, spend a ton on marketing.
Almost all Swiss watch brands (by volume) are owned by either Richemont, Swatch Group, or LVMH. Rolex, Patek, Audemars Piguet, Breitling, and Chopard are the last of the big Swiss independents, but there are smaller ones like Czapek and Cie, H Moser & Cie, Gruebel Forsey, Richard Mille.