Why Are Luxury Watches So Expensive?

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When you hear about a watch that costs five figures or more, you likely wonder if that watch is truly worth that amount of money. The truth is, most of these watches cost that much because they are simply made better than your standard everyday watch is. That being said, if you’re considering purchasing a luxury watch, you have a right to know why they are priced the way they are. If you’ve always wondered about this, then today is your lucky day. There are many reasons why luxury watches cost so much, and below are some of those reasons.

7 Reasons Why Luxury Watches Are Expensive

1. There Is an Emotional Value to Them

While many people don’t realize it, luxury watches have an emotional value to them. People who buy a watch from Rolex or Patek Philippe know that they’re good watches, but it isn’t just a financial decision to them. These people like the prestige of wearing this type of watch as much as they like the watch itself. By definition, a luxury item is something we don’t need – it’s something we want. Companies that make luxury watches know this, and they’re counting on the fact that a buyer’s emotions are going to play into the decision to buy a particular watch. In fact, they use that fact to market to these very people, and it’s always worth it in the end.

2. Marketing and Promotion

Marketing and promotion are important parts of the sales process because without marketing and promotion, no one would ever hear about the watches, much less buy them. By the time a watch hits the market, a lot of money has been spent on developing it, yet the watch companies haven’t made a penny yet. When they’re ready, they send their watches to retailers, and the price has to be marked up so that both the watch company and the retailer can make a profit. Marketing and promotional efforts cost a lot of money, and to make it even more of a challenge, these efforts have to be ongoing. All of this put together means the final price of the watch is going to be high.

3. It Costs a Lot to Produce the Watch

Simply put, most luxury watches are expensive to make. These are not watches that use inexpensive parts and components but instead, all of the components are top-notch and made from the very best materials. Even if the companies decide to put just a small markup on their watches, they’re still bound to cost a lot of money. Some of the things they use to make the watches include sapphire crystals and Swiss movements, to name a few. The more components they add that are high in quality and expensive to the watch company, the higher the final price will be for the consumer. Of course, high-quality parts are highly desired, which is another reason why luxury watch companies have so many customers.

4. Its Perceived Value Is Enormous

It is said that the number-one rule of real estate is that a house is worth what just one person is willing to pay for it, and the same can be said for watches. The truth is, regardless of the economy, there are always going to be customers who can afford to pay a lot for a quality watch. This includes not just customers but also collectors, who have been known to pay tons of money for these watches. Watch manufacturers are not trying to price-gouge anyone, but they know that their well-made watches will always have customers ready to put down good money on them. This can keep the prices up for a long time.

5. They Often Are Assembled by Hand

Many luxury watches, including Rolex, use computers and robots for much of the manufacturing process, but there are some things only humans can do, and that costs money. Rolex, for example, assembles by hand functions such as bracelets and watch movements. In addition, before the company sends their watches to COSC for chronometer certification, humans have to double-check everything to make sure everything is perfect. Not only does this take time, but it takes money as well. Of course, it’s worth it because the quality of a Rolex is second to none. Nevertheless, this is one of the reasons why they cost so much money.

6. The Law of Supply and Demand – but Mostly Demand!

When a luxury watch is in demand, the company knows it will always get the price it’s asking for the watch in the end. High-end watches are always in demand, and the watch companies know this. Again, they are not out to overcharge anyone, but they know what their watches are worth and they know there are people out there who can afford them. Between collectors and those with discerning tastes, luxury watches will never lack for customers, and this is yet another reason why the watches are so expensive.

7. They Often Increase in Value Over Time

A watch made by Rolex or Patek Philippe has name recognition, and that name is very valuable. These are expensive and well-made watches, so they do not depreciate like other watches do. In fact, if you own one of these watches and you sell it later on, you might even make some money on the transaction. High-end watches are expensive, yes, but they are worth what you’re paying for them because they tend to last and keep their value much longer than the average watch does.