Where do retails come from?

I was paging through the April 2010 issue of WatchTime over the weekend and saw the article comparing the new Breitling and IWC in-house chronograph movements and their respective retail prices.  I found it extremely interesting, as I had a guy ask me just last week, “Why does the new Rolex Submariner have a higher retail price than the Rolex GMT Master II?”

If you have yet to read the article, you should definitely check it out; it is very informative and extremely well written.

I have always wondered about the different methods brands use to determine the retail prices of their products.  I was once told by someone affiliated with Roger Dubuis that the company’s retail prices would be over 50% less if they did not have to meet all of the criteria necessary for the Geneva Seal, the quality seal of the Geneva School of Horology.  The 12 criteria required for a movement to obtain the seal are extremely detailed and extensive, to say the least.

As the April 2010 WatchTime article states, the Breitling and IWC in-house chronograph movements are extremely comparable; both have been put through extensive testing and are of remarkably high quality.  The Breitling Caliber B01 is currently used in the Chronomat B01 and will soon be in the three new limited edition pieces Breitling just recently announced: the Navitimer 01, the Monbrillant 01 and the Chronomat 01.  The IWC Caliber 89360 is housed in the Big Ingenieur Chronograph and is now being used in the recently released Portuguese Yacht Club, one of my favorite pieces.

At the end of the WatchTime article, the editor discusses how the Breitling and IWC watches that use these movements are priced quite differently, with the Big Ingenieur retailing for approximately twice as much as the Chronomat B01.  Reading this got me thinking about the respective retail prices of all of the in-house chronograph movements that are out there and the Rolex Cosmograph Daytona in particular.

In-House Chronograph - Rolex Cosmograph Daytona.

The Rolex Daytona retails today for $10,400, about one and a half times the amount of the Breitling Chronomat B01.  Comparing the Caliber 4130 that Rolex uses in the Daytona and Breitling’s Caliber B01 is a whole different conversation in and of itself…  My main question for you is whether a watch with a great deal of history deserves a higher retail price than a different watch of arguably the same quality? I would argue that it does…  I think there is something to be said for the history and evolution of watch.  Do you guys agree?

IWC has made in-house movements in the past, in addition to the Caliber 89360.  Should having multiple in-house movements affect the overall pricing of the brand?  Does that add prestige to the overall brand that then trickles down to the rest of their products?

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2 thoughts on “Where do retails come from?

  1. if a watch is a proven winner, like the Daytona, then I can see paying more for it. There aren’t many watches as well know as it and it still carries the Rolex name which is probably why a lot of people buy it. They probably don’t know about the history, they just buy it because it’s a Rolex. I think having a completely in house movement watch line would add some prestige to a brand. I know it’ll raise the prices, but I think people would appreciate it in the long run and would be willing to spend extra. Although the B01 is a great movement, it still hasn’t been around that long. Give it another year or 2 and now with the expansion into the Navitimer and the Montbrilliant, and I bet it’ll soon be held in just as high of a regard as some of the other well known in house movements.

  2. To quote Verbal/Keyser:
    “The greatest trick the Devil ever pulled was convincing the world he didn’t exist.”
    I often remember this when I see the pricing of fine Swiss Watches. Make no mistake, I love and collect them, and am a confirmed fan of the free market, but realistically, most of these watches are worth what the manufacturers can convince the public they are worth. Eventually, they price a portion of the core customers out of their product….Rolex did it to me and Breitling, while a lovely company, is well on the way to doing the same.

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