Actual Profit in Reps

[DAY9080 3]

Given the amount of effort that goes into the production of these reps, take for example this IWC Aqua Timer rep on a friends wrist...

I am intrigued as to how much profit is actually in it for the rep makers. Taking it one step further, how much profit is really in there in the Gens since the quality of the Super Reps seems so high?

Has anyone ever pondered this and actually done some digging?

Just being a curious Joe!

[Mariner89 0]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

[FL13 511]

Reps dont have to support AD costs, QC costs, Advertising costs, development and design costs.

 

Reps just use the Gens to do all this.

 

Super Reps only cover the costs of the materials, movement, and Rep Dealer.

 

 

[greg_r 81]

The gen manufacturers spend more on marketing than they do on actually manufacturing the watch.

 

There's a healthy profit to be made in reps, but nothing like what the gen manufacturers are making...

[fetasigma 0]

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

[DAY9080 3]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

I was talking with a fellow enthusiast today and he paid £230 for an AP RO rep which retails at £13000. Now do they really spend that much on ads and marketing etc to justify, let's say the watch costs them £1000 to make, an £11000 markup?

Is it just our human desire to have exclusivity that allows them to justify their hefty profit margins?

Are most manufacturers privately owned or public owned companies? Just s thought that crossed my mind this instant.

[FL13 511]

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.

[DAY9080 3]

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

 

I guess this is where all these Kickstarter companies come in. I've seen a surge in companies offering affordable automatic watches but the problem here is some of these will never see the light of day!

 

If there were a Kickstarter or a small boutique brand that made watches that look like the super ocean heritage or the avenger 2 or the world timer (yea, I love Breitlings) I would spend soooooo much money with them!

 

None of you are hiding this knowledge in your back pockets are you? :P

Edited November 4, 2015 by DAY9080

[greg_r 81]

Obviously a gen costs a good deal more to manufacture than the average rep - however, bear in mind that retail price for these kinda goods is based on perceived value (i.e, what they think they can get away with) not manufacturing cost.

 

It has been said that a Rolex sub costs around $600 to manufacture... How accurate that is, I can't tell you but it seems likely to be in the right ballpark.

[Pesman 9,461]

This is an oft trod discussion Rep's of a luxury item are interesting in as much as they highlight the massive disparity between something that looks like the real thing and the real thing itself. However a luxury watch is just that a luxury. To the OP'S point though I am intrigued that material and labour costs are so small . Even allowing for tooling etc. I assume a lot of parts are shared between workshops and high-end reps are rising in price

Edited November 4, 2015 by Pesman

[Mariner89 0]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

I was talking with a fellow enthusiast today and he paid £230 for an AP RO rep which retails at £13000. Now do they really spend that much on ads and marketing etc to justify, let's say the watch costs them £1000 to make, an £11000 markup?

Is it just our human desire to have exclusivity that allows them to justify their hefty profit margins?

Are most manufacturers privately owned or public owned companies? Just s thought that crossed my mind this instant.

That's basically it ... most brands i.e. Rolex, Omega, Breitling, IWC etc. don't cost more than 1000 bucks(my guess) to actually build ... so every bit extra is mark-up to pay for the workers, HQ, ads, sponsorships, R&D, materials you name it. I wouldn't be suprised if all of that actually only adds up to 50% of the final price and the other 50% is pure profit (again my guess)

[fetasigma 0]

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.

yeah but you are upping the movement quality even then the material costs remain the same, its just contruction costs that go up. Not to mentionand you are talking about how much it costs you the consumer to get that movement, it is much cheaper when you buy in bulk to build watches. if i can buy a 21j watch for less than 10 bucks on ebay that tell you the actuall cost of the standard movement

[Pesman 9,461]

I would also add that reps have actually led me to buy gens and the jump in build quality is marked. They just are solid. Saying that the most I've spent is £3500 on a speed master and at least that has appreciated in value. At the end of the day the mechanics is what makes these desirable. I'd we wanted accuracy we'd all wear quartz! Plus I can dive to 600m! Which, of course I do regularly. ..

Edited November 4, 2015 by Pesman

[DAY9080 3]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

I was talking with a fellow enthusiast today and he paid £230 for an AP RO rep which retails at £13000. Now do they really spend that much on ads and marketing etc to justify, let's say the watch costs them £1000 to make, an £11000 markup?

Is it just our human desire to have exclusivity that allows them to justify their hefty profit margins?

Are most manufacturers privately owned or public owned companies? Just s thought that crossed my mind this instant.

That's basically it ... most brands i.e. Rolex, Omega, Breitling, IWC etc. don't cost more than 1000 bucks(my guess) to actually build ... so every bit extra is mark-up to pay for the workers, HQ, ads, sponsorships, R&D, materials you name it. I wouldn't be suprised if all of that actually only adds up to 50% of the final price and the other 50% is pure profit (again my guess)

 

Something tells me that the margin is a lot greater. I see a ton of adverts for Christopher Ward, a beautiful Swiss made gen watch which doesn't break the bank at all (typically £600). 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!

 

There is obviously some quality difference between the gens and reps but I just question whether the difference is proportional to the difference in price... I can't say I have ever seen any of the major brands with on any TV spots... Maybe it is the sponsorship of major sporting events etc but I'm sure Citizen has done similar things at one time and made timers/clocks for major events but their watches are still reasonably priced.

[Pesman 9,461]

:wub: for Christopher Ward. The new Trident is a cracking auto dive watch for £550. Wheras a Bremont seems massively over-priced for UK watch using modified movements at £3500 upwards. Edited November 4, 2015 by Pesman

[Mariner89 0]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

I was talking with a fellow enthusiast today and he paid £230 for an AP RO rep which retails at £13000. Now do they really spend that much on ads and marketing etc to justify, let's say the watch costs them £1000 to make, an £11000 markup?

Is it just our human desire to have exclusivity that allows them to justify their hefty profit margins?

Are most manufacturers privately owned or public owned companies? Just s thought that crossed my mind this instant.

That's basically it ... most brands i.e. Rolex, Omega, Breitling, IWC etc. don't cost more than 1000 bucks(my guess) to actually build ... so every bit extra is mark-up to pay for the workers, HQ, ads, sponsorships, R&D, materials you name it. I wouldn't be suprised if all of that actually only adds up to 50% of the final price and the other 50% is pure profit (again my guess)

 

Something tells me that the margin is a lot greater. I see a ton of adverts for Christopher Ward, a beautiful Swiss made gen watch which doesn't break the bank at all (typically £600). 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!

 

There is obviously some quality difference between the gens and reps but I just question whether the difference is proportional to the difference in price... I can't say I have ever seen any of the major brands with on any TV spots... Maybe it is the sponsorship of major sporting events etc but I'm sure Citizen has done similar things at one time and made timers/clocks for major events but their watches are still reasonably priced.

True that lesser swiss brands and japanese brands sponsor ... But how may Movie stars and Athletes and VIPs do you see wearing CW or Seikos to a Gala or event. Those guys don't pay a single penny for those 30,000$ watches ... that's because when they are seen wearing these brands that's better advertisement than almost anything else. And you'd be hard pressed to find any tennis match, golf tournament, F1 race, or most other sports on a professional level sponsored by anything other than Rolex Omega or Hublot. They just simply spend an absurd amount on marketing. But again I think that after all costs of operations and marketing are taken away I still wouldn't be surprised if 50% of the retail price is pure profit

[Gazzla 23]

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

[Pesman 9,461]

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

Edited November 4, 2015 by Pesman

[DAY9080 3]

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

Haha... Fortunately I've managed to avoid the pube ridden reps! Your comment does get ones mind conjuring some disturbing images!

[aventerav 0]

Yes gen's do have a huge markup but they will also cost much more to produce, think of where they are getting produced. You still have to calculate the labor to make the watches which is going to be much higher than some shady operation where they probably barely pay the workers in China. If Rolex was priced too low you would see everyone with them, so they price them higher out of reach of most people or enough where people can't justify the cost of a watch. Theres many people out there who want a $8k Rolex just to show off. They don't seem to care they are spending $8000 on something that may cost $500 as mentioned after all the costs are calculated, they just want to have the name on their wrist no matter what the cost. I mean why do people honestly pay $50k for a Patek? Is it really that superior to a watch much less the cost? No, generally it would be for someone who wants to flaunt the money they have to drop the amount a car costs on their wrist.

[Pesman 9,461]

Let's not forget that our friendly TD do pretty well too. Recently a trade sale to me saw a drop of nearly a third on a rep price so they do okay. Mind you its hardly like walking to Argos to buy something so I don't envy them the midnight scrums to pick up their watches before the factory is raided.

[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

[DAY9080 3]

You would shit a brick if you knew how much profit Gens make ... not for the retail seller but for the company ... but to be fair most brands spend a lot more than we realize on things other than R&D and construction ... like ads, sponsorships, charity, and all sorts of other marketing shenanigans but they obviously still make a hefty profit

I was talking with a fellow enthusiast today and he paid £230 for an AP RO rep which retails at £13000. Now do they really spend that much on ads and marketing etc to justify, let's say the watch costs them £1000 to make, an £11000 markup?

Is it just our human desire to have exclusivity that allows them to justify their hefty profit margins?

Are most manufacturers privately owned or public owned companies? Just s thought that crossed my mind this instant.

That's basically it ... most brands i.e. Rolex, Omega, Breitling, IWC etc. don't cost more than 1000 bucks(my guess) to actually build ... so every bit extra is mark-up to pay for the workers, HQ, ads, sponsorships, R&D, materials you name it. I wouldn't be suprised if all of that actually only adds up to 50% of the final price and the other 50% is pure profit (again my guess)

 

Something tells me that the margin is a lot greater. I see a ton of adverts for Christopher Ward, a beautiful Swiss made gen watch which doesn't break the bank at all (typically £600). 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!

 

There is obviously some quality difference between the gens and reps but I just question whether the difference is proportional to the difference in price... I can't say I have ever seen any of the major brands with on any TV spots... Maybe it is the sponsorship of major sporting events etc but I'm sure Citizen has done similar things at one time and made timers/clocks for major events but their watches are still reasonably priced.

True that lesser swiss brands and japanese brands sponsor ... But how may Movie stars and Athletes and VIPs do you see wearing CW or Seikos to a Gala or event. Those guys don't pay a single penny for those 30,000$ watches ... that's because when they are seen wearing these brands that's better advertisement than almost anything else. And you'd be hard pressed to find any tennis match, golf tournament, F1 race, or most other sports on a professional level sponsored by anything other than Rolex Omega or Hublot. They just simply spend an absurd amount on marketing. But again I think that after all costs of operations and marketing are taken away I still wouldn't be surprised if 50% of the retail price is pure profit

I know... I have never seen James Bond wearing a Seiko diver! Even the Bremonts that appeared in Kingsman had me immediately racing to their website!

I guess I am one of the lemmings that allows them to justify their margins!

None the less, I agree with Pesman and others who have stated that the rep is the doorway to the gen!

My journey into the rep world led me to rid myself of all my Tissot and Hamilton Quartz watches in favour of Panerai and Breitling reps! This also led to a purchase of many Tissot and Hamilton automatic gens... So... I guess we are back at the beginning... It all comes down to perceived value and therefore your profit margin is whatever you can get over the cost of making your consumer believe that it is worth the premium you have placed on it! Take that Einstein! Who needs e=mc^2?!

[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

[myaz 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