What it costs Rolex to make a watch

[omx5o]

Are we talking about an average cost? Does a DSSD cost the same to make as an air king?

[c.rod]

We need a mole. Someone needs to alter their life and get a job there and report back to us.... Lmao!

[springbar]

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

No kidding.

Your question is simple: what is the marginal cost of a 116610? That is, what does it cost Rolex to produce one more Submariner?

This is pretty secret stuff, so who knows. But on a relative scale, I think you're underestimating the bracelet relative to the case and dial. The bracelet and clasp are comprised of many parts and would appear to require quite a few operations to produce.

[locutus49]

It comes down to supply and demand. If buyers were unwilling to pay the current prices, Rolex would lower them. I don't begrudge a company like Rolex making a healthy profit, and maintaining a relatively high price creates a barrier to entry, and preserves the exclusivity of the brand. Anyone can own a fake Rolex. Not everyone can afford to own a genuine one.

Everyone CAN afford to buy a watch. Some are $5. But luxury items are reserved for those who can afford them, and hopefully appreciate the fit, finish, and quality of luxury.

Just like Porsches. I don't want Porsche charging 30K USD for a new 911. I don't want everyone in the country driving 911's. Let the masses drive BMWs or Fords. Am I an elitist? Yep. So shoot me.

[Onikage]

I'm sure it costs a lot more than $200 to make, assemble and test a Rolex movement. The labour cost for someone to take a working one apart, oil and reassemble is more than that.

[Tseg]

If it makes people feel better about costs, I googled the cost/value of the materials that make up the average human body. One article did the math and said there is less than $5 worth of minerals in the human body. Another article did the math and came up with $160. 3200% variance. And then another at $1,985. No wonder we can't arrive on an answer for Rolex.

http://chemistry.about.com/b/2011/02...body-worth.htm

http://www.datagenetics.com/blog/april12011/

http://bgoodscience.wordpress.com/20...ponents-worth/

[AbsolutelyROLEX!]

Lots of interesting ideas here guys, im enjoying the read and the jokes that come with it!
Thanks for your inputs!

[10:11:31 28]

Here's a video of how the cases are manufactured in case anyone is curious: [LINK]

[lipjin]

I wonder what's with all the hate :). It's a perfectly legitimate thread with a healthy discussion.

I for one think 1.1k is a decent estimate for the cost of manufacturing. Throw in cost of r&d and marketing and maybe that goes up to 2k. Luxury margins are huge - that's a fact.

[versatile1]

$967.10 is the cost
Don't ask me how I know.

[submariner66]

I would say my $7,000 sub COSTS $2,500 + to make. Im saying that if they sold it at that price directly to me they would make 0 profit on it. Purely what it costs to make. Not market, distribute, ship or otherwise improve on.

I would imagine that in 2014, workers in Switzerland and manufacturing in Switzerland is not an inexpensive endeavor.

[Tseg]

Originally Posted by submariner66

I would say my $7,000 sub COSTS $2,500 + to make. Im saying that if they sold it at that price directly to me they would make 0 profit on it. Purely what it costs to make. Not market, distribute, ship or otherwise improve on.

I would imagine that in 2014, workers in Switzerland and manufacturing in Switzerland is not an inexpensive endeavor.

The CEO said they make 30% margin, I believe the AD make ~24% margin at MSRP. What s MSRP $8850? Lets say AD buys at $6726, that means Rolex fully costed would be $4708. Below that, Rolex loses money. Like it or not, they have to pay for all that marketing and the costs get spread across all watches. Without all that marketing, Rolex is another me-too brand.

[DreambreaX]

how come the movement only $200 ???

i thought the movement is the most expensive

[DreambreaX]

dial and hands more expensive than movement??

[rmfnla]

I see aftermarket replacement crystals all over the place for $30; do you really think Rolex pays $50 each to a subcontractor..?

[_Ronni_]

Depends on what you want to include in the price. I guess you are counting materials, but apart from that? Man hours, machinery, machinery maintenance, housing costs, development, packaging, warranty repairs, distribution, sales management, advertising, general management, production process improvements, power and utilities, quality assurance and so on.

I take it your question entertains the marginal cost to produce one Rolex. Since such a large part of the production costs are fixed, it is not a meaningful question.

I would say that there are material costs for about $300 in a SS Rolex. Does that mean that you could produce and sell a similar watch for $300? Probably not, you would need to invest billions of dollars, so it would be one expensive watch.

Once all these costs has been covered, I think that a SS Rolex has a gross cost of about $5.000. Just my guess of course :)

[AbsolutelyROLEX!]

Originally Posted by DreambreaX

how come the movement only $200 ???

i thought the movement is the most expensive

I guess your right, never thought of that,

[hawg]

I like to think Rolex cost a few thousand to make. Makes me feel better. Ha.

[locutus49]

I think Rolex sells their watches at a 20% loss. Yes, they cost more to manufacture and sell than we pay. They do that to put the highest quality timepieces in the hands of the masses for a reasonable price (for what you get). This is my opinion and I'm sticking to it

Originally Posted by hawg

I like to think Rolex cost a few thousand to make. Makes me feel better. Ha.

[Vincent65]

Erm, no-one has mentioned that Rolex watches are made in Switzerland. It costs $3-$5 for a loaf of bread here. A pair of kids' shoes can easily be $100. Even basic things are insanely expensive.

$50 for a bracelet? You can't get half a steak dinner here for that.

I will take a very wild stab and guess that to manufacture a steel Submariner costs them roughly 25% of what you will pay to wear it.

[Tseg]

Originally Posted by locutus49

I think Rolex sells their watches at a 20% loss. Yes, they cost more to manufacture and sell than we pay. They do that to put the highest quality timepieces in the hands of the masses for a reasonable price (for what you get). This is my opinion and I'm sticking to it

Yes, Rolex, the Volkswagen of luxury watches. Agreed.

[AbsolutelyROLEX!]

Originally Posted by Vincent65

Erm, no-one has mentioned that Rolex watches are made in Switzerland. It costs $3-$5 for a loaf of bread here. A pair of kids' shoes can easily be $100. Even basic things are insanely expensive.

$50 for a bracelet? You can't get half a steak dinner here for that.

I will take a very wild stab and guess that to manufacture a steel Submariner costs them roughly 25% of what you will pay to wear it.

Another very good point here, did not know that, yes that definitely will affect the price!

[kjp1]

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

amen! +1

[submariner66]

Originally Posted by Vincent65

Erm, no-one has mentioned that Rolex watches are made in Switzerland. It costs $3-$5 for a loaf of bread here. A pair of kids' shoes can easily be $100. Even basic things are insanely expensive.

$50 for a bracelet? You can't get half a steak dinner here for that.

I will take a very wild stab and guess that to manufacture a steel Submariner costs them roughly 25% of what you will pay to wear it.

That was my point when I said "I would imagine that in 2014, workers in Switzerland and manufacturing in Switzerland is not an inexpensive endeavor."

[tom2517]

Originally Posted by Tseg

The CEO said they make 30% margin, I believe the AD make ~24% margin at MSRP. What s MSRP $8850? Lets say AD buys at $6726, that means Rolex fully costed would be $4708. Below that, Rolex loses money. Like it or not, they have to pay for all that marketing and the costs get spread across all watches. Without all that marketing, Rolex is another me-too brand.

Somehow I seriously doubt Rolex only gives AD ~24% to play with. Obviously not all, but many Rolex sells at a discount, I don't think AD would only take 5-10% margin.

Keep in mind, almost all ADs are at prime location, with staff to feed, advertising, marketing, and some other costs that are not paid by Rolex.

There are still brands that gives you more than 24% off right off the bat, AP used to sell at 40%+ off in the 90s before the ROOs took off.

So while Rolex is said to have stiffer pricing, I still think ~24% is low.

[SUBversive]

Originally Posted by Vincent65

Erm, no-one has mentioned that Rolex watches are made in Switzerland. It costs $3-$5 for a loaf of bread here. A pair of kids' shoes can easily be $100. Even basic things are insanely expensive.

$50 for a bracelet? You can't get half a steak dinner here for that.

I will take a very wild stab and guess that to manufacture a steel Submariner costs them roughly 25% of what you will pay to wear it.

I pay $5 for a loaf of bread in whole foods .....

[powerfunk]

Originally Posted by tom2517

Somehow I seriously doubt Rolex only gives AD ~24% to play with.

Correct; this is a number we actually know and it's 38% (or was it 37.5%).

[Vincent65]

Originally Posted by submariner66

That was my point when I said "I would imagine that in 2014, workers in Switzerland and manufacturing in Switzerland is not an inexpensive endeavor."

indeed - must have missed that, sorry!

[rmfnla]

Originally Posted by locutus49

I think Rolex sells their watches at a 20% loss. Yes, they cost more to manufacture and sell than we pay. They do that to put the highest quality timepieces in the hands of the masses for a reasonable price (for what you get). This is my opinion and I'm sticking to it

They make it up in the volume...

[rmfnla]

Originally Posted by SUBversive

I pay $5 for a loaf of bread in whole foods .....

Hate the Ho...