Benjamin C. from Framingham, Massachusetts, USA asks:
I am having a very hard time reconciling the cost of some watches. For instance a simple IWC Portofino costs $4500 list. There is nothing special about it that justifies the cost. It does not contain any precious metals or stones. The band isn't made from the leather of an exotic animal. Aside from telling the time and a calendar dial, it doesn't do anything. The Master of G watches that Casio produces for their G-Shock line at least have features like solar power, shock protection, stopwatch, alarm, moon phase, and a host of other features.
I've seen watches on this blog that retail for upwards of $40,000. Even when a watch contains gold, it's not enough to even remotely cover the exorbitant MSRP. Can you provide some insight into what factors into the wholesale/retail cost of a luxury watch? Is it all about the construction and manufacture of the parts? If so, then how it is possible that some watches can cost more then cars?
This is a question that everyone hits. The reason is this: you’re used to thinking of watches as functional things, where the price is related to how well it works as a watch. Most of what you see here are luxury goods, which have a very different pricing psychology. Luxury goods are supposed to be expensive, and often designed to draw attention to themselves as markers of wealth and status. There is more to it but that is the simple answer.
Do a bit of reading on Thorsten Veblen and "conspicuous consumption" and it’ll make more sense.
It gets more complex than that, too - the majority of the luxury market is aimed at mass recognition: Think Chanel, Rolex, LV bags, that sort of thing. As you get more expensive, the signaling changes to where the watches are not recognizable to the common man, only to others of similar wealth and taste. It pays to be a educated in the watch world so that you know where to go for the most bang for your buck. You can also check out our watch buying guides that help you learn what to look for in general.
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