Why doesn’t Rolex just raise MSRP on SS?

[HappyFish]

Yes, hopefully there gonna be a recession in the US - so i can get all their credit-card financed watches for low! ;-) I dont fear any recession - in the opposite - it`s the time for bargaining! Vintage cars, Arts, precious watches - they all survived any downturn very, very well!

Don`t listen to the gloomsters!

[SkyJuice]

Actually the real question is why didnt Rolex increase the SS stainless steel production.

[904VT]

Originally Posted by brandrea

What would Hans think of all this now?

He would probably think we were all crazy


And I'm sure he would say "Yes, it's safe to wear your Rolex" hahaha

[dtwer]

Originally Posted by SkyJuice

Actually the real question is why didnt Rolex increase the SS stainless steel production.

Value retention.

Right now the Rolex ADs get to sell every SS sport at full msrp and people would give up their right arm for the privilege of buying one. This is the golden era to be selling Rolexes and Rolex is unlikely to not know it.

[outtatime]

Originally Posted by dannyp

Rolex doesn't need to for three reasons:

3. Rolex is a not-for-profit company, giving all of its proceeds to a children's charity, so leaving some money on the table isn't as big a deal compared to others.

I would love to see the actual details on this. As far as I've seen, while their company is, yes, technically owned by a charitable trust, it's all very closed-books sort of thing. Does that "charitable trust" distribute funds to some charity? Probably. Does it donate "100% of the proceeds to a children's charity"? I highly doubt that.

[TheWatchEnthusiast]

Originally Posted by MinMay

I vote for an increase based on the market...maybe now people who really want a Rolex..can walk into a store and pick one.

If Daytona is selling for 25K, then raise it 25K. If Submariner selling for 10K, then price it at 10K. It's that simple.

How this will solve anything?? If you want to pay these prices go grey and pay and get anything you want now. If the MSRP gets where the aftermarket values are now then the aftermarket prices will rise further.
Raising the prices will not help any of us getting the watch from an AD. Raising production will but Rolex definitely has dramatically cut production. My AD which has provided me almost all the popular watches I wanted says that this year is even worse than last year by far.
The SS professional line watches will only trickle in.


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[exador]

Prices did go up in a lot of countries post Baselworld.

[TheWatchEnthusiast]

Originally Posted by exador

Prices did go up in a lot of countries post Baselworld.

We all pay more if you think that we use to get discounts on MSRP and now we are begging to pay full MSRP. Never mind that many are forced to pay much higher prices on the gray market because we know it’s almost impossible to get one at full MSRP.
Now we have to pay almost if not full MSRP for the PM models too. That is what the artificial shortage has done.




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[dbleoh7]

Originally Posted by dannyp

Rolex doesn't need to for three reasons:

1. The perceived scarcity and associated hype ultimately drives sales of more expensive pieces.

2. Rolex wants to use price to position its watches relative to those of other houses (i.e. a SS Rolex should cost a bit more than a comparable Omega or Breitling but still be less than a comparable Patek or AP).

3. Rolex is a not-for-profit company, giving all of its proceeds to a children's charity, so leaving some money on the table isn't as big a deal compared to others.

Spoiler alert. Non-profits are rarely not for profit. They use their yearly profits to pad their executives wallets so they can still remain non-profit to evade taxes

[dannyp]

Originally Posted by outtatime

I would love to see the actual details on this. As far as I've seen, while their company is, yes, technically owned by a charitable trust, it's all very closed-books sort of thing. Does that "charitable trust" distribute funds to some charity? Probably. Does it donate "100% of the proceeds to a children's charity"? I highly doubt that.

The story I'd heard was that Rolex's founder was an orphan and therefore set up the company to benefit an orphanage in perpetuity. How it actually works, I am not sure.

Originally Posted by dbleoh7

Spoiler alert. Non-profits are rarely not for profit. They use their yearly profits to pad their executives wallets so they can still remain non-profit to evade taxes

Certainly true with some, but hardly all. Regardless, the point is that Rolex isn't beholden to quarterly earnings as other companies are, and the pressure to push margins as far as possible isn't there to the same degree.

[mailman]

Originally Posted by SS Oyster

Rolex should keep prices the sane, but increase margins by selling direct to consumer online or through their own “Rolex Owned” boutiques. That way, Rolex will make the MSRP and not just 60% if the MSRP as they do today with 40% going to the AD.


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If Rolex sold direct to the consumer online it would make them no different than Invicta.

[timepieceluvr]

So many economists....


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[Jojoshop]

Originally Posted by Zakalwe

Assuming the bubble does burst, it would be hugely damaging for a luxury brand to reduce prices, which could theoretically be a risk if they try to approach market value for SS pieces.

Furthermore, whatever the TRF party-line, a lot of “casual buyers” buy Rolex because of the strength of resale value. That resale value, in proportional terms, would diminish with substantial price increases.

Not sure if there is any bubble out there from Rolex as a company. Their prices are reasonable. Gray, yes there is a bubble and not sure when it will hurst,
Another bubble start showing up. Other brands such as seiko are now listed for ~$5k. Seriously, love seiko but this is kind of way overpriced piece

[johnny.tran1]

raising the prices on these SS pieces would make them even harder to get.

[Jojoshop]

Prices are not the issue. Every single Rolex you want is out there at a price. Higher MSRP means higher gray. The margin won’t change it will just translate to higher $ profit.
They need better governance in how to ensure gray access to brand new watches is limited. Move to boutique might be an answer but o don’t think that would work perfectly either since they will get better control but customers in small cities will lose direct access


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[Molnboman]

Originally Posted by TickTockChuck

I think Rolex takes a careful, measured long term view in it's pricing to avoid an unthinkable (for them) price cut should the world economy tank...and it will at some point. If you follow their pricing history it only moves up in measured steps. They still need to sell a million units each year between Rolex and Tudor and most buyers are just regular hard working folks and not super rich. Jacking prices to current Grey market bubble prices isn't going to happen nor would it help anything imho. Stay the course and supply will catch up with demand eventually. My 2 cents. Cheers!

Very good point, which perhaps explains the mass investment in Tudor over the past few years. To keep the factory busy 24/7 They need to strengthen their “ gatekeeping brand” if there is a downturn in Roltex business....if that’ll ever happen.


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[blankapdx]

Originally Posted by HappyFish

Yes, hopefully there gonna be a recession in the US - so i can get all their credit-card financed watches for low! ;-) I dont fear any recession - in the opposite - it`s the time for bargaining! Vintage cars, Arts, precious watches - they all survived any downturn very, very well!

Don`t listen to the gloomsters!

Hoping for a recession because you want to buy cheaper luxury items. Shame on you. Do you even think about how many people would suffer if there is a recession?

[Turnaround]

Originally Posted by dannyp

3. Rolex is a not-for-profit company, giving all of its proceeds to a children's charity, so leaving some money on the table isn't as big a deal compared to others.

I forgot about this, and you just really sold me on more Rolex. I’m helping out these kids as much as I can.

[orhanbalu]

Rolex is just supporting secondhand market, their market strategy


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[kog]

Here's my take on this. I think Rolex have a large stock of precious metal watches not selling anywhere near as fast as the SS. They can't lower the price of their precious metal watches because that cheapens the brand and annoys existing customers so they restrict SS models. This allows Rolex to build stocks of SS and shift the precious metal models and creates more demand for the brand. Its a win win win for Rolex.

It seams Rolex stick to their business model with the same rigour that they do their watch making Raising and lowering prices at a whim doesn't give customers confidence in a brand.

[Gravity]

Originally Posted by Watchdaytona

None of the boutiques are owned by Rolex, they are owned by chains.

Pretty sure Rolex owns the shop in the Wynn, only one in the world.

[myusernamez]

Originally Posted by Zakalwe

Assuming the bubble does burst, it would be hugely damaging for a luxury brand to reduce prices, which could theoretically be a risk if they try to approach market value for SS pieces.

Furthermore, whatever the TRF party-line, a lot of “casual buyers” buy Rolex because of the strength of resale value. That resale value, in proportional terms, would diminish with substantial price increases.

They wouldn't discount prices in that case. They would allow AD discounts for real buyers but for average Joe just looking into the window and seeing MSRP prices would still think in terms of crazy expensive.

[Rashid.bk]

Originally Posted by KFP55

More that I’d like to be able to buy the watch I want when I want it - and be able to see them in person before making the decision. If they increased prices they’d inherently decrease the number of flippers bc there would be a smaller (or no) after market premium. Feels like there is a happy medium here

You're delusional if you think that. If you priced a Submariner at $10k we'd still be in this situation and even worse if they raised production for all watches to be in the shelf.

All that would create is a loss of value and then return to five years ago where Submariners and even GMTs sat in cases and grays offered huge discounts. Today Rolex sells every single watch.

Raising prices would only hurt the average buyer, greys already have two things, established relationships and deep pockets. Flippers will have the same access as you and now all that will exists is a BLRO being sold for $24k market price vs the $17-18k we're seeing now.

Also, I just don't believe a ss Rolex is worth more than they are charging now. If you price a Daytona C at $17k or a BLNR/BLRO at $13k MSRP, then at that point I'm looking at AP.
Rolex has priced the watches accordingly and the reason they're not available is because this extremely robust middle layer of resellers who discovered how to make a buck on resale merchandise. There isn't a huge monumental global spike in demand, there is a spike in resellers. All the watches you could ever want are readily available at your nearest reseller.
It happens with sneakers and clothes all the time. If you think raising prices will solve this problem you really must have money to burn.

[Brew]

You are trying to fix a, "problem" that Rolex does not recognize as being a problem. Good luck with that.

[Rashid.bk]

Originally Posted by Gravity

Pretty sure Rolex owns the shop in the Wynn, only one in the world.

The Wynn in the US?...I am pretty sure that isn't correct. The only Rolex owned boutique is Chrono-Time in Geneva unless that has changed in the last year or so.
I may be wrong however.

[myusernamez]

Originally Posted by blankapdx

Hoping for a recession because you want to buy cheaper luxury items. Shame on you. Do you even think about how many people would suffer if there is a recession?

No - stop putting words in his mouth. I agree with him because I prefer to buy low and sell high. Hoping to have such an opportunity does not equal hoping people will be miserable. Of course, it's not fun for people to be in (financial) distress but yes I hope for a remake of 2008/2009 myself so I can seed capital and watch it triple over the next 10 years.

With or without us buying at low prices recession come and go anyway and you shouldn't blame the recession - blame the bubbles created by central banks.

Giving people access to cheap credit and pushing them to consumption ( Americans are great at that) is the real cause of their distress, not the recession itself.

Gimme cheap shares and yes I'll buy goods off people selling to pay their next CC statement and I'm not one bit ashamed of that. Welcome to capitalism.

[AK797]

Originally Posted by kog

Here's my take on this. I think Rolex have a large stock of precious metal watches not selling anywhere near as fast as the SS. They can't lower the price of their precious metal watches because that cheapens the brand and annoys existing customers so they restrict SS models. This allows Rolex to build stocks of SS and shift the precious metal models and creates more demand for the brand. Its a win win win for Rolex.

It seams Rolex stick to their business model with the same rigour that they do their watch making Raising and lowering prices at a whim doesn't give customers confidence in a brand.

They can't raise and lower prices willy nilly as you say because it would hurt the brand, nor can they adjust production this way as the very traditional Rolex plan things out years in advance, so there is no conspiracy to help gold models and restrict SS models etc.

All Rolex have ever publicly stated is that they are trying to curb the grey market by making ADs more selective to whom they sell, they have not made any stated changes to supply or price, so their measures of course are mere trifles when you are in a price/demand spiral as many watches are now engulfed in, and Patek far more so than Rolex.

[Wizardly]

It just struck me that this particular thread reads like a Stock Market forum.