Why do ADs offer 100% MSRP On trade-ins?

[Joeguy]

Recently, I bought a SS DJ41 from an AD. The salesperson said that their store would give me full MSRP for the watch if I traded it to them (within a 5 year window) and purchased something that was double the MSRP of my DJ41. This seems like a GREAT deal to me but ...

I know not all ADs do this, so what’s the catch?
I love my watch, but it won’t be worth that in 5 years. How can they afford to eat the cost of the DJ like that?

As Admiral Ackbar says, “Something seems fishy here.”

[Hodog16]

Usually on a deal like that they don’t discount the more expensive model which usually has to be PM to be double the datejust. They know how to make their money one way or the other.

[Cru Jones]

Doesn’t seem “fishy” to me. They make huge margins on each sale + presumably, the trade-in will be only on watches they have in stock at the time + they are betting on price increases taking care of some of their loss + they are getting customers used to paying MSRP.

[Likestheshiny]

Their margin is 40-ish% on a Rolex, and higher for other brands. If you do the trade-in, from their perspective they just broke even on the new watch and got a used watch for free.

[Glidelock]

Usually the requirement is you buy an all Gold watch...which has a serious markup...and definitely nets them $8k minimum after all is said and done!

[mikkolopez]

It just seems sweet but the AD will surely make money off you.

Most ADs have pre owned buddies or they themselves sell preowned back door. They’re not gonna lose margins off any deal they make.


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[RJRJRJ]

A "double price" Rolex puts you at least into two-tone territory, and you won't get a discount. They take a hit on your watch, and they get you for a nice full price sale.

[scooba]

I have a similar arrangement with my AD, it works because they don’t discount the new watch, This is one of the Rolex rules it’s difficult to enforce but over paying for a trade in Rolex don’t care , The AD sells it with a full service and a loss but it doesn’t break the Rolex code. It also feels good to get your money back when you trade up . It sort off works as long as you are happy to trade upwards .

It Defo works for me and my AD , I also get well looked after for staying in line with Rolex policy , Don’t flip Watches , Trade them back if the AD can make a profit that’s ok as well

[scooba]

I am also told the Rolex AD Mark up is 32% , so it isn’t huge imho

[scooba]

I am also told the Rolex AD Mark up is 32% , so it isn’t huge imho ,

Don’t forget when Rolex put a price rise through like 5% all the current Rolex inventory goes up making the AD a larger margin

[WatchLurv]

Originally Posted by scooba

I am also told the Rolex AD Mark up is 32% , so it isn’t huge imho ,

Don’t forget when Rolex put a price rise through like 5% all the current Rolex inventory goes up making the AD a larger margin

It's between 32-40%. Depends what deal they have brokered with Rolex. Used to be flat 50% incl. shipping fees and no advertisement costs.

[The Libertine]

Originally Posted by Likestheshiny

Their margin is 40-ish% on a Rolex, and higher for other brands. If you do the trade-in, from their perspective they just broke even on the new watch and got a used watch for free.

Exactly. Whatever the AD is offering, is ultimately to their profit/benefit. Not yours.

[coralfarmer84]

Wonder how many steel Daytona’s they get back on trade....

[beshannon]

Originally Posted by Cru Jones

Doesn’t seem “fishy” to me. They make huge margins on each sale + presumably, the trade-in will be only on watches they have in stock at the time + they are betting on price increases taking care of some of their loss + they are getting customers used to paying MSRP.

Exactly

[1William]

The margins are 62% of msrp. Do the math on a TT or PM piece and see where you will be at full retail for one. It is a gimmick and for a less informed consumer it seems like a good deal. You are better off contacting a TS and see what the trade is on your watch and what they will take on their piece. It is just math but if you pay retail on the new Rolex from the AD you will almost always be upside down for any future trades or sells.

[m j b]

I wonder if the MSRP that they will offer will be what you paid (years ago) or the current amount. And if they'll adjust the offer for condition, etc.

But I agree with the other comments - if you're buying a more expensive watch, it will likely be PM and they'll do just fine.

[brandrea]

Times sure have changed .... the last time I asked with an AD about a trade they said they weren’t interested but said if I couldn’t sell privately theyd offer 40% off

[Jcy90]

Their goal is to get a client used to payinhg MSRP. The AD knows that only a very small majority of people will trade in. Plus if you buying a DJ41 the only watches that are double the price are expensive 2 tones, and solid gold. Lots of juice in those models.

[jsausley]

Originally Posted by Joeguy

Recently, I bought a SS DJ41 from an AD. The salesperson said that their store would give me full MSRP for the watch if I traded it to them (within a 5 year window) and purchased something that was double the MSRP of my DJ41. This seems like a GREAT deal to me but ...

I know not all ADs do this, so what’s the catch?
I love my watch, but it won’t be worth that in 5 years. How can they afford to eat the cost of the DJ like that?

As Admiral Ackbar says, “Something seems fishy here.”

A couple of things to keep in mind:

If the markup is 100% on a watch, and your watch was $10,000, they have $5,000 in it. So if you're buying a watch worth $20,000 they likely have $10,000 in it. So by giving you $10k for your watch they're still making $5,000, plus whatever they can sell your used watch for (which in the case of stainless models may be MORE than it originally cost).

Another thing to keep in mind is that Rolex prices generally increase. I assume they're giving you original MSRP, not the new MSRP, right?

[Joeguy]

Originally Posted by jsausley

A couple of things to keep in mind:



If the markup is 100% on a watch, and your watch was $10,000, they have $5,000 in it. So if you're buying a watch worth $20,000 they likely have $10,000 in it. So by giving you $10k for your watch they're still making $5,000, plus whatever they can sell your used watch for (which in the case of stainless models may be MORE than it originally cost).



Another thing to keep in mind is that Rolex prices generally increase. I assume they're giving you original MSRP, not the new MSRP, right?

Correct. I get credit for the dollar amount I spent, or less if the “new” watch isn’t double that amount.


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[TswaneNguni]

Give you your money back but no discount on the more expensive model.Makes you feel like you score,but you dont

[nello]

Originally Posted by WatchLurv

It's between 32-40%. Depends what deal they have brokered with Rolex. Used to be flat 50% incl. shipping fees and no advertisement costs.

Last I read, and I cannot remember where, it is 38%.

[WatchLurv]

Originally Posted by nello

Last I read, and I cannot remember where, it is 38%.

Yes. I couldn’t remember the exact number.

But that’s before: advertisement + shipping.

See the Rolex advertisements at random spots? That’s Rolex telling the AD to put that up - Rolex didn’t advertise that themselves nor did the AD want to spend $X on it. It cuts into their margins.

[Joeguy]

Originally Posted by m j b

I wonder if the MSRP that they will offer will be what you paid (years ago) or the current amount. And if they'll adjust the offer for condition, etc.

But I agree with the other comments - if you're buying a more expensive watch, it will likely be PM and they'll do just fine.

The value was at the price I paid for the first watch and they didn’t “care about scratches and normal wear, etc. Just don’t drive over it in a tank...”

I was drinking champagne at the time and thinking how wonderful they were to offer me such a great deal, so I didn’t press him. I left with the impression that they wouldn’t mind a ding or two.

Good thing.


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[scombs263]

I had the exact same offer at an AD in Las Vegas. Was looking at a BLNR at the time. Deal had to be double or more in price for the trade in. Couldn't see myself buying a non discounted watch of $18,000 or more.

[Joeguy]

Thanks to everyone who contributed to the thread! I can understand it now.

I had got the time impression that discounts were becoming a thing of the past, but if that isn’t the case, then I easily understand why this isn’t such an amazing deal as it first seemed.

Again. Thanks all. That helped.


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[canIwearTWOatOnce]

was just told by friend that works at an AD 38%