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On value vs. cost in luxury watches: what brand is most aligned?

  1. Annapolis Oct 9, 2023

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    This is nothing more than a silly mental exercise, but on a long drive the other day my mind turned to watches (as it sometimes does), and I got to wondering about how much value I personally place on brand/prestige as a factor when deciding whether I believe a watch is worth its asking price. Only thinking about pricier luxury watches here (not Casios), and not necessarily about watches I’d actually want or be able to buy.

    I’m wondering what other people think, too. I know this is a waste of time and brain-cells. But this is a watch forum, so…

    The basic premise is that, say, a stainless steel Seamaster diver that costs $5,900 USD retail is---in terms of material and labor costs---probably “worth” a few hundred bucks. You can object and say we need to consider research, design & development, and marketing costs, etc, but even so, when you’re producing at the scale Omega/SWATCH is, I can’t imagine those costs amount to much for any individual item.

    And yet I’d argue that the 300M diver is a reasonable value when you consider various other factors, and that’s the part that got me into the rabbit-hole. A thing is “worth” only what people are willing to pay for it, and I’d have no problem justifying $5,900 for that watch. Because…

    -An in-house movement that has a long and storied evolutionary history. Co-axial escapement would be a part of this.
    -A cultural history (for the watch itself), including connections to events and fictional characters.
    -Its status relative to its Rolex counterpart, in that it’s less hyped but no less robust or attractive---obviously this is highly subjective---and it doesn’t generate the kind of judgment or resentment the other does.
    -The allure of the Omega brand itself: this is the reputation/prestige bit.

    If I’m being honest with myself, then, I’d probably value the-thing-in-itself at about $500. Which means the rather silly/emotional things I just enumerated make up more than 90% of its value to me.

    Why would I possibly care so much about an in-house movement?: to my non-technical mind, a modified ETA would be just as beautiful and mystifying. And all the other stuff is based in marketing and social reasoning rather than anything inherent.

    I guess some would call this a definition of “luxury.”

    But what it got me wondering is: what luxury watch brand do you think sets retail prices that are fairly close (or at least closer than Omega’s) to actual intrinsic value? I’m guessing the answers may be watches at the extremes: more entry-level stainless watches (from, say, Tag?) or complicated precious metal watches that are slow sellers and can sometimes be obtained at less than retail price.

    ...Or are these just the ravings of a lunatic mind?
     
  2. Canuck Oct 9, 2023

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    I think of an analogy to your thoughts. A supermarket! If a brand name product wants maximum exposure on the shelves in a supermarket for their higher priced, nationally advertised product, the manufacture pays a premium to the supermarket for shelf space that will give it maximum exposure. Other companies that may be marketing an identical product, likely out of the same plant, but with a different label and lower price, may not be prepared to pay a premium for high profile shelf space. Their lower priced product will be placed elsewhere on the shelves, thereby may be less noticeable.

    I think it all comes down to advertising hype and product placement as to relative prices on very similar watches.
     
  3. Walrus Oct 9, 2023

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    Something similar came up in a previous discussion. It got me thinking so I posted some peer reviewed papers regarding obtaining “luxury products. I think the PDF was too large it wouldn’t load properly.

    I have of course lost those papers which makes me an idiot but if you do a search you can find it. But it did have some interesting “studies and theories
     
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  4. Dan S Oct 9, 2023

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    I don't know if you can upload PDF files to the forum unless you convert to images.
     
  5. Walrus Oct 9, 2023

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    Ah Thanks for clarification next time I’ll just copy the abstract. Hope things are well for you.
     
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  6. Dan S Oct 9, 2023

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    I ran into this issue when I was trying to upload a patent. In the end, I think I just took a screenshot of the first page.
     
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  7. STANDY schizophrenic pizza orderer and watch collector Oct 9, 2023

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    So if you have worked out a $500 price. (Not that I agree with that price)

    Anything over $500 paid is money for a feeling.
     
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  8. vibe Oct 9, 2023

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    I can tell you hublot is the most maligned.
     
  9. Mark020 not the sharpest pencil in the ΩF drawer Oct 10, 2023

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    With Panerai coming in second
     
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  10. drster Apr 1, 2024

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    I consider Rolex the best deal at retail price. The fact that most of their watches market price is above retail supports my opinion.
     
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  11. gbesq Apr 1, 2024

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    It depends a great deal on how you define "intrinsic value," but I think that the short answer is "none." Swiss watches are luxury goods and are not necessary for us to live our lives as opposed to something like, for example, an automobile which most people need to transport themselves to/from work, the grocery store, medical appointments, etc. Strictly on a utilitarian basis, one can easily argue that the retail price of an entry level Honda Civic is much closer to its intrinic value than a BMW 7 series. Both will get you where you need to go -- the BMW will just do it with better driving dynamics, safety tech, comfort and WOW factor -- but you'll pay through the nose for it. If you measure the intrinsic value of Swiss mechanical watches by their ability to accurately tell the time -- their chief function -- they all suck compared to the cheapest Timex quartz watch. We buy them for the prestige factor and there's very little intrinsic value in that for all Swiss luxury brands, Rolex included. .
     
    Edited Apr 1, 2024
  12. gatorcpa ΩF InvestiGator Staff Member Apr 1, 2024

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    I think that’s true for just about all watches, wherever they are made, with the possible exception of:

    1. $5 to $10 quartz watches.
    2. Apple Watch - only because it does so much more than just tell you the time.

    gatorcpa
     
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  13. dinexus Apr 2, 2024

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    With particular regard to precious metal options, I think Rolex has the most fairly priced gold in the game because at the end of the day, market pricing on gold is market pricing. And since this is the high-end forum, with regard to watchmaking chops, any Chopard LUC under 10k I'd consider to be a pretty good value.
     
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  14. ErichKeane Apr 4, 2024

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    I personally think the Longines watches, particularly the Spirit and Master Collection lines are really high value for the price.

    I have a hard time loving the modern Omegas (outside of Speedmaster Moonwatch), for some reason the coax movement seems to have made all the watches giants.
     
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  15. padders Oooo subtitles! Apr 4, 2024

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    For good reason.

    What nonsense. Happily the market is correcting so that virtually all precious metal Rolexes and most of the steel ones now sell for less than retail in the aftermarket.
     
    Edited Apr 4, 2024
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  16. Pastorbottle Apr 5, 2024

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    Utter bollocks! When you buy a Rolex you pay for hype and bullshit, much as you do for most other brands, but you pay more for it…. Mind you, you do get much more hype and bullshit, so if that’s what you want, I s’pose you get your moneys worth
     
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  17. Ron_W Apr 5, 2024

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    Nomos comes to mind, at 2~2.5K you have a great value watch with propriarty movement and design. And it is flat which is more difficult to produce with a decent WR. You could argue a case for cheaper Seiko`s but i think for less then 1K always get a quartz as those cheap mechanical movements dont deliver in accuracy, maybe with exception of the Swatch Powermatic 80 cosc watches from Certina, Tissot and Longines. Grand Seiko used to be great value as in better than others for less money.
    Baume & Mercier with the Baumatic 70 hrs movement can be had a great prices, and that same movement but with 120 hrs PR runs in the new IWC Ingenieur automatic 40, which makes it the most disconected watch/value proposition .........In The World. Still like its looks very much.

    Your €/USd 500,- mark is not realistic i think, as you do need to bring it to market and make a healthy profit to cater future investments and happy stakeholders, you already mentioned some of that. All the different dials and versions off the same watch still all need their R&D etc, although at lower percentage costs then the original. The rule of thumb for watches i believe is 33/33/33 for production - marketing - margin so the Seamaster 300 would be fairly priced at 1500,- , and still be great value. Solid watch, good performance and decent value retainer.

    It once was 1500,- and complaints came about the expensive service costs in relation to that price and watches were thrown away or not repaired and stuffed in a drawer. Not a very luxury aura. Omega, as well as others, did listen to the market ::facepalm2:: and quadrupled the prices of new watches to restore balance ::screwloose:: ..... and gave us all back that luxury feeling when buying a watch that is worth to be serviced. Blessings be upon them !
     
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  18. Annapolis May 9, 2024

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    Stumbled upon an example today of some of the absurdity I implied in my OP.

    A very reputable and well-respected dealer of preowned luxury watches (whom I won't name or link, as I'm not attacking them at all---they're just responding to market forces, exactly as they should) recently added several watches to their inventory, including:

    1) A Patek Aquanaut 5064A quartz: this is a 34mm steel Aquanaut with a (to my eyes) rather dated and unattractive dial with yellowing numerals and the date window that looks like a total afterthought. (The latter is still sorta true of the current models. If they lost the date, it wouldn't be a bad-looking watch.) On these older versions, the rubber strap was not designed to look integrated with the case. And--again--quartz: no superbly-finished automatic PP movement to view through an open caseback.

    2) A 2-year-old, like-new Lange 1815 Up & Down in rose gold: this is a 39mm precious-metal, modestly complicated (small seconds and power reserve) dress watch with the exquisitely-finished visible German silver manual-wind movement one expects from Lange.

    The Patek is priced $1,400 higher than the Lange, and I don't doubt for a second that it'll sell, probably faster. But how nuts is that? Someone will pay over 25 grand USD to get an old, small, quartz steel-on-rubber Patek, but less than that for an example of real haute watchmaking in gold from a brand that produces less than a tenth of the number of watches Patek does.

    And the real coup de grace, if you want to compare steel with steel:

    3) An essentially brand new JLC Master 8 Days Perpetual Calendar in steel, 40mm: this is pretty much the ultimate in terms of a complicated dress watch from an unassailable brand---the full calendar including a 4-digit analog year display, moon-phase, night-day indicator, and, yes, a full 192 hours of power reserve out of the nicely-finished (if not Lange-level) visible movement...

    For half the price of either the Patek or the Lange.

    There's some apples-and-oranges here, I know.

    Anyway, rambling. And who cares. But it made me laugh for a sec.
     
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