Actual Profit in Reps

[Mariner89 0]

Even in lower priced gens, the build quality is far superior to your average, pube ridden rep. :P

Has anyone ever actually pulled a pube from a rep? Would love to know! !! :o

Haha it's funny you mention that ... the other day I was working on a ceramic sub I'm trying to rebuild ... somehow after I had got the crystal and bezel back on I held it up to the light and saw what I thought was a pub stuck under the hour hand ... turns out it was a beard hair I felt retarded

Guess we'll have to take your word that it was a beard hair and not a pube! lol

unless I accidentally rubbed my balls on the dial I'm pretty sure it was a beard hair haha

[DAY9080 3]

Even in lower priced gens, the build quality is far superior to your average, pube ridden rep. :P

Has anyone ever actually pulled a pube from a rep? Would love to know! !! :o

Haha it's funny you mention that ... the other day I was working on a ceramic sub I'm trying to rebuild ... somehow after I had got the crystal and bezel back on I held it up to the light and saw what I thought was a pub stuck under the hour hand ... turns out it was a beard hair I felt retarded

Guess we'll have to take your word that it was a beard hair and not a pube! lol

unless I accidentally rubbed my balls on the dial I'm pretty sure it was a beard hair haha

fair enough!! Haha!

You obviously know what you are doing if you are confident enough to rebuild a watch.

[DAY9080 3]

So is it more of a case of the bigger their balls, the higher the price! Get away with whatever Joe public are will to pay!

Just as Greg_r said some brands spend a ton on marketing perception as it is the main predictor of prices people will pay. I just can't blame them here. Luxury watches are not a necessary purchase and no one forces you to buy one. Hell, some people want them bad enough to buy replicas illegally.

 

As for profit margins, Archieluxury, that affable chap with impeccable taste has a take on this

Not familiar with Archieluxury but his argument is consistent with those posted and I guess we have 2 margins to consider. The margin of the company when they sell on to the retailer and the margin the retailer makes when they sell on to the consumer. So with companies like Christopher Ward selling directly, and not having any middle men so to speak, that may explain why they can see watches with quality Swiss movements at prices which seem preposterous.

[Pesman 9,461]

If you've not enjoyed Archieluxury before ... prepare yourself....

[aventerav 0]

If you've not enjoyed Archieluxury before ... prepare yourself....

Yeah I just watched a few of his videos, all I got out of him was a lot of whining.

[Mariner89 0]

If you've not enjoyed Archieluxury before ... prepare yourself....

Yeah I just watched a few of his videos, all I got out of him was a lot of whining.

That man is the epitome of class DAMMIT! ... do not talk beneath Archie!

[insert-here 0]

Could it have been nose hair?

[insert-here 0]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

[Left Coast Guy 24]

I've seen some numbers on this before, and they tracked to what Greg_r mentioned, around $600 in your average submariner, including labor and materials. The rest is marketing and mark up. And if you dig around, there is a post from one of the rep fora (can't recall which) detailing the the actual gold content in a gold watch, which I found interesting -- turns out there's only about $1200 including case and bracelet in a gold sub.

 

As for profit in reps, you can buy a A2824 retail for $90, so figure wholesale maybe tracks those down for $70. Then caseset runs another $50 and bracelet $30, so with dial, I'd presume your average high end rep runs $160 - $180 in part and labor alone, so that puts gross profit around 40% before you factor in sales & admin. And of course the factories and the dealers have to share that margin. From that I'd reckon its a good little market, but its not a get rich quick scheme.

[fetasigma 0]

here is a china made homage/gen for you......with mechanical movment, and working GMT, brand new......sold for 10 bucks shipping included........works like a charm too.....so if you really think your standard rep costs more than a couple bucks to make, you are fooling yourself

 

before i got into reps i had a lot of fun with cheapies from asia and bought mechanical watches for less that 20 bucks all the time that were all brand new

 

Edited November 4, 2015 by fetasigma

[Sakurai 1]

https://en.m.wikipedia.org/wiki/Veblen_good

[greg_r 81]

If you've not enjoyed Archieluxury before ... prepare yourself....

Yeah I just watched a few of his videos, all I got out of him was a lot of whining.

That man is the epitome of arse DAMMIT! ... do not talk beneath Archie!

 

fixed

[greg_r 81]

Same discussion can be had just about any product. Toyota vs Mercedes. Both do the same thing, but you won't see a sports hero or celebrity driving a Toyota. It's mostly about perception and marketing.

 

Bollocks. Ridiculous generalisation.

 

A good friend of mine is both a celebrity and a multi-millionaire. He drives a beat-up 30 year-old Landrover. His wife currently drives a Toyota.

[aventerav 0]

Apple got into the game of taking advantage of the large markups with a item that people want to show off too with the gold iWatch.

 

http://www.businessinsider.com/profit-margin-mark-up-on-gold-apple-watch-edition-2015-3?r=UK&IR=T

 

I wonder what the sales figures have been on the gold iWatch. With the difference being this iWatch value will crater once its obsolete in 6 months and just has a little bit of gold in it.

[deju 1,873]

I think everyone without a grasp of basic business and things like OVERHEADS should delete their replies... Le sigh.

 

As mentioned a Rolex sub is $500-600 to manufacture.

 

So many planks take the retail knock $600 off and think that's clear profit.

 

Did all the R&D and machinery and man hours involved perfecting the product fall out the sky for free?

 

That's even before we mention things like marketing/advertising/sponsorship.

 

I read (and take with a pinch of salt) that excluding AD profit that Rolex makes roughly clear profit of 30% on each watch.

[Hornet 1]

Rolex are never going to share their profit margins, so we'll never really know, but I suspect that the incidental costs down the chain add up. Still, can't imagine the Rolex board is worried about their business model.....

 

 

.....if any of us had a product that people consistently wanted to buy and you could put a large profit margin on it would you not do it? I bloody well would.

 

[Hornet 1]

I think everyone without a grasp of basic business and things like OVERHEADS should delete their replies... Le sigh.

 

As mentioned a Rolex sub is $500-600 to manufacture.

 

So many planks take the retail knock $600 off and think that's clear profit.

 

Did all the R&D and machinery and man hours involved perfecting the product fall out the sky for free?

 

That's even before we mention things like marketing/advertising/sponsorship.

 

I read (and take with a pinch of salt) that excluding AD profit that Rolex makes roughly clear profit of 30% on each watch.

 

+1.....

 

Read a few articles about Rolex's production facilities and you'll see where the money goes.

 

[GenTLe 1,501]

sad thing is as far as material costs go.....you probably have about 15-20 bucks in a watch if its stainless(sad i know, more if gold or other metals) now contruction costs and labor will add a bit more,,,,another 20 bucks if its a rep, a couple hundred if its a gen and thats a about it for actual cost of the physical item

 

Even a Rep that uses a Seagull or Miyota movement has $100+ just in movement costs.

Uhm... No.

Let's say 50$ at their buying volumes.

[Daffy 105]

There are companies out there that are turning out "rep" gold iWatches, by simply plating the stainless steel models.

[Left Coast Guy 24]

I think everyone without a grasp of basic business and things like OVERHEADS should delete their replies... Le sigh.

 

As mentioned a Rolex sub is $500-600 to manufacture.

 

So many planks take the retail knock $600 off and think that's clear profit.

 

Did all the R&D and machinery and man hours involved perfecting the product fall out the sky for free?

 

That's even before we mention things like marketing/advertising/sponsorship.

 

I read (and take with a pinch of salt) that excluding AD profit that Rolex makes roughly clear profit of 30% on each watch.

 

Well Richemont is public, shows a 27% profit margin, and is considered one of the laggards of the luxury goods makers. Louis Vuitton is probably a better comp and it runs in the 40-45% operating margin range. And like you said, before AD profit. And gross margins are north of 80% even at Richemont....

[tinnio 0]

I think everyone without a grasp of basic business and things like OVERHEADS should delete their replies... Le sigh.

 

As mentioned a Rolex sub is $500-600 to manufacture.

 

So many planks take the retail knock $600 off and think that's clear profit.

 

Did all the R&D and machinery and man hours involved perfecting the product fall out the sky for free?

 

That's even before we mention things like marketing/advertising/sponsorship.

 

I read (and take with a pinch of salt) that excluding AD profit that Rolex makes roughly clear profit of 30% on each watch.

 

Well Richemont is public, shows a 27% profit margin, and is considered one of the laggards of the luxury goods makers. Louis Vuitton is probably a better comp and it runs in the 40-45% operating margin range. And like you said, before AD profit. And gross margins are north of 80% even at Richemont....

Rolex has to spend more money on branding, since there is a reason it's the #1 Luxury brand in the world.

 

When someone wins the lottery, they go buy a Rolex and not a Patek or AP...and that kind of brand value is extremely valuable

 

That's one of the reasons why Rolex is pretty much the only watch company that actually keeps its value and you can make a profit by buying from the dealer. Which if you think about, makes ZERO sense since they make so many watches every year

[Bamadadof3 0]

I think everyone without a grasp of basic business and things like OVERHEADS should delete their replies... Le sigh.

 

As mentioned a Rolex sub is $500-600 to manufacture.

 

So many planks take the retail knock $600 off and think that's clear profit.

 

Did all the R&D and machinery and man hours involved perfecting the product fall out the sky for free?

 

That's even before we mention things like marketing/advertising/sponsorship.

 

I read (and take with a pinch of salt) that excluding AD profit that Rolex makes roughly clear profit of 30% on each watch.

 

Some of the machines Rolex invented and use on the line cost millions of dollars to make and then they have to be serviced quite often to maintain tolerances. These are machines that can't be bought anywhere else. The investment these watch companies have in line equipment alone is what keeps new watch companies from popping up. The cost to make an in-house movement and then tool it up for mass production is so cost prohibitive only 3 companies that I know of have even attempted it in the last 10 years with RGM here in America being one. Go look at their watch prices and it will show it's a very expensive proposition.

[Bamadadof3 0]

I think everyone without a grasp of basic business and things like OVERHEADS should delete their replies... Le sigh.

 

As mentioned a Rolex sub is $500-600 to manufacture.

 

So many planks take the retail knock $600 off and think that's clear profit.

 

Did all the R&D and machinery and man hours involved perfecting the product fall out the sky for free?

 

That's even before we mention things like marketing/advertising/sponsorship.

 

I read (and take with a pinch of salt) that excluding AD profit that Rolex makes roughly clear profit of 30% on each watch.

 

Well Richemont is public, shows a 27% profit margin, and is considered one of the laggards of the luxury goods makers. Louis Vuitton is probably a better comp and it runs in the 40-45% operating margin range. And like you said, before AD profit. And gross margins are north of 80% even at Richemont....

Rolex has to spend more money on branding, since there is a reason it's the #1 Luxury brand in the world.

 

When someone wins the lottery, they go buy a Rolex and not a Patek or AP...and that kind of brand value is extremely valuable

 

That's one of the reasons why Rolex is pretty much the only watch company that actually keeps its value and you can make a profit by buying from the dealer. Which if you think about, makes ZERO sense since they make so many watches every year

 

The cost to sponsor a major golf tourney is several million. Sponsorship of race car events for a whole season I'm sure would top $15 million. It takes a lot of watch sales to recoup that kind of skittles...

[rawbaws 91]

here is a china made homage/gen for you......with mechanical movment, and working GMT, brand new......sold for 10 bucks shipping included........works like a charm too.....so if you really think your standard rep costs more than a couple bucks to make, you are fooling yourself

 

before i got into reps i had a lot of fun with cheapies from asia and bought mechanical watches for less that 20 bucks all the time that were all brand new

 

 

That bracelet looks like it is about to fall apart

[Testomatic 0]

Rolex EBITDA is around 30% in line with it s peers in the luxury segment and confirmed by Rolex CEO

 

The company doesn t publish their financials but this market is very consistent from one vendor to another.

 

To compare, the ebitda of mercedes is 10% and Apple 36% so this gives you a scale of where luxury stands.

 

As for profit per watch it is good but not 500%. Rolex sells 820,000 watches a year to the AD network this translates into 4bn usd approx in sales for rollie... And that s about 5000 usd per watch so after all expenses rolex pulls into about 500-800$ in net profit per unit

 

One particularity is rolex does not pay taxes as it is a foundation thus giving it a slight edge against competitors (but i m not 100 pct sure this is true, i think the foundations ownes the shares but rolex pays taxes)

 

It s a good business but not a phenomenal one as the volumes have to stay constrained to ensure exclusivity. rolex is also investing massively in their factories and has a fully integrated production which is unique - they do all te steps of the watch making process in house and this comes at a significant cost.

 

Ok and now margins at out TDs ? My calculation give markups of 60-150usd per watch which covers costs for the website, the QC effort, the money mules, the transhippers, a few front men and spending their life answering our emails. Not a bad business but not a great one either. Net I d say a TD pulls in about 40$-60$ a piece on average generating an income of 100k$ usd a year.