What it costs Rolex to make a watch

[AbsolutelyROLEX!]

Not many numbers coming here, wasnt trying to start something
I really dont care about their profit margin either, just wondering what others think.....

[Vaxe]

From a purely manufacturing standpoint with no other overhead for a steel model:

Austenitic SUS like 904L is $60 worth of ingot for a 40mm watch and bracelet, then you add machining and assembly at this magnitude.

Then again, no other manufacturer can mass produce the same watch to this detail, accuracy, and reliability at this cost, so the price Rolex charges is absolutely worth it.

[Laszlo]

~25% of whatever the MSRP is. And that's best case under maximum effeciency. A 114060 would cost approx. $1,875.00. But I think it costs them more.

[SUPERDOC]

I think that the problem with this question is that it seems like a simple enough question, but it ignores not only the business costs, but also the whole psychology of veblen economics...

What does it cost to make a Rolex? possibly as much as it costs to make a citizen, or Bulova, but somehow the price point is much different...

you are welcome to join the Bulova forums...

Does it really cost $2000 to make that pair of Gucci shoes? (which probably come out of the same sweatshops as the dollar store varieties)

I have had many $50 bottles of champagne that are of incredible quality, (and I prefer to the Dom), but when trying to make someone feel special, do I serve the 'great value', or do I serve the Dom? Try to guess...



Do you ask this question because it bothers you that you paid that much for something that can not be discerned from an invicta by the uninitiated?

More than a few people have commented on how much they Like my "michael Kors Watch" (when wearing my YMII)...

the simple fact is that it is pointless to even try to ask this question, because the answer is immaterial...

Veblen items are valuable because they are expensive...this makes them enviable and attractive and provides many things on which you cannot place a price.

A Rolex would not be a Rolex if the price were lower...
Look at all the companies that perished during the quartz crisis...
the price of the Omega dropped and the perceived value also dropped

(This despite the greater accuracy, and better value of the quartz movement)

I know many out there will counter with the "just a Watch" argument... but they are trying to fool themselves...unwilling to admit that they have purchased a veblen item.

To them, I will reassure that Veblen economics is not interchangeable with "Snob Effect"...

I'm sure that my post will also be met with many "I buy for me" responses...which many will see as a counter point to what I'm saying, but in actual fact is the very backbone of the veblen item...its not about showing off, it's about making a statement...most often to yourself.


So, how much does it cost Rolex to make the watch... who cares?

This is a situation where the item is worth so much more than the sum of its parts....

Why even bring up $$ ? We are all paying obscene amounts, (and to some people offensive amounts) for 'just a watch', but most of us couldn't be happier ....

ok, I'm going to step off my soapbox...

[Sublover2166]

The cost of those CNC machines that machine the cases, bracelet parts, movement parts are Very expensive. Don't know how many employees Rolex has but I'm sure they don't make minimum wage. Rolex apparently has more gold reserves than Fort Knox. Gold bars are expensive. Advertising also costs money. Nothing that Rolex does is cheap. Anyway, they sell every timepiece they make right?

[FTX I]

Originally Posted by SUPERDOC

So, how much does it cost Rolex to make the watch... who cares?

The OP.

[AbsolutelyROLEX!]

Holy smokes guys, this was not a philosophical question, its just interesting thats all....
Maybe the mods should close this thread, as some are taking it way too personal

[joe100]

Originally Posted by anderl712000

Holy smokes guys, this was not a philosophical question, its just interesting thats all....
Maybe the mods should close this thread, as some are taking it way too personal

'Eh, folks want to believe their $8k+ watch cost $7,999 to make. Simply isn't true.

[Challenger Deep]

I don't think that it costs a measly $1100 bucks to make a Rolex.

[redsubby]

It's a very simple question I don't know why people are trying to make it harder than it needs to be. The OP just wanted to have an idea how much it costs to make a Rolex, simple as that. Ain't nobody is mad at how much we pay for them, it's just interesting to know, not that any of us will stop buying if we knew the cost.
I can't stand answers like "does it matter?", "who cares"...etc. If you don't care or it don't matter to you, then don't answer.

[eggplanty]

I think to some extent all luxury items are way overpriced. They aren't 100x more well made or useful than their downmarket counterparts but they do command 100x the price. If it's not worth it to you then just don't buy it. You get to vote with your wallet when you buy or don't buy and ultimately money is the only thing that companies understand.

[springer]

Originally Posted by anderl712000

I have wondered about this quite often, and just saw another post about record profits at Rolex.
Any thought of how much a watch costs rolex to manufacture?
Here is my thoughts for lets say a 116610 to keep it simple...

Movement- $200
Bracelet- $50
Case- $300
Dial and hands- $400
Ceramic bezel- $100
Crystal- $50

For a total of $1100

What do you guys think?

I would say you are very close. I believe crystals would be much less as well as the bezel inserts, dial and hands. I'd say $1,000 to $1200 to actually manufacture or source the parts would definitely be in the ballpark.

[novan3]

Originally Posted by SUPERDOC

More than a few people have commented on how much they Like my "michael Kors Watch" (when wearing my YMII)...

Ouch! seems like reasonable grounds for a trademark infringement suit

[GB-man]

I think your number sounds reasonable. My guess would be in the range of 750-1250. As we all know cost of goods is only part of the equation for any business of Rolex variety.

[Nidal]

38% goes to dealer. Rest goes to Rolex. More than half of that is profit. Rest is material and lots of control testing


Nidal

[Andad]

Originally Posted by springer

I would say you are very close. I believe crystals would be much less as well as the bezel inserts, dial and hands. I'd say $1,000 to $1200 to actually manufacture or source the parts would definitely be in the ballpark.

I agree with you John but would the $300 for the case include the equipment and tooling required to manufacture it including replacement parts and maintenance, quality control, assembly, warranty etc. etc.

It is a difficult number to pin down.

If you gave me a kg of 18K YG I still couldn't make a case for a Rolex DD.

[zama]

I think the movement would be a core cost in the process, the case less so the bracelet tends to have more substance parts/assembly etc. I genuinely believe they would produce a watch for closer to $1K for a basic stainless watch, they would undoubtedly have some of their general costs covered in the broad cost data they have shared.

Sales/distribution tends to be where margin is eaten.....

[Baselman]

So Rolex make 30% well It costs me say minus 20-30% off to buy a perfect used Rolex and I have no r&d costs, no shop costs, no sponsorship costs, no marketing costs, no used sales tax, no event costs, no promotion costs, no building or staff costs, no training or servicing costs and if I sell for higher price I can make 30% too same as Rolex - thanks to Rolex we also benefit from supply and demand you forget to mention that benefit :)

[E70x5]

To answer the OP's question in the simplest form, my guess would be 15% of msrp. Let's take the new sea dweller at roughly $10k msrp, the Ad's markup is 40% ($6k cost to ad) and I would imagine rolex's markup to the ad would be close to 75% ($1500). No facts just my opinion guys . . .

[Sarko]

If you only look at te costs of the parts, I would say between 500-700. However you should not forget the costs of man hours assembling the watcht / movement.

On top of this you have things like economic depreciation of the machines etc, overhead costs, marketing. This is al calculated in the price.

[77T]

Just wondering how one would calculate the cost to produce a smile? Or the pride of ownership one feels with a Rolex perched upon their wrist.

The interesting thing is this to me: whenever one attempts to value a luxury item it inevitably devalues that item's worth.

Oh, my guess is SS Sub = 17% of MSRP. The Gross Margin, G&A, R&D, Marketing and Taxes + AD Markup gets the other 83%

[Travelair007]

Originally Posted by anderl712000

I have wondered about this quite often, and just saw another post about record profits at Rolex.
Any thought of how much a watch costs rolex to manufacture?
Here is my thoughts for lets say a 116610 to keep it simple...

Movement- $200
Bracelet- $50
Case- $300
Dial and hands- $400
Ceramic bezel- $100
Crystal- $50

For a total of $1100

What do you guys think?

Andy,
Dude....I don't know what's up with TRF sometimes....let's see if I can bring in some of my own estimates. When you asked that question, the first thing I thought of was counterfeit watches.

Material
You can produce a Folex for $50 (material & labor)...proof is in the pudding (hmmmmm pudding ) as you can buy that junk for $100...
I understand that it's an extreme comparison but hear me out. What you would have to account for is higher grade Stainless or precious metals if applicable, more complicated movement (with precious material as well), probably higher end machinery and manufacturing techniques, premium coatings...It's certainly isn't apples and oranges when it comes to a SS model. So I'm going to put down $150-300 for material on a SS model... (I'm not familiar with the precious materials in the movement so that could cost a little more)

All in all, I think your estimates are a on the high side if they were material only.


Labor
I think labor is another key part of it, the difference between a Chinese laborer working for $1.47 / hr (min wage -> http://www.clb.org.hk/en/content/wages-china) vs the higher Swiss watchmaker average wage of $25 / hr avg...that must drive a lager cost than material. I don't know how long it takes to put a rolex together and all the labor involved in the movement... Having built watches myself (shitty ones) and taken apart movements, I'm going to go ALL OUT and say it takes 40 hrs of combined labor which I know that this estimate is completely outrageous.

That's $1,000 in labor...

Overhead
Using the rule of thumb of luxury goods in the fashion industry where my wife works....if I take that $9,000 Rolex and allocate 65% GM to Rolex, it would indicate that their overhead incl SG&A is $1,800 per watch or 20% of the watch value.

What's not factored in is Taxes, Depreciation, Amortization, Cost of Cash & Debt, Restructuring, etc...

Material Cost - $300
Labor - $1,000
Overhead - $1,800
_________________
Cost of a SS Rolex selling for $9,000 is $3,100

That's my estimate....

[Knappo 1307]

I always thought they grew on special Rolex trees.....

[watchwatcher]

I would think it would be almost impossible to accurately calculate. From the limited glimpses Rolex has provided of their factories and assembly process (and this would just be limited to the manufacturing part of the equation), there are a lot of amazing machines and personnel involved in this process, not to mention the quality control and testing. The only way you could even get in the ball park would be to know what the materiel, machines and personnel cost would be and divide it by the number of watches produced. And this would give you only the manufacturing number. I could throw out a number, but it would really just be a guess...my guess is that number is higher than most are speculating.

[Travelair007]

Originally Posted by Knappo 1307

I always thought they grew on special Rolex trees.....

They do...here's one we just chopped down...

[hawg]

Wow. People don't take so seriously. Simple question, no strings attatched. Broxi said it best. One almost becomes leary asking what he thinks is a good topic question. I find something like this much more interesting than lets say the can;t decide what to buy question. All in fun people, as we all love our watches.

[kbutler1]

Muuuuhahhahahahha

[SUPERDOC]

Originally Posted by hawg

Wow. People don't take so seriously. Simple question, no strings attatched. Broxi said it best. One almost becomes leary asking what he thinks is a good topic question. I find something like this much more interesting than lets say the can;t decide what to buy question. All in fun people, as we all love our watches.

Agreed -- I'd like to retract my post -

I projected way too much into the original question -- and for what ever reason saw it as a complaint about price and cost...

My apology to the OP, and the rest of the group.

[FTX I]

Originally Posted by SUPERDOC

Agreed -- I'd like to retract my post -

I projected way too much into the original question -- and for what ever reason saw it as a complaint about price and cost...

My apology to the OP, and the rest of the group.

You're one of the good guys and everyone here knows that.

[rmfnla]

Originally Posted by Broxi

the OP seemed to needlessly get a hard time for what I thought was a reasonable question no matter how many times it has been raised.

I for one would rather read about this instead of whether someones Rolex and car/degree/career/ choice of wine/ shoes are a balance or pose questions as to whether it's Safe to eat a sandwich whilst wearing a Rolex or is my Rolex a BMW m5.

Constructive answers or nothing at all is better than comments from people who are taking the forum to personal or too serious