Something is worth exactly what someone will pay for it. If someone is willing to pay a million dollars for a Timex Marlin, that’s what it’s worth. If someone’s willing to pay $10 for a Richard Mille (my bid) and no one will pay a dime more (which they shouldn’t), it’s worth $10. Of course none of that addresses the key question: is an expensive watch worth it? . . .
What’s an expensive watch?
What’s expensive for me might not be expensive for you or vice versa. So let’s define an “expensive watch” as anything that costs $20k and up.
Why Are Expensive Watches So Expensive?
Once upon a time, big bucks bought a gold watch. Period. These days, the sub-$20k price point is lousy with watches encased in gold, platinum, titanium, carbon fiber and ceramic.
Accurate timekeeping and cool complications (chronographs, perpetual calendars, moon phase, etc.) that were once big ticket items are now available in inexpensive G-SHOCKs, Seiko Astrons and smartwatches – some boasting the aforementioned exotic materials.
There are two main reasons why watchmakers charge $20k and up for a wristwatch: money and marketing.
1. Making and selling an expensive watch costs a lot of money
The trick to making money: to take in more than you spend. High-end watchmakers spend a lot of money, and it ain’t on materials.
Take a good close look at a $20k watch – and I mean a really close look. Clock the meticulously finished surfaces. The work is performed by hand by highly-skilled and, in the case of Swiss watches, unionized craftsmen. Slowly.
Even when watch parts are made by machines – as they are with Grand Seiko and Rolex – the computerized equipment is expensive, the facilities housing them aren’t cheap, and expert machinists aren’t a dime a dozen. And there’s still a massive amount of hand assembly and quality control.
An expensive watch has to be designed – considering what’s already been done, what could be done and what will sell. There aren’t a whole lot of people who have the technical know-how and artistic vision to design a Hublot Big Bang Ferrari 1000 GP. They like to work in nice offices for big salaries using the latest computers.
By the same token, someone’s got to see the watch through the design, prototyping and production stages – a project management challenge that can span years. And that’s just the making-the-thing part of the program.
Although the internet has reduced the costs of marketing, the savings aren’t significant at the $20k-and-up watch level. Watchmakers in that rarified air spend huge wads of cash on high end events, watch fairs, advertising, company owned boutiques, quaffing champers with celebrities, enablers and customers, and more.
If I said that marketing can account for half the cost of a $20k-plus timepiece would you be surprised? Offended? The truth hurts.
2. Watchmakers charge $20k for an expensive watch because they can
The second part of the cost equation is instructive. When you buy an Audemars Piguet you’re not just paying for a watch, you’re paying for the entire company: executives, employees, buildings, travel expenses, etc. More than that, perhaps above all, you’re buying their reputation. Think of it this way . . .
All watchmakers are subject to the law of supply and demand. If NET-A-PORTER charges $50k for a Royal Oak Automatic 37mm 18-karat frosted white gold it’s because they can. The price has less to do with the cost of production than it does the amount of demand. And that demand depends on AP’s reputation.
Grand Seiko also sells $20k-and-up timepieces. But their relative lack of reputation – despite astounding product quality and an illustrious brand history – is reflected in the relative lack of demand for their products. (You can bet that limited edition watches in that price range are limited by consumer interest.) The same “problem” afflicts Jaeger-leCoultre.
Not so Patek Philippe, Audemars Piguet or A. Lange & Söhne. A brand’s reputation is also model specific; all these companies have watches that are as good as their halo timepieces (e.g., the Patek Philippe Nautilus) that stand zero chance of making the same money (e.g., the AP Code 11.59).
As our man Adams pointed out, price is all about marketing. Watchmakers charge what they can on a cost-plus basis. The retail price reflects their reputation vis-a-vis the competition. An Audemars Piguet Royal Oak is a better watch than other watches or other of their products – not to mention dozens of competitors – only in the sense that consumers believe it is.
Is an expensive watch worth it?
I don’t suppose the answer to our central question will come as much of a surprise. We can talk about depreciation, but really? A $20k-and-up watch is worth it if you think it’s worth it.
The issue is clouded by a simple fact: there’s a huge selection of “as good” watches well below that price point. In fact, there have never been so many excellent timepieces in the $10k – $20k range – especially if you’re willing to buy pre-owned.
Ultimately, what you’re surrendering, what you can’t get below $20k for a new watch, is elaborately hand-finished movements. Details that are largely invisible to the naked eye. (That said, transparent casebacks are standard fare and you can buy a jeweler’s loupe for under $20.)
I’ve been saving up for a Vacheron Constantin Overseas, reserved for me for a hair under $20k. It’s worth it because I want it. Ultimately, it’s as simple as that.
I worked in consulting and, in part, having fancy (but recognizable) watches and tailored suits showed that you were good at your job and had a track record that your clients could trust in. The relative expensiveness of the product IS the product in the case of some brands.
There’s no doubt this is true. Products like watches (or handbags, some cars, sunglasses…) have a signaling effect. They say something about you. And people will pay dearly to say something about themselves without needing to actually say it in words.
Regarding finishing:
“It is usually the case that when a watchmaker cannot make a technical advance, he will divert himself by decorating his work.”
George Daniels
High end watchmakers don’t lose money adhering to the old adage, sell the sizzle not the steak.
The headstone for the Swiss watch industry (except for a couple companies) will read “But look at the finishing.” Decoration is the one thing the Swiss can do reliably. Not good design, not cohesive model lineups, not compelling brad identities. One of the most reliable ways to tell a undesirable watch is to see how much the review talks about the finishing. A Patek? It’s an MF-ing Patek. A Royal Oak? It’s an MF-ing Royal Oak. CODE 11.59? But look at the finishing. Richemont? But look at the finishing.
Im an consulting engineer. In my trade if you dress up in expensive designer suit, designer sunglases and expensive watch of brands mentioned above) your considered a failure. Why? Because you have to compensate knowledge and experience with looks. What you wear is casual simple stuff, sunglases that have quality but dont screem in brand, like american optical or randolph, watches that are funktional and under the radar, seiko (these can be a grand seiko because engineers love inovative unusual stuff), maybe omega, citizen or no watch at all. Anything that is a “fashion/luxury brand” is an absolute no go and a red flag for fellow engineers/potential clients (nostly also engineers by trade).