ROLEX markup

Originally Posted by Gedanken

Well, John, let's look at Commerce 101, shall we?

The seller's interest is in getting the highest price.

The buyer's interest is in getting the lowest price.

The only way both sides will walk away happy is by being mongrels in the bargaining process.

Simple.

Maybe it's just my Asian heritage, but by my reckoning taking the first offered price equates to bending over, spreading them and sending out an engraved invitation. If somebody offers me a good deal, I'll not only come back as repeat business, I'll get all my mates to come along. If somebody refuses to budge, he's cutting off his nose to spite his face - if he doesn't want my dollar, I'm sure his competitors will.

Sure, when I negotiate there's a lot of good-natured barbs flying about. I'll accuse the seller of robbing me blind, and in turn he'll say that I'm taking food out of his firstborn's mouth. Far as I'm concerned, it's part and parcel of the business and exactly the way in which he earns my money. After all, the AD's the third party - he makes his money by conducting the transaction and the bargaining that comes with it, not by making the watches himself. If he can't take that kind of heat he's in the wrong line of work.

I don't think your wage analogy applies here. The wage is based upon an already agreed-upon amount, and while it is subject to negotiation, there's already a figure that both sides have accepted. There's no such agreement when a buyer walks in through an AD's door.

Very good post James! I agree completely.

[Gedanken]

Al, I've never understood why someone would subscribe to the profit-per-sale model instead of going for volume. It's pure madness.

One of the fundamental aspects of business, any business, is leverage. Giving someone a good deal and having him come back bringing more customers along is some of the best leverage you can earn - do the work on the first sale and close a whole number of subsequent sales with it. Sure, I make three bucks instead of five on the first deal, but the next time this guy comes back, I'm a dollar up already, and every mate he tells about me is another three bucks in my pocket. Alternatively I plant my ass down refusing to go below five, and have a whole bunch of threes going to my competitor, leaving me to do all the work looking for a sucker who won't bargain, all for a lousy five bucks. How much simpler can it get?

If Rolex is a charitable company, why don't they just give their watches away?

[Rockrolex]

Originally Posted by Gedanken

Well, John, let's look at Commerce 101, shall we?

The seller's interest is in getting the highest price.

The buyer's interest is in getting the lowest price.

The only way both sides will walk away happy is by being mongrels in the bargaining process.

Simple.

Maybe it's just my Asian heritage, but by my reckoning taking the first offered price equates to bending over, spreading them and sending out an engraved invitation. If somebody offers me a good deal, I'll not only come back as repeat business, I'll get all my mates to come along. If somebody refuses to budge, he's cutting off his nose to spite his face - if he doesn't want my dollar, I'm sure his competitors will.

Sure, when I negotiate there's a lot of good-natured barbs flying about. I'll accuse the seller of robbing me blind, and in turn he'll say that I'm taking food out of his firstborn's mouth. Far as I'm concerned, it's part and parcel of the business and exactly the way in which he earns my money. After all, the AD's the third party - he makes his money by conducting the transaction and the bargaining that comes with it, not by making the watches himself. If he can't take that kind of heat he's in the wrong line of work.

I don't think your wage analogy applies here. The wage is based upon an already agreed-upon amount, and while it is subject to negotiation, there's already a figure that both sides have accepted. There's no such agreement when a buyer walks in through an AD's door.

James, I think you summed it up perfectly when you said "Maybe it's just my Asian heritage..." That's exactly true. In the Asian and Middle Eastern cultures, bargaining is a way of life. It is how business is done. Western culture has not had that long tradition. We just don't have the bazzaar mentality (and that's not said pejoratively).

In most transactions, the buyer pays the price marked on the product. The only major execptions are cars and jewelry. But even auto dealers in the U.S. are getting away from bargaining over price these days. And one of the most successful jewelry houses in the U.S. certainly is Tiffany's. Rest assured you don't negotiate with Tiffany's. Yet they have been in business for a hundred years.

So it's really the culture in which you are raised that determines how you view the buyer-seller transaction process.

[Gedanken]

Perhaps, Ed, but my boss is British-born and his haggling skills and tenacity put me to shame. His wife's told me he's gone as far as starting with an offer of 10% of the asking price.

It may well have started as a Middle-Eastern and Asian thing, but the model is catching on elsewhere. Over in Oz, JB Hi-Fi is a chain of stores selling electronic goods, and despite being Australian-owned, they do in fact invite people to come in and name their price. On top of that, they sell smaller items like CDs and DVDs at a lower markup and kill the competition.

Back in 2004, a survey was carried out by Boston-based Reach Advisors looking at the consumer mentalities of various age groups. It was found that while a slight majority of baby boomers liked bragging about what they paid for some products, Generation X and beyond preferred to brag about how much they saved on their purchases - this applies to Gen Xers earning $150,000 a year or more as well as other income brackets. I'd say the writing's on the wall.

In any case, I'll stand by my argument - why pay ten bucks for something when you can pay five? It's just illogical.

[Rockrolex]

You may be right, James. The problem is I'm before the baby boomer generation. I don't want anyone to know what I paid for something - none of their damned business. And as for haggling, it's not in my Eastern European blood, although I will admit to having done my share in places where it is the norm.

[Gedanken]

Well, Ed, I was just having a chat with Sasha's mother the other day about money and she's sticking to the traditional model of whacking all your money in a bank account. To cut a long story short, my bottom line was that these days you have to get ahead just to stand still financially, and nobody can afford to avoid being financially savvy. It's all about getting bang for your buck.

[Rockrolex]

Originally Posted by Gedanken

Well, Ed, I was just having a chat with Sasha's mother the other day about money and she's sticking to the traditional model of whacking all your money in a bank account. To cut a long story short, my bottom line was that these days you have to get ahead just to stand still financially, and nobody can afford to avoid being financially savvy. It's all about getting bang for your buck.

I fully agree with you there, James. I was reading a story the other day about how today's generation (not sure whether it's the baby boomers, Generation Y or Gen X) is spending like there's no tomorrow and not putting anything away for down the line. That's who's buying all these multi-million dollar homes in our area, as well as the big Mercs, Beemers, Ferrari's and Lambos. What's going to happen to them when they are forced to retire because the company says you are out of here at 65 (or even 70)? Life expectancies are getting longer all the time. In the U.S., you can't expect Social Security to cover your living expenses without some additional resources.

It's going to be interesting to see what happens.

[Gedanken]

Yuh huh. Then again, about ten years ago I worked out that people love showing off what they don't have, and I see plenty of people in my generation racking up insane amounts of debt. For crying out loud, there are so many guys driving around in cars that cost more than a few years of their gross income, and they completely disregard the fact that said cars are devaluing even as the interest piles up.

Well, the piper's gotta be paid some day, and when that payment's due, the piper's gonna make an AD look like the Salvation Army.

[Gedanken]

Anyway, bugger this hush-hush about wholesale prices. It's Friday evening and I've got time to enter a few choice details. The following figures are from The Rolex Report, and since it was published in 2002, the figures are obviously out of date but nonetheless illustrate the size of the markup (generalised by John Brozek as being between 40-42%).

..................................MSRP........Whol esale
Sea Dweller..................$2351........$4000
Sub (SS).....................$2271........$3875
Daytona (SS)...............$3231........$5500
GMT (SS)....................$2271........$3975
YM (TT)......................$3821........$6500

Ooooh, I've told you - now I'm gonna have to kill you!

[Rockrolex]

Originally Posted by Gedanken

Anyway, bugger this hush-hush about wholesale prices. It's Friday evening and I've got time to enter a few choice details. The following figures are from The Rolex Report, and since it was published in 2002, the figures are obviously out of date but nonetheless illustrate the size of the markup (generalised by John Brozek as being between 40-42%).

MSRP Wholesale
Sea Dweller $2351 $4000
Sub (SS) $2271 $3875
Daytona (SS) $3231 $5500
GMT (SS) $2271 $3975
YM (TT) $3821 $6500

Ooooh, I've told you - now I'm gonna have to kill you!

Your secret is safe with me, James. I promise never to tell a soul.

[Gedanken]

Lawyer-client privilege, Ed?

[JJ Irani]

Originally Posted by Gedanken

Anyway, bugger this hush-hush about wholesale prices. It's Friday evening and I've got time to enter a few choice details. The following figures are from The Rolex Report, and since it was published in 2002, the figures are obviously out of date but nonetheless illustrate the size of the markup (generalised by John Brozek as being between 40-42%).

..................................MSRP........Whol esale
Sea Dweller..................$2351........$4000
Sub (SS).....................$2271........$3875
Daytona (SS)...............$3231........$5500
GMT (SS)....................$2271........$3975
YM (TT)......................$3821........$6500

Ooooh, I've told you - now I'm gonna have to kill you!

Good posts and excellent info, James. Thanks and appreciated!

[Launch Mini]

My comment should have been more generalized. I did say I always try for a discount.
But on the supply/demand side of the equation, there is no reason for an AD to discount a product that can be sold af MSRP. ( ie Daytona , SS Subs) But they will move on the less popular models.
Problem is , when the SAME merchandise is offered at a competitor, it is easier to compare you bottom line price. This is one reason Rolex sets guidelines for it's AD's.
NOW, try shopping for a matress for you bed.
Sure, there are discounts to be had, but I HATE the "we will beat competitors prices on the SAME product".
The matress manufactures will churn out "similar" products, but for large wholesalers, part of the deal is, they get "their own line of product" so it is impossible to find the SAME product at a competitor.
And you are right on the Commerce side of the equation. If the buyer & seller cannot agree on a mutually satisfactory price for both parties, no sale takes place ( ie I cannot find a BMW dealership to sell me a new 330 for the price of a Honda Accord) I have a good idea they are making a good % on the sales, but the demand is there ( at least around here) to sell every bloody car that shows up on the lot.

[Gedanken]

John, in the mattress analogy would equate to an AD selling Subs while another guy sells Omega SMPs. Doesn't really apply to this situation, where everybody involved is selling the same product.

I don't know about the Beemers either. The boss' wife drives an X5, and ever so often she gets a stack of junk mail from them saying that they've knocked down the price of their current lineup and are throwing in thousands of dollars worth of goodies. Sure, they clear the lot (as their sales quota probably requires them to), but they don't just sit and let the supply/demand equation do all the work for them - they still have to go out and offer the best deal possible, even if it doesn't hit Honda prices.

Yes, I acknowledge that supply/demand applies, but the demand side is not entirely incapable of exerting its own influence.

[Rockrolex]

Originally Posted by Gedanken

Yes, I acknowledge that supply/demand applies, but the demand side is not entirely incapable of exerting its own influence.

Now let's discuss the supply/demand rules for oil. Care to tell me how the demand side dictates the price of oil? Seems to me, on the contrary, the demand side is what's pushing the price up continuously. Has anyone yet said, "We're not going to pay the outrageous price you are asking for that gunk?"

Originally Posted by Rockrolex

Now let's discuss the supply/demand rules for oil. Care to tell me how the demand side dictates the price of oil? Seems to me, on the contrary, the demand side is what's pushing the price up continuously. Has anyone yet said, "We're not going to pay the outrageous price you are asking for that gunk?"

I heard on the CBC today that the fighting between Isreal and Lebanon is the reason oil experts are justifying the leap in the price of crude today.

Last time I checked, neither nation was an oil producer (of note) nor refiner of note. So... huh?

Next the oil companies will be justifying price increases because it's raining outside.

[Gedanken]

Originally Posted by Rockrolex

Now let's discuss the supply/demand rules for oil. Care to tell me how the demand side dictates the price of oil? Seems to me, on the contrary, the demand side is what's pushing the price up continuously. Has anyone yet said, "We're not going to pay the outrageous price you are asking for that gunk?"

Sure they have - ever heard of Linköping? Sure, Biogas is a whole lot of bullshit but it works and if everybody employed a little Swedish sense, those mongrels sitting at the top of Shell, BP, Mobil and so on wouldn't have a hostage to take.

On my own part, I've refused to go with the big boys anymore. United Fuels here is selling E10 (10% ethanol) fuel, which is as high as current legislation will allow. CSR Australia produces the ethanol from sugar, it burns a lot cleaner than petrol and to boot, I pay four cents less for a litre of 95-octane fuel than I would for that 91-octane lighter fluid that Shell shamelessly tries to pass of as petrol. I can't remember the name of Saab's latest concept car, but it's designed to run on pure ethanol.

Sure, I can't yet declare a complete victory on my part, but sure as hell I'm not going to roll over and take this crap. It's every consumer's responsibility to look out for how he's being ripped off, and where there's a will, there's not only relatives but a way as well.

[maverick]

FOX news just did a story on the guy that invented a car that runs on water. Yes, water, H2o. He started out to design a water welder that would not get hot at the tip and succeeded. The thing will melt a rock! Then he modified it to run a car. Some big car manufacturer both the rights from him. It was on MSN's site too I think.

BTW, while I was on vacation I did not read the paper, watch the TV or go on the 'net. I think I was happier. =) maverick

[Launch Mini]

I have that video on my computer. Anyone know how to a *.mwv file?
I will post if I get help.
It is pretty cool. Literally, The welder uses water,will burn metal , but he touches the flame.
The byproduct of the burn, is water again.

[Launch Mini]

Jame's didn't mean to rattle anything with my posts. I was in a pissy mood when I wrote the first one.
In summary, SS Daytona = No discount
SS Sub === Possible discount
DJ - I would expect a healthy discount ( at least from my experience)
Gas, now don't get me going. If I were smarted, I would have invested heavily in Gas Stocks instead of Panerai's LOL.
What really burns my backside, In Disneyland, freaking bottle of water $2.75

[Gedanken]

Nah, it wasn't a worry at all, John. If anything, it highlights why we get stupid things happening like the price of fuel and SS Daytonas.

[C.J.]

Originally Posted by Launch Mini

Jame's didn't mean to rattle anything with my posts. I was in a pissy mood when I wrote the first one.
In summary, SS Daytona = No discount
SS Sub === Possible discount
DJ - I would expect a healthy discount ( at least from my experience)
Gas, now don't get me going. If I were smarted, I would have invested heavily in Gas Stocks instead of Panerai's LOL.
What really burns my backside, In Disneyland, freaking bottle of water $2.75

Popular night clubs and especially the ones in the casinos $5.50 for a 12oz bottle the 7-11 just outside the building, 99 cents

[JJ Irani]

Originally Posted by C.J.

Popular night clubs and especially the ones in the casinos $5.50 for a 12oz bottle the 7-11 just outside the building, 99 cents

Yikes.....that is highway robbery for something that should be FREE. In NZ we just bend over and guzzle pure, cool, clear water from the number of drinking fountains all over the place.

So many advantages in this. In summer the girls show more cleavage and the mini-skirted ones show more legs!!

[astcell]

Markup in most all retail establishments, from Walmart to Nordstrom is going to be 50% or more. Some places like the JCPenny jewelry department can have a 1000% markup on gold charms. But that's a cost of doing business and we all expect that. I do not want to have to fly to Europe to get a Rolex becase there are no dealers here. And if I was concerned about saving a hundred dollars or so, maybe I need to look at a Casio or Citizen watch instead.

To continue this argument, well if a $5000 watch is $2500 to the dealer, does that mean to Rolex it is $1250? And when you go back further and further you end up with $4.27 worth of materials in the watch. The rest of the cost is shaping it into a watch from the ore it started as, and getting it to you.

I'm in the Army. Bullets are cheap. But look at the billions spent in "delivery" costs them to where they need to go!

I applaud the dealers for being there with such exquisite selections and opportunities to enjoy any one of a number of fine Rolexes. Their profits will soon be spent on rent, electricity, payroll and other costs. Their profit on my watch will be long gone and I will still have my watch on my arm. The consumer is truly the winner in this arrangement, so while I would appreciate a special price for me, I would never think of asking for a discount.

On the other hand with the zealousy of some sales folks, I figure they may be personally getting a $500 commission on each sale. It can be worse than wanting to get a cell phone. I refuse to go to one dealer because one salesman will pounce on me when I get in the door. Good for them if they get a commission, I am happy for them.

[Biblebanger]

A dealer friend told me that their discount was around 35% off of list on most models. They lost their AD rights with Rolex last year for discounting too much and shipping out of their territory.

I think they are very sorry that they lost it.

I guess you don't screw around with their rules.