Margins on Rolex watches

[Explorer69]

Hi all,

An AD once told me the margin (profit) they make on a Rolex is a few hundred bucks only. How true is that and if so, what is the cost of making a Rolex watch?

[Oceanklassik]

IIRC someone here had posted the cost price of ROLEX watches. Do a search; you should be able to find.

I am not sure the amount of the profit but I do understand that ROLEX watches yielded the least commission for the sales staff among the other brands in the store. This means that for each ROLEX watch sold, for example, a sales staff may only get 5% commission. But if he/she sells a hublot, he/she may get 10%-15% for one sold. The reason is simple - ROLEX sells by itself. No need to push. Having said that, I do not know the percentage commission exactly for each ROLEX watch; 5% is my guess.

However, the theory of "ji sao chen duo" (sell one cheap; can sell many-many) comes in here. Though the commission and even profit margin for each ROLEX watch may be little, they sell in aplenty; very fast; very well. And hence, this brand actually churns more revenue for the company at certain outlets.

So you understand why ALWAYS ROLEX now?

[Explorer69]

True, commissions aside, the profit which rolex makes is incredible. For example, if I am not wrong the cost of producing a DSSD is under 5k ( unconfirmed) and look at the retail price!! Will note and search on the previous posts on this topic

[Darkangel]

True, commissions aside, the profit which rolex makes is incredible. For example, if I am not wrong the cost of producing a DSSD is under 5k ( unconfirmed) and look at the retail price!! Will note and search on the previous posts on this topic

Material cost maybe 5k, but R&D and advertisement costs is way more than that.

[KuchingKu]

True, commissions aside, the profit which rolex makes is incredible. For example, if I am not wrong the cost of producing a DSSD is under 5k ( unconfirmed) and look at the retail price!! Will note and search on the previous posts on this topic

What about Pam? Material and R&D cost not even a fraction of Rolex but selling price is there or even more. Of course they sell fewer pieces. All luxury goods are like that lar. Do you really think a Hermes Burkin deserves the same price as a DSSD?

[Explorer69]

Hermes birkin is hand crafted whereas rolex is mostly robot / machine made. But I agree also on the r&d and a&p cost... But there again with the volume rolex makes, it easily recuperates these cost. In any case the retail mark ups for luxury items I believe is 3 to 3.5 times as a rule of thumb.

[estrangable]

Material cost maybe 5k, but R&D and advertisement costs is way more than that.

not sure abt rolex but for other brands such as tag or omega, the markup by retailer is 50%. That is why when the retailer have special discount for staff, the max they offered is always 50%

[Heng Tin Hong]

If you know the actual cost of a watch,you won't be buying watches??????

DSSD(i mean the watch alone),maybe less than 2k??????

It very fair that the retail is 13kplus,because........

Agree with Darkangel,not only R & D,advertisement.......

Rolex profit,Rolex overhead,Swiss goverment tax,Shipping cost,insurance???

After that,Sinapore goverment tax,Rolex Singapore overhead,Retailer profit,retailer overhaed???

Even if DSSD(watch alone is 2k) is retail at 13k+,i will still buy,cause will you sell your watch at market value or the watch cost???????

Thanks

Heng.

[Seventh Son]

From my technical knowledge and back ground. I believe the cost of producing a Rolex timepiece should cost only a few hundred dollars. Bear in mind that it's after all a mass produced item. Most of the other costings go to marketing, sponsers, networking, dealers profit etc. And to expoilt another human weakness, it must be priced sky high so we want it more! Imagine Daytona cost $2888, would you still want it, crave for it, lose sleep over it? A well engineered german midsize saloon cars OMV only cost 40K thereabout. You do your maths...

[Watcha]

Material cost is... immaterial

how much does steel cost? even at top grade.
how much does gold cost?

costs are complicated in modern international companies. labours, taxes, advertisements, sponsors, more taxes, distributions, after sales, R&D, events...

the calculation of the cost, mark up, reports, audits is costly.

after all these of course the handsome profits... pricing it painful enough for most but not out of reach.
after all Rolex is not a niche player. No limited editions, no limited productions, no special editions, no special promotions, no complications.
just plain old good solid watch that last.

[Heng Tin Hong]

Well Said,Bro Seventh Son.