What is Omegas mark up?

PRW · Jun 27, 2020

Went into an AD yesterday and tried on the black SMP 300 on SS.
Ticket price £4170.
Asked for discount, instantly got offered at £3600. I cheekly asked if they would throw in the black rubber off the one they had in the display case and after not very much banter, they said ok!
Now I think this is a good offer but I now am in serious consideration about the purchase of this purely out of principle. I mean, how much mark up do they have on these watches? I may never purchase a premier name again?
I love divers and may go back to Seiko? Same performance and IMO, reliability for way less money. I think over the years I have been drawn into the marque snobbery trap?
Or...would YOU just make the purchase?

killer67 · Jun 27, 2020

That's about 15% off which is not unheard for that model I think my AD would go lower

PRW · Jun 27, 2020

Really? Who's that?

PRW · Jun 27, 2020

K killer67
That's about 15% off which is not unheard for that model I think my AD would go lower

And how much would you usually pay for the genuine black rubber? £250?

kelsey · Jun 27, 2020

Marque snobbery? I don’t see Omega a snob’s brand.
Visit a snob brand boutique you’ll see the difference 😉

btw there are some pretty expensive Seiko’s out there.

You may go back to Seiko, so what happen to your previous Seiko?
There’s a world of difference between a $300 Seiko and a $5000 Omega, just like there’s a world of difference between a $300 Seiko and a $5000 Grand Seiko.

STANDY · Jun 27, 2020

PRW
Went into an AD yesterday and tried on the black SMP 300 on SS.
Ticket price £4170.
Asked for discount, instantly got offered at £3600. I cheekly asked if they would throw in the black rubber off the one they had in the display case and after not very much banter, they said ok!
Now I think this is a good offer but I now am in serious consideration about the purchase of this purely out of principle. I mean, how much mark up do they have on these watches? I may never purchase a premier name again?
I love divers and may go back to Seiko? Same performance and IMO, reliability for way less money. I think over the years I have been drawn into the marque snobbery trap?
Or...would YOU just make the purchase?

Well there is markups on everything, google markup on chocolate Or A flat white coffee 😗

From a usual stand point of no discount, this is a good time to be buying a watch.
After Covid lockdown any sale would be welcomed with a please buy....

Best deals are always to be had just before end of financial year.

I got a great deal on my Speedmaster the last week of June several years ago. The comment was “give us a price and we will see”. I hit them with $500 less than their best offer a few weeks earlier and was met with as long as I completed the deposit by the end of the day. Threw $500 there and then on the CC and wired the rest the following day. Had it sent to me 2 days later with a few gifts (I live 3500km from the nearest AD or boutique)

stuart70 · Jun 27, 2020

In conversation with an AD, it was implied that there was somewhere between 30% and 40% mark up on wholesale price. But that there is also another factor that dealers have to sell a range of the brand. For example they may have to sell 100 Omegas but they all cannot be Speedmasters and Seamasters. Hence you can get some good deals on the slower moving lines.
On other brands it may be more or less. There has to be some mark up to pay for the shop.

Many of the micro brands who sell directly say that they work that a third of the final price gross cost i.e. how much it is to make the watch. The rest of the cost (66%) is made up of overhead and profit.

PRW · Jun 27, 2020

Anyway, doesn't really matter, bought it!
See new thread.

stevec14 · Jun 27, 2020

S stuart70
In conversation with an AD, it was implied that there was somewhere between 30% and 40% mark up on wholesale price. But that there is also another factor that dealers have to sell a range of the brand. For example they may have to sell 100 Omegas but they all cannot be Speedmasters and Seamasters. Hence you can get some good deals on the slower moving lines.
On other brands it may be more or less. There has to be some mark up to pay for the shop.

Many of the micro brands who sell directly say that they work that a third of the final price gross cost i.e. how much it is to make the watch. The rest of the cost (66%) is made up of overhead and profit.

I heard the same - my AD’s said they have around 35% on the watch. Make sense the usual discount is about 15% so they make 20. Most punters for watches don’t think to ask for a discount so all the better...

vintage hab · Jun 27, 2020

According to a blog on Watch Bandit: “Most timepieces have a 700 to 12000 per cent markup” from the actual cost to manufacture. Obviously there’s significant overhead to cover, but still seems like there’s a lot of margin in there.

Canuck · Jun 27, 2020

Don’t confuse MARKUP (cost of goods), with MARGIN (how much of what you sold it for is left after you subtract all the costs of selling it)! Salaries, bank interest, rent, theft, light, heat, insurance, discounts, good will, etc. etc.

vintage hab · Jun 27, 2020

Canuck
Don’t confuse MARKUP (cost of goods), with MARGIN (how much of what you sold it for is left after you subtract all the costs of selling it)! Salaries, bank interest, rent, theft, light, heat, insurance, discounts, good will, etc. etc.

Agree: the watch is marked up from direct costs to manufacture which covers overhead (all the things you listed), and what’s left is margin (ie profit). I expect that a mark up of 700-1200% will leave lots of margin (even after paying overhead), thus the discounts.

Canuck · Jun 27, 2020

vintage hab
Agree: the watch is marked up from direct costs to manufacture which covers overhead (all the things you listed), and what’s left is margin (ie profit). I expect that a mark up of 700-1200% will leave lots of margin (even after paying overhead), thus the discounts.

Yes, but. If the cost to the retailer is (let’s say) 60% of the MSRP, all the expenses listed above come out of the 40 % over cost. I have no idea re: the margins realized by the manufacturer.

stuart70 · Jun 27, 2020

If you read the Swatch Group accounts the net profit is about 12% (before taxes).
An AD will buy at wholesale and put their mark up on top - further increasing the price. For a watch company it makes more sense for them to sell direct as they take the AD profit. Of course there are online sale cost but still..

From the accounts it is also interesting to see the level of stock held (finished goods). This is about 40% of annual sales- at production cost. That is an awful lot of watches etc.

stuart70 · Jun 27, 2020

Canuck
Yes, but. If the cost to the retailer is (let’s say) 60% of the MSRP, all the expenses listed above come out of the 40 % over cost. I have no idea re: the margins realized by the manufacturer.

The final sale price to the customer will have tax on. In the U.K. that Value Added Tax (20%). So you can work back from that roughly.

Omegafanman · Jun 27, 2020

When you look at razor blades, freeze dried coffee, Take away fries and Coca-Cola I think for the boutique or AD experience / all the branding and marketing costs, warranty etc watches are not a bad deal in terms of mark up + the supply chain needs a cut. At least you don't get all the car sales flim flam on extras... you want a strap with that.. need any Lume for night work.... a second hand would give you better track of time... Date window package sir (Yes I did try to buy an Audi once :0) Mind you talking branding and marketing after the golden Buzz butt I have no shame asking for discounts.... like most of you I never pay list. Also please don't F....me on service costs and spares if you want long term loyalty.

Evitzee · Jun 27, 2020

I wouldn't turn myself inside out trying to figure out costs and margins. Do your research and see what the watch is going for from grey marketers and used dealers, then decide if you want to buy the watch at whatever cost you think is fair and achievable. The Speedmaster is pretty cheap for Omega to produce, the tooling for the pretty simple chrono movement and case and dial have long been amortized, but Omega and the market determines what price it commands (that is what marketing and advertising is for).

One thing is clear across all luxury goods, and this includes automobiles, the difference between the wholesale price (what the dealer pays for the item) and the recommended retail price has been squeezed over many years. There isn't as much % spread between those two prices these days and that inhibits how much discount an AD can give you. That's why some ADs give up on some brands, they just aren't as profitable as they used to be. The manufacturers, like Omega, like this as it supports the boutique principle where little or no discount is offered. That means far more profit as the prices are kept high and there is no pesky middleman to divert some of those profits. That's how luxury is sold these days and it seems to work pretty well for those making luxury goods.

Omegafanman · Jun 27, 2020

Evitzee
I wouldn't turn myself inside out trying to figure out costs and margins. Do your research and see what the watch is going for from grey marketers and used dealers, then decide if you want to buy the watch at whatever cost you think is fair and achievable. The Speedmaster is pretty cheap for Omega to produce, the tooling for the pretty simple chrono movement and case and dial have long been amortized, but Omega and the market determines what price it commands (that is what marketing and advertising is for). One thing is clear across all luxury goods, and this includes automobiles, the difference between the wholesale price (what the dealer pays for the item) and the recommended retail price has been squeezed over many years. There isn't as much % spread between those two prices these days and that inhibits how much discount an AD can give you. That's why some ADs give up on some brands, they just aren't as profitable as they used to be. The manufacturers, like Omega, like this as it supports the boutique principle where little or no discount is offered. That means far more profit as the prices are kept high and there is no pesky middleman to divert some of those profits. That's how luxury is sold these days and it seems to work pretty well for those making luxury goods.

I agree - and the super low interest rates / finance packages have kept the distributor model afloat on waiver thin net profits as you get further down the chain.

Archer · Jun 27, 2020

Evitzee
I wouldn't turn myself inside out trying to figure out costs and margins. Do your research and see what the watch is going for from grey marketers and used dealers, then decide if you want to buy the watch at whatever cost you think is fair and achievable.

Agree completely.

Evitzee
The Speedmaster is pretty cheap for Omega to produce, the tooling for the pretty simple chrono movement and case and dial have long been amortized, but Omega and the market determines what price it commands (that is what marketing and advertising is for).

Couple of things - this statement assumes that the Speedmaster design has been static - it hasn't. This applies to the visib;le parts of the watch, but also the movement - Omega is upgrading and changing designs on things all the time on their watches and movements.

Second, the cost of tooling isn't a one time cost, because tooling doesn't last forever. You don't buy one set of everything once, and use it forever - there are ongoing costs that have to be covered for both tooling and equipment. Tooling wears out, as does the machinery. The tooling will get replaced on a regular basis, and the machinery needs repairs and even complete rebuilding from time to time, just like a watch does.

vitriol · Jun 27, 2020

PRW
I love divers and may go back to Seiko? Same performance [,,,]

Which Seiko movement has a performance comparable to O8800?

What is Omegas mark up?

PRW

killer67

PRW

PRW

kelsey

STANDY

stuart70

PRW

stevec14

vintage hab

Canuck

vintage hab

Canuck

stuart70

stuart70

Omegafanman

Evitzee

Omegafanman

Archer

vitriol

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