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Many people no longer use analog watches; with the invention of cell phones, all you need to do to tell the time is pull your phone out of your pocket or purse. However, for some people, these classic, mobile clocks are an important part of their wardrobe and how they present themselves or a treasured gift for an accomplishment such as graduating from college or landing their dream job or promotion—but with it comes an expensive price tag.
Those buying watches may be expecting them to be somewhat pricey but are willing to splurge for a special occasion. However, they may be surprised by just how costly these little clocks can get: the lowest range is several hundred dollars, and the highest range is many thousands of (with a few being over a million) dollars. Many people wonder why exactly such a small item is so expensive; read on for eight reasons why they cost so much!
A Lot of Research Goes into Creating Watches
Before a watch is built, years of research go into making it. Watchmaking is a field where you have to use the already established tried and true watchmaking techniques. However, to make a name for yourself as a watchmaker, you also need to build upon that and challenge yourself to make your watch into more—more complex, more refined, less bulky, and so on.
It takes time to research and figure out what materials and moving parts you can make that will help your watch stand out while also respecting the past and proper techniques that work. So, when you are buying an expensive watch, you are also paying for the time it took before the watch even began to take shape.
It Takes Multiple People and Stages to Develop a Watch
Watches may be small, but it takes many people to make them. Creating and perfecting a watch is an art form across many disciplines, including house movements, dial-mounting, long power reserves, and finishing techniques.
In-house movement or in-house caliber means that instead of outsourcing the creation of the watch‘s engine, a unique design for the movement of the watch is designed within the company. As you can imagine, this requires a great deal of skill from people who have a background in mechanical engineering.
After the in-house movement is created, the dial or the clock’s face needs to be mounted onto it. Because the in-house movement for a watch is so unique, the mounting of the dial also has to be unique to make sure it fits into place properly, and therefore proper training needs to be had. This video gives a small window into just how much precision and time it takes to mount the dial on a custom watch.
Instead of being battery-powered, a watch is run by a self-winding movement in a spring. Once the spring has completely unwound, then the watch will need to be wound back up again. Most power reserves in luxury watches last 48-72 hours. There are skills needed to both design this spring as well as knowledge of how it will fit in and work with the rest of the clock’s mechanisms.
Part of the appeal of a watch is its smooth, polished, and attractive look. This is done with finishing techniques which include:
- Beveling: Smoothing all the sharp angles in the mechanisms down to give it a softer, smoother appearance
- Mirror or black polish: Applying polish to the metallic components to give it a glossy finish that has a mirroring effect
- Graining or brushing: Etching a pattern into the watch’s surface to give it a unique and attractive look; there are many different types of graining designs, but the three most common are Geneva Stripes, Perlage, and Guilloche.
When you combine every aspect of creating a watch, the man-hours it takes often reach the high thousands. You are paying as much for the labor, time, and skill that went into it as you are for the brand.
Watch Movements Require Highly Skilled Specialists
As mentioned above, creating a watch movement takes people who are highly skilled in that area. Some movements are so incredibly complex and detailed that it goes beyond the capabilities of many watchmakers. Thus, the number of people who are capable and skilled enough dwindles. Even in the small number of people who have the skill set necessary to create a movement, training (usually lasting years) is necessary.
But training costs money, and the people watch companies are training also need to be paid for their work. Since it is a highly specialized field that few people can work in, these specialists are paid quite a bit. This, in turn, drives the cost of production up, and that cost is then transferred into the overall price of the watch for the company to be able to make money from their product.
High-Quality Watch Materials Drive Up Costs
Another reason that watches can be more expensive is that the material used for the case, the dial protector, and even the wristband are simply of better quality and cost more to acquire. The types of materials generally used for luxury watches are numerous and include the following:
- Precious metals, such as gold or diamonds
- Crystal (for the dial)
- Leather or titanium (for the bracelet)
On the other hand, most fashion watches are made from low-cost materials such as plastic, which means they can be sold for much less money.
Watches Have a High Demand and Low Supply
Because so much time, labor, and precision go into making watches, it is impossible to mass-produce many watch models. Therefore, the amount that is produced is limited by necessity. It is no secret that people tend to want something that they can’t have or is unique. It is no different when it comes to watches. When there is a limited supply of something, it grabs attention, and people are willing to pay more for it.
Across watch companies, there are two ways watch availability is limited. On the one hand, you have Rolex, which does not make more than a million of any watch style. On the other hand, many other companies create limited-edition models; these are only made for a certain amount of time and cost more than the standard model they regularly make.
When it comes down to it, though, the more a watch it sought after, the more a company can charge for it as they have established themselves as a reputable luxury brand.
Established Watch Brands Are Able to Charge More
Well-known and established watch brands can charge a lot for their watches simply based on their brand’s reputation and prestige. There are several reasons why well-known brands such as Rolex can charge a lot for their money and why people are willing to shell out the big bucks.
Humans both want to be accepted and fit into a group, but they also want to stand out. Having a well-known luxury brand of a watch can not only help them fit in with certain groups, but the relative rareness of these watches helps them stand out or have status and respect in their social group.
Watch companies each have a niche and have marketed their brand in certain ways. Their name becomes synonymous with specific traits, and people who want to portray a certain vibe or impression are willing to spend money on a watch that helps them achieve that.
There are dozens of watch brands that have made a name for themselves; some of these watch brands include:
- Rolex style=”font-weight: 400;”> – Even people who aren’t interested in watches know this name and what they make. Rolexes are seen as a display of power and prestige. One of their claims to fame is being the first luxury watch company to create a waterproof model. It is also the favored watch of James Bond.
- Patek Phillipe – Patek Phillipe is a Swiss watch company that has been around since 1839. They are known for the craftsmanship and handmade detail of each watch which has, in turn, earned them a reputation for reliability and uniqueness. Speaking of uniqueness, the total number of watches made by Patek Phillipe since 1839 is a mere one million, making their accessibility more elusive and the demand even higher.
- Audemars Piguet – Many luxury watches have to be handled with care, but Audemars Piguet changed that. Their Royal Oaks model watch was the first luxury watch to be made of stainless steel, which gave them the reputation of having luxury watches that were also durable. Their popularity among celebrities such as Arnold Schwarzenegger has furthered their fame.
While there are people who know that a specific brand of watch will help them portray a certain look or sense of accomplishment, there is a different group of people. These people are watch enthusiasts, also known by some as horophiles.
Watch enthusiasts are those who have taken the time to study watches in depth—both their appearance and everything that goes into making them. They have a level of understanding and appreciation for them that goes far beyond just knowing what certain brands portray. They are concerned with the inner workings of watches and the ways that watchmakers have combined centuries-old techniques with newer ideas.
In short, this is a group of people who is willing to pay extra for a watch because it is already something they have devoted time and money to, and they understand in detail and appreciate the level of expertise that goes into creating one. Furthermore, because they have studied watches in detail, they know the exact one that will express who they are and their interests as a person.
For watch enthusiasts, the right watch is a form of self-expression as much as it is about the prestige of owning one, and they are willing to pay extra for that form of self-expression.
It Takes a Lot of Resources to Market Watches and Their Brand
For most products on the market, the goal is to produce and sell as much as possible. The quality of the product may not be the greatest, but since it is being sold at a fairly low price, people are willing to use it until it breaks and then go buy another one. Because the materials are not expensive and there is not as much expertise to produce them, companies can afford to produce a lot.
When it comes to luxury items, including luxury watches, the goal is to build up a reputation of quality and exclusivity, but the key thing is you need both. You can create an incredibly well-made product with all the best materials and the best watchmakers, but if you have not built up a reputation, your watch business will not be successful. Therefore, as much effort and resources have to go into making sure a reputation is built, usually including these marketing practices:
- Identifying and utilizing the niche market. This could be done by reaching out to well-known people, such as celebrities, and asking them to wear a watch. If they are satisfied and keep wearing it, then others start to notice.
- Excellent customer service. Some products can do this by personalizing the product to the customer. While this isn’t possible for watches, it is important to communicate with the customer and make them feel valued.
- Utilizing social media. While social media is fairly new when it comes to sales, it is highly effective, and a watch brand can help build up its reputation by knowing the proper hashtags and partnering with influencers to help its product become more widely known.
- Remaining exclusive. As people start to get to know the brand and hear good things about it, its demand will rise. However, to be a luxury brand, there should only be enough production to remain exclusive.
In short, it takes a lot of time, attention to detail, and knowing which resources to utilize and when to utilize them to build up a reputation as a luxury that people want more of, which can be expensive.
Watch Companies and Retailers Add Markups
Companies have to make more than they spend to produce a product, and as such, they will sell products for quite a bit more than it took to make it. This is true whether the product is a stuffed animal, a piece of furniture, or a watch. The price of designing, creating, and putting a watch out onto the market is, as previously mentioned, all very costly, and when you add a markup to that, it can get extremely expensive.
Keep in mind that to keep their business and be able to pay everyone—from the designers of the smallest detail, all the way down to the distributors—it requires money. Nobody wants to keep a business running if they are not making a profit by a certain point, so a watch company needs to charge enough for their products to make it worthwhile for everyone involved.
Is it Possible to Buy Expensive Watches at a Discount?
Affordability is different for every person, and watches—especially luxury watches—will always be expensive. However, there are a couple of ways that you may be able to get a great deal on a luxury watch. (Be warned that it will take research and a lot of patience.)
Shah Lusso has a great set of tips for how to negotiate with authorized dealers to get good deals on both new and pre-owned watches. They include:
- Know your price. This means more than simply knowing the amount you are willing to spend. It also means understanding what a reasonable price for the specific model is, and not trying to lowball the dealer.
- Know the right time to negotiate. There are certain times of the year, such as the holiday season, when you will not be able to negotiate very much, as there is a high demand for watches. It is also advisable to go at the end of the month and the end of the day when the dealer has quotas to meet or is ready to go home and will be more flexible.
- Don’t start the negotiation process if you are not ready to purchase the watch. Watch dealers value their time. If they have spent time going back and forth with you and trying to reach a price you are both happy with, only for you to back out, they will not be willing to work with you again or give you the same price later on.
- Be prepared to leave. If you have done proper research, you will be familiar with the model watch you want, its retail value, and what price you should be able to reasonably negotiate it down to. If the dealer absolutely refuses to work with you, it’s time to move on to the next store or come back later and try again at a different time.
- Make it a choice. Don’t be set on one watch. Have two options that you can negotiate and go back and forth with the dealer on. One might be more expensive than the other, so they will likely try to steer you in that direction, but if they know that you also like the less expensive watch, then they may be more willing to bring the price down to a more comparable price.
Buying Watches on the Gray Market
The watch industry was initially designed to have a more streamlined approach to production. The watchmaker would create the watch, and then they were then distributed to authorized jewelers and dealers. However, many times, the agreement the watchmaker would have with these authorized dealers would require them to accept bulk amounts of watches, including some that didn’t tend to sell as well, leaving the dealers with inventory they couldn’t get rid of.
Since they cannot restock with newer or better selling models unless they sell off what they have, they sell these watches at reduced prices to gray market dealers. These gray market deals can then sell them to customers at a much lower price than an authorized dealer would. One website that you can research and where you can access different gray market dealers is chrono24.
While you will likely be able to find a watch at a much lower price this way, it is important to do your research and be aware of potential downsides, such as:
- The deals you can get are very much dependent on the brand. Certain brands, such as Rolex, you may not be able to get at a cheaper price due to the high demand.
- Many of these watches are older models. This means that there has been more time and opportunity for things to go awry and break during transit and general moving around.
- You do not get the guarantee that you would from an authorized dealer. Most dealers offer a five-year warranty complete with a certificate that includes coverage for any potential damage which may happen during that time.
Watches can be very expensive. One reason for this is the quality of materials that can go into each part of the watch, from the dials and the mechanisms down to the wristband. Some other reasons include the research that goes into making a quality watch, the willingness to try new things and be ahead of the game, the expertise required on various levels, and the training that goes into making a good watch.
In addition, there are other factors that make watches more expensive, including the exclusivity of the watch, as there are only a limited number of watches available, and the time and effort it takes to market and build up a luxury brand. Ultimately, those customers who are willing to spend the money for a watch understand many or all of these aspects that comprise the bulk of the cost and are willing to spend the money.