Luxury watches: where do the premium-prices come from?

Materials

When you pick up and decide to wear a specific watch, the first thing you would probably feel is the size and weight of the whole thing. The weight is mostly determined by the material the case and bracelet is produced from. These different materials all have a different value. Lets start with the most common used material for your watch, Stainless Steel. Stainless Steel is a material that is perfect for watchmaking because of the decently low cost and the durability of the material. Stainless Steel is easy to produce a watchcase and bracelet out of that will withstand any daily wear and tear. Stainless Steel is a pretty lightweight material, so it does not give you the feeling you wear a brick on your wrist. A material that might give you that feeling would be Yellow or White Gold. Yellow Gold is a precious metal that is a bit softer that stainless Steel, but is a lot heavier. The colour of 14kt and 18kt Yellow Gold really give a luxury feeling, but that will definitely work its way through to the pricing of the watch. When looking at a Rolex Datejust 41, these prices start at anywhere from €9.000 for a fully stainless steel piece. When looking at the Gold/Steel counterpart, these prices start at €12.000 and upwards.

Complications

We all know a watch with just a hour, minutes and seconds hand, or with a date-complication like the Rolex Datejust or Submariner Date for example. There are a lot of other complications however, each one more complicated then the other. It is obvious that the more complications a watch offers you, like a ‘perpetual calendar’ or ‘tourbuillon’, the more moving parts the movement is made up of, and the more complicated the movement. These special complications can really bump up the pricing of your luxury watch. While a normal Audemars Piquet Royal Oak Off-shore starts anywhere from €30.000, you can pay at least ten times that for an ‘open-worked double balance wheel’ complication and op to €700.000 for an Audemars Piquet Royal Oak Perpetual Calendar.

Quality

While a lot of watch enthusiast will never say no to a good old Seiko or Doxa, there are some thing quality wise where brands differ from each other. When you take a good look at your Rolex, and compare it for instance to your Seiko watch, the big difference will definitely be the finishing of your watch. There is a saying when people are wondering if their Rolex watch is real. “When looking at your watch and something is not perfectly aligned or centered, your watch is definitely not a real one.” These top-tier watch brands have perfected their finishing to a point that every minor little detail on the dial, or lugs is exactly like it is supposed to be. The perfect fit of the new Jubilee Bracelets are a great example of these high standards of quality control. Or what about the finishing of the movements of A. Lange & Söhne on their Lange 1 for instance. These high standards of build-quality and finishing are unmatched by any other cheaper watch brands.

Brand name and History

Like in all consumer markets, the name and history of each specific brand plays a big role in pricing their products. This goes for the market of Designer Clothing, but same goes for the luxury watch market. One of the things that Rolex is way better at than any other watch brand, is making sure their marketing machine is working 24/7. While there are other brands with high quality watches, most of the consumers that think about luxury watches almost immediately think about Rolex as well.

This part of strategic positioning from Rolex in the head of their costumers is one of the reasons why they are able to sell upwards of a million watches at retail each year. When looking at the history if the brand Rolex, this Premium Tag is definitely deserved, don’t get me wrong. Rolex was the first to produce an automatic movement on large scale, and the first to produce a water resistant watch with the oyster case. 

The same goes for the story behind the Omega Speedmaster, which started out as a racing watch, but later on is marketed as the first watch worn on the moon. All these historic events and inventions play a big part in being able to ask premium prices for these luxury watches.

The overall verdict

While the basis of pricing these luxury watches comes from the materials used for production, and the quality of the complications and finishing of the watches, the biggest part of the pricing is simply marketing. These big brands know all to well that the can ask a premium from their costumers, not just by improving their products, but by improving their story they tell their customers. You need to find out for yourself, where in this spectrum you find the balance of value for money. When you have a bit more to spend, you can easily opt for a premium. The benefit is that the higher side of the spectrum comes with finishing like no other, but there is a fine line between value for money, or just a premium price tag for a story.