The BIG question: WHY is Rolex increasing their prices?

[JJ Irani]

Okay, guys.....

Obvious question: WHY? WHY? WHY???

WHY is Rolex going on increasing their prices?

1. Is it due to the genuine increase in raw material prices?

2. Have their overheads shot through the roof?

3. Or is it just plain ole' greed?

Makes me wonder......then fret and fume!!

JJ

[cwru32]

did you expect a decrease in prices?! lol

[JJ Irani]

Originally Posted by cwru32

did you expect a decrease in prices?! lol

No, but it does make you wonder how these guys can keep on increasing prices even in these bad times and still hope to find buyers out there who will keep on forking out their $$$ for those over-the-top prices.

JJ

[Nakow]

What do you have the problem with JJ ? ," Rolex "or "Price increase "

[Welshwatchman]

I think it boils down to the fact that they believe that the Brand itself has been underpriced for some time.

The entry level price point for a Rolex was £1400-1500 not an awful long time ago, now it's pushing £3,000 with the sports range starting at £4,000 (excepting the 14060m).

I wouldn't be surprised if Rolex are aiming their entry level sports watch pricing towards the £5,000 mark and tweaking down manufacture to suit. There has already been instances of dealer rationisation.

Now is the last chance buy, new (with discount) or used, I reckon.

[nylawbiz]

Isn't the current price increase about evening out the disparity in curency exchange rates?

[spogehead]

Originally Posted by nylawbiz

Isn't the current price increase about evening out the disparity in curency exchange rates?

That's what I understood as well.

At the moment the UK is much cheaper than in central Europe, 'price harmonising' was a phrase I saw somewhere

[rescue7]

Originally Posted by nylawbiz

Isn't the current price increase about evening out the disparity in curency exchange rates?

That would be my guess for the increase, it's trading at 1.2304 against the American Greenback, according to Globe Investor.

[argee1977]

Well i can't see it being materials, most of the materials have actually reduced in price, as for overheads, well again i think that this would be minimal, if anything due to rationalisation.

I just think Rolex are playing a dangerous game, as stated above i think they feel they are underpriced for their perceived place as the top watch brand, but this is plainly through marketing, there is no way they are in the same ballpark as the likes of Patek and the others who spend a lot of time and energy on each watch, which are handmade and hand decorated.

The biggest danger is that Rolex will alienate their biggest market, and that's the normal guy on the street who saves or buys a rolex on credit to reach his dream of owning one, if they continue with the price rises and raising the entry level watches each year then the normal guy will buy an omega or something else, and with nearly 1 million watches to shift every year i can't see rolex doing too well if they're only aiming at the upper classes.

I have to admit, i've all but given up owning another Rolex, i really want to get another LV, but i just don't think they're worth £4000+, not when i bought a submariner 5 years ago for nearly half that price new. I do love rolex, i've owned 7 of them, but i look at a rolex and to me it's a great tool watch, near indestructable and with a distinctive look, but that's not worth the new prices to me, but that being said i'm also in the same boat with regards to all the top brands nowadays, Panerai are getting daft with their pricing, Omega as well and it seems they're all trying to catch up with the top makers without putting in the effort, just putting in the price increases.

[rescue7]

I can confirm a price increase here in Canada but what about States, Europe, Australia and Asia, have they had a price increase.

[The GMT Kid]

Now is the time to buy vintage. I just bought this beautiful Day-Date and it is over 40 years old.

[tommypit]

Originally Posted by argee1977

Well i can't see it being materials, most of the materials have actually reduced in price, as for overheads, well again i think that this would be minimal, if anything due to rationalisation.

I just think Rolex are playing a dangerous game, as stated above i think they feel they are underpriced for their perceived place as the top watch brand, but this is plainly through marketing, there is no way they are in the same ballpark as the likes of Patek and the others who spend a lot of time and energy on each watch, which are handmade and hand decorated.

The biggest danger is that Rolex will alienate their biggest market, and that's the normal guy on the street who saves or buys a rolex on credit to reach his dream of owning one, if they continue with the price rises and raising the entry level watches each year then the normal guy will buy an omega or something else, and with nearly 1 million watches to shift every year i can't see rolex doing too well if they're only aiming at the upper classes.

I have to admit, i've all but given up owning another Rolex, i really want to get another LV, but i just don't think they're worth £4000+, not when i bought a submariner 5 years ago for nearly half that price new. I do love rolex, i've owned 7 of them, but i look at a rolex and to me it's a great tool watch, near indestructable and with a distinctive look, but that's not worth the new prices to me, but that being said i'm also in the same boat with regards to all the top brands nowadays, Panerai are getting daft with their pricing, Omega as well and it seems they're all trying to catch up with the top makers without putting in the effort, just putting in the price increases.

I couldnt agree with you more Well Said!

[BigHat]

I respect the Rolex marketing department I guess. They pay for good people and you'd think they'd only act on research, not hunches.

I'd also think the name of the game would be to maximize profits over time. That would require a sound analysis of the right niche for them based on their pass reputation and how they feel they can tweak it.

While most of the people(non-WIS types) that can afford the brand aren't likely to understand that superb alternatives exist, I think they are either VERY smart or skating on thin ice. We have all read of closing ADs and others being asked to buy additional inventory or risk getting the franchise pulled. Of course, this can't be assessed as stupid or prudent without the obvious accounting for the current global economic climate that has to be restricting the sales of all luxury goods. Just doesn't seem like the right time to be moving further upscale.

Time will tell, but a few more grand added to the existing prices will surely have me looking elsewhere when the mood and pocketbook warrants more watch shopping.

[diablojota]

Originally Posted by argee1977

Well i can't see it being materials, most of the materials have actually reduced in price, as for overheads, well again i think that this would be minimal, if anything due to rationalisation.

I just think Rolex are playing a dangerous game, as stated above i think they feel they are underpriced for their perceived place as the top watch brand, but this is plainly through marketing, there is no way they are in the same ballpark as the likes of Patek and the others who spend a lot of time and energy on each watch, which are handmade and hand decorated.

The biggest danger is that Rolex will alienate their biggest market, and that's the normal guy on the street who saves or buys a rolex on credit to reach his dream of owning one, if they continue with the price rises and raising the entry level watches each year then the normal guy will buy an omega or something else, and with nearly 1 million watches to shift every year i can't see rolex doing too well if they're only aiming at the upper classes.

I have to admit, i've all but given up owning another Rolex, i really want to get another LV, but i just don't think they're worth £4000+, not when i bought a submariner 5 years ago for nearly half that price new. I do love rolex, i've owned 7 of them, but i look at a rolex and to me it's a great tool watch, near indestructable and with a distinctive look, but that's not worth the new prices to me, but that being said i'm also in the same boat with regards to all the top brands nowadays, Panerai are getting daft with their pricing, Omega as well and it seems they're all trying to catch up with the top makers without putting in the effort, just putting in the price increases.

I agree completely. As much as I'd like to get another Rolex, I'm not quite sure I'm going to buy a new one. They have priced me right out of the game. I bought my Sub for 3800 new 5 years ago and with it pushing 6k, that's just too much for what it is, IMHO. Oh well.

[sbakar]

A brand such as Rolex may be considered a Veblen good, which is a good for which demand INCREASES when price increases.

http://en.wikipedia.org/wiki/Veblen_good

Interesting reading.

SNB

[Welshwatchman]

Originally Posted by sbakar

A brand such as Rolex may be considered a Veblen good, which is a good for which demand INCREASES when price increases.

http://en.wikipedia.org/wiki/Veblen_good

Interesting reading.

SNB

It would be reasonable to suggest that 75% of those asked which was the most expensive or best watch in the world would answer "Rolex" yet if they were to visit a fine watch shop they would realise that this is by no means the case.

Seems to me that Rolex are waking up to this fact and positioning their prices upwards towards the general expectation. This will annoy most of us enthusiasts but is by no means an impending disaster for Rolex.

If any mass produced premium watch brand can carry the price tag it's Rolex.

[kayaker21]

The GV milgauss dropped in price by $10 in canada,must be a clearance. .

[chenx15]

Originally Posted by kayaker21

The GV milgauss dropped in price by $10 in canada,must be a clearance. .

better run and grab it!

[cwru32]

its simple common sense psychology...even tho i dont believe in much psychology or psychiatry ;o
they need constantly to build an image of exclusivity...rolex cant be icon of success if made of plastic or same metal as any other watchmaker uses...as to the economy, it is irrelevant to a company like rolex. they sell a million watch at premium so if they dont sell any watch for next 5 years they can still survive...although they will have to send some of their staff home ....or to edmonton for that matter, to freeze!
another aspect is related to customers. they want their investment watch to grow in value. how can it grow in value if rolex would not increase the prices!!?!
JJ that was my best post ever!! and thats only for you! :)

[nylawbiz]

We're only talking about Canada, right?

[Ronnie Rolex]

I think its related to the drop in the U.S. $. I'm not sure about Down Under where you are JJ. I haven't checked the Euro to Sheep exchange rate in awhile! : )

Seriously, Nikon raised their prices twice in the last few months and camera and lens prices out here are soaring. I'm a member of a Nikon forum and those members are screaming as loud as the Rolex forum members are.

[pirchryn]

JJ I agree with you, but I guess Rolex is like the Mercedes of the world, typically un-phased by economic down turns. As it is considered to attract only the wealthy or a highly sophisticated watch connoisseur. Where price does not drive the purchase, rather the allure of the watch.

[rob]

Originally Posted by pirchryn

JJ I agree with you, but I guess Rolex is like the Mercedes of the world, typically un-phased by economic down turns. As it is considered to attract only the wealthy or a highly sophisticated watch connoisseur. Where price does not drive the purchase, rather the allure of the watch.

True, but in this economic situation, when most employers are either laying off or not giving pay raises this year, strange that they would! Have they actually raised prices?

[tommypit]

The prices are just ridiculous. I think the tremendous increase inprice has made other quality watches more desirable esp. breitling and Omega.

[housemad]

Originally Posted by tommypit

The prices are just ridiculous. I think the tremendous increase inprice has made other quality watches more desirable esp. breitling and Omega.

Sorry to desapoint you...Rolex is above those watches!

[GMTII Owner]

Rolex is increasing their prices...because they can.


John

[seedgun]

I think it may be a bit simpler than some think.
1- in this economy unit sales are going to decrease just because a lot of folks that could afford one now can't.
2- The folks that still can, probably can pay more and will.
3- when you sell an item that is percieved as a luxery item you must maintain it's perception. If you go down market and try to selll volume to make up $'s you will in all likelyhood actually net fewer Dollars and wind up with a higher cost of goods.
Thus it's better to sell fewer at a higher price than more at a lower.
I'm sure the MBA's that work for Rolex have a good handel on where their point of diminishing reterns are.
Just my $.02
ANdy

[Blimms]

Originally Posted by seedgun

I think it may be a bit simpler than some think.
1- in this economy unit sales are going to decrease just because a lot of folks that could afford one now can't.
2- The folks that still can, probably can pay more and will.
3- when you sell an item that is percieved as a luxery item you must maintain it's perception. If you go down market and try to selll volume to make up $'s you will in all likelyhood actually net fewer Dollars and wind up with a higher cost of goods.
Thus it's better to sell fewer at a higher price than more at a lower.
I'm sure the MBA's that work for Rolex have a good handel on where their point of diminishing reterns are.
Just my $.02
ANdy

You hit the nail right on the head. As price increases - production will drop. The brand will move further upscale and the wealthy that purchase will continue. It's like the many that own Rolls Royces - Sure, there are cars out there that are just as good as the Rolls/Bentleys, but they will only buy that brand. I was over in Palm Beach yesterday at a few watch boutiques. In speaking with a sales rep - he stated that the majority of their clients own many Rolexes in addition to other brands. But they purchase several Rolex models and they usually don't inquire about the price. While I was there - I saw 2 women and 1 man pull out those "Black Cards" and in addition to jewelry - guess what they each were purchasing also. I need to play Lotto !!!

[BigHat]

Originally Posted by Blimms

The brand will move further upscale and the wealthy that purchase will continue. It's like the many that own Rolls Royces - Sure, there are cars out there that are just as good as the Rolls/Bentleys, but they will only buy that brand. :

Many good points from all on this topic since my last visit. Youseff, you're right, there is an element of irrational behavior to be accounted for in the luxury goods market.

I guess we'll have to see how this shakes out.

Personally, I see a huge disconnect between the closing RSCs, reduced workers/work days at the others, much better stock availability (US anyway), generally better discounts, sh*tty Basel releases, rumors of equity financing and some sort of master plan to "upscale" the image.

[buckscat]

Andy you sound like an economist. I completely agree with your response. I think that they have yet to reach a point of diminishing returns.

Just look at all of us. It wasn't too long ago when most people owned only one watch and wore it till it died before purchasing another. Look at how many of us own multiple luxury watches and we are a small percentage of people who do. Consumer spending (this year aside) has risen exponentially for a long time so the demand is obviously there. With Rolex wanting to maintain an image as THE luxury watch, it makes sense that their prices go up the way they do given that people associate luxury/quality with price. As long as demand goes up, price will follow it up.

Thats my .04 cents.