Timezone.com Founder Worries About The Fragility Of High Watch Prices

Timezone.com Founder Worries About The Fragility Of High Watch Prices

Timezone.com Founder Worries About The Fragility Of High Watch Prices   feature articles

Why does it seem that all the watches we love are priced like a year of tuition at an Ivy League college? It wasn’t always this way.

For more years than I care to remember, I’ve been collecting watches. Also, being a fourth generation watchmaker and retail jeweler, I’ve had the privilege of being an authorized dealer for several high profile watch companies including IWC, JLC, Ulysse Nardin, to name just a few. I’ve also had the distinction of watching the death of the mechanical wristwatch in the 1970’s, the birth and dominance of the Japanese quartz watch shortly thereafter, and the resurrection of the modern Swiss mechanical watch in the late 1990’s. But even though I’ve been brought up in the business and have a historical viewpoint of the industry, I’m still sticker shocked by today’s prices.

Timezone.com Founder Worries About The Fragility Of High Watch Prices   feature articles

Whenever I see a really great watch that I covet in a magazine, or on a great blog like this one, or in an uptown watch store, I’m always amazed at how expensive the watch is. In the past, I’ve owned very expensive watches, and at one time I only owned four watches, all tourbillions. However, I never wore them. I was like the guy with a new luxury car, dreading the first ding. Finally, I was so fed up with my paranoia about damaging the watches that I sold all of them off and promised myself I’d only wear steel watches, and not worry about destroying them. And to this day, I will only wear a steel watch. In the beginning (circa 1999), they were less expensive and much more affordable than their “gold cousins”, thus more fun to wear, without all the worrying about hurting the case. But now, when I see a great steel watch I like, it’s once again so expensive that it’s not fun anymore. When did steel become as expensive a metal as gold? I guess steel must be an endangered species. I feel like protesting the Swiss Watch industry’s pricing structure, sort of like “Occupy Wall Street” only this way: “Occupy Switzerland”. We could all camp out in front of a great Swiss House Watch Company and sing protest songs of the 60’s, sleep in tents (heated), drink German beer and hold up signs like: “Let’s be Franc…. Down with Prices!”

Timezone.com Founder Worries About The Fragility Of High Watch Prices   feature articles

Let’s do an economic exercise: An Omega Speedmaster Professional cost $225 in 1973. Today it’s going for $4,500. The CPI in the USA from 1973 to present is 44.4. All things being equal, this watch should be selling for around $1,215 today. Accounting for currency fluctuations, maybe a bit higher. Has the watch evolved into such a higher state of craftsmanship that it justifies this higher price above the normal inflationary forces? It really hasn’t changed much: same watch; same functions; and same materials. Further, Omega did their own in-house movements in 1973, but now they use their parent company’s movement, and share the technology with several watch brands.

In the story of Lewis Carroll’s “Through the Looking Glass”, the sequel to “Alice in Wonderland”, there’s a part in the story where Alice and the Red Queen are running away from a storm, and the wind is blowing so hard at them, that it’s keeping them in place as they run.

The dialogue goes like this:"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else — if you run very fast for a long time, as we've been doing."

Let's be Franc, down with watch prices.

"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"

This rather silly, clever dialogue from the story, that was written in 1871, has evolved into a modern day scientific and business theory called: The Red Queen Phenomenon”.

The phenomenon states that in the evolutionary world, a species must adapt to survive in the ever-changing environment surrounding them. They must adapt quickly to keep their position in nature. In the business world, the phenomenon states that in order for a business or product to survive in the market it must “run as fast as it can” to keep up with the competition and with the ever-changing marketplace.

Timezone.com Founder Worries About The Fragility Of High Watch Prices   feature articles

Let’s take the iPhone, the quintessential high tech product. The iPhone is basically the same price since the second iteration of the product, but what you get each time Apple releases a new iPhone is amazing. Faster, more memory, better graphics, better design, bigger screens, all for the same price. Apple is living and breathing the “Red Queen Phenomenon”. Apple is running as fast as it can to keep its market share with Samsung and Google constantly tailgating them.

In this uncertain economic environment, with high unemployment, bankrupt countries seizing citizen's bank assets, and a general malaise about the economic future…. I’m sure a lot of you reading this article are ”running as fast as you can, just to keep up with your job position or your income level”. Instead of living "Livin' la Vida Loca”, you’re living the Red Queen Phenomenon.

In the Swiss watch industry, they seem to be oblivious to the Red Queen Phenomenon. They aren’t running as fast as they can to keep their market share. The luxury watch consumer is not getting more for the money. We’re not getting better quality, or longer warranties, or free servicing out of warranty. In fact, the only true improvement we’re getting is a better distribution of the watches, thus making them more readily attainable.

So I guess I’ll just plunk down my $7,900 for that IWC Portuguese Chrono Automatic in steel I’ve been drawn to like the siren’s song drawing the sailors to the rocks. Or, maybe, just maybe, I’ll pay for another one-quarter semester at my daughter’s college in Boston.

Richard Paige, a fourth generation watchmaker,  is  the former owner and co-founder of Timezone.com, and  several  watch retail stores in California. Currently Richard has designed and manufactured his own line of watches using antique and vintage American Pocket watch movements: rpaigewatch.com

28 comments
zaki2004
zaki2004

If I enjoy a beautiful $40,000 watch on my wrist and have worked hard for it, why should I deprive myself of it?

I give Uncle Sam hundreds of thousands of dollars to squander every year, why should I not enjoy the fruit of my own labor?

Live and Let Live.  Help people who need help, work honestly and enjoy the pleasures that can be had legally and lawfully as long as you don't hurt others.

So many of the watches are too expensive, buy the cheap ones, there  are plenty of them out there :)

Jatlifefyre
Jatlifefyre

Great article.   Rolex, Omega, etc watches are over priced compared to the good old days.   There are great brands out there that produce stylish watches with good movements.  I get more compliments on my Christopher Ward watch then my Omega or Rolex.  My next watch is likely to be from New Zealand.  

bruno bruneau
bruno bruneau

Most of us will agree but I do believe there is ONE exception.

One brand still offers an incredible value for the price they ask.

A brand with superb, legendary inhouse movements, a brand with a huge and important history, a brand which is in the same league as JLC, IWC, Rolex, Panerai,  .... but 30  or 40% cheaper....

Just take a look at Zenith

Inhouse chronograpgh starting at 5.5 K (euro) the other brands I mentioned charge between 8 and 11 K for a similar piece

there is an alternative !

Kar Wai Law
Kar Wai Law

Why would watchmakers make only 500% profit

margin off suckers like you/us, when they can effortlessly and snobbishly make 1000% percent or more?

funkright
funkright

I read the comments and all I see is people trying to justify their purchases and the prices paid. At one time I had a panerai gmt (233), Rolex gmt (2c), sinn gmt (U2), and omega speedmaster gmt (allay the SAME time)... Then I woke up to the fact that they all held no greater purpose than showing my purported success to the world around me. I got past that, accepted that no shiny object (or quantity thereof) would engender a better life and sold them off. Now I wear nice lowe end seikos, have a few homages (not branded) and a hell of allot more money in the bank. Allowing me to experience life through experiences not through the automatic wobble of a timepiece on my wrist. Pricing is insane with no improvement whatsoever to justify the constant increase, we'll, besides the fact that you're showing your neighbour that for today, maybe, your station in life is better than his. I'm not a Ramsey fan, but I love his quote “We buy things we don't need with money we don't have (or could more wisely spend elsewhere) to impress people we don't like.”

Azua
Azua

Your math is flawed.  Omega is a Swiss watch to the price increase over time should be compared to the rate of inflation in Switzerland.  Also regulation and labor laws have changed drastically since the 1970's...Especially in the European Union which all adds to the costs

aleximd2000
aleximd2000

My oppinion is that with a very good marketing you can sell anything!

The situation is this because the demand is so high that they can ask almost everything for a product!

Just write on it limited edition , end of series and the freaks are running to buy it!

I know many rich people who say you can't see me wearing something that worths only 5000 euro.I start after 15000, or I have the whole collection of Hublot,I am an expert in Hublot , and sadly they can't tell the difference between a quartz and automatic movement never to say kinetic.So because of this , I don't know who said that the really fans , obviously the mass people of conoisseurs are those who are working hard day by day and are making a huge effort for buying an omega speedmaster for example. This is life!

If , for example the prices would be lower and close to reality , the black industry would be smaller i think!

Think the example of rolex: in china a rolex , of course from cheese, costs about 2 dollars at the end of the factory line!

Even if it is made from chees the real thing cannot be 2500 time better!Isn't it??

DG Cayse
DG Cayse

"Consumer Worries About The Fragility Of High Priced Watches"...there, fixed that for you.

Heretic that I am, if I pay s bundle of ready for a watch, I want that damn thing to be tough and dependable.

Keep the fancy schmancy for the display case.

I want a watch that can endure the real world and be dependable under all the conditions which I may encounter in real life.

Lesthepom
Lesthepom

Good article but I think complaining that Swiss watches are overpriced is like complaining cares are overpriced because the first garage you looked in was the Ferrari garage you can get a 100% Swiss watch for less than $100 if you can't afford new Tyler's for you Ferrari why would you by one I have some nice watches ( in my eyes ) including a solid gold omega I wear all of them and I may be a bit more carefully with the gold one but I still were it to go fishing as I don't intend selling it and have no one to leave it to I see no point in buying a nice watch and leaving it in the safe

If I was in the position to buy a $50,000 watch with a weeks wage I don't think I would care if it only lasted a year as I'd probably have several more to choose from

Mister_w
Mister_w

It's simply a case of supply and demand coupled with brand placement. The high end manufacturers can sell enough watches at the hugely inflated prices to generate enough profit to satisfy their shareholders so why would they do anything else? We shouldn't expect them to do anything else. They're profit making companies not charities. As for us "peasants", all we can do is enjoy Ariel's reviews and buy watches from companies who have a different marketing strategy, like Christopher Ward, Nomos or Xetum.

Borys Bozzor Pawliw
Borys Bozzor Pawliw

Prices for elite timepieces are a law unto themselves. It is essentially what the market is willing to pay for the available supply. And to be fair, this is the way it should be. Except in ultra rare cases, a fine Swiss, German or British mechanical watch is really a piece of jewelry or even art - it's a luxury, a status symbol whose real world utility is exceeded by products costing not just 10%, but sometimes 1% the price. And due to the volumes, you are not going to get the same update cycles as per mobile phones. But perhaps Swatch will start a bit of innovation with the Sistem51. Overall though, fine watches make a mockery of the economic concept of utility, and pretty much the pricing model that should be driven by it.

MarkCarson
MarkCarson

Sadly you are right. Most of the 'famous' brands have entry points in the $5 - $10K range, unlike years gone by. Then again, since the quartz revolution and the mechanical renaissance, these tiny machines have gone from being essential to merely useful and more likely objects of desire rather than function.

BTW - we have almost run into each other around town a couple of times from what I hear.

Ulysses31
Ulysses31

Rich people are willing to pay stupid prices for things, thus stupid pricing abounds.  The value proposition doesn't even come in to the argument at this point.  There are varying levels of course.  Most of us here still talk about value and so are not completely hopeless.  The IT or oil sheik billionaire doesn't give a damn though, and those are the types of people the Swiss watch industry courts with glee, knowing that they can rake in all the money they want while sitting on their innovation-bereft asses and not really giving a damn about the rest of us since we aren't worth that much to them (note; making a hideously ugly design that looks like an engine block or a crushed car doesn't equal innovation).  Meanwhile, the rest of us aspire to owning these pieces that are so far beyond our reach they become magnified in our minds in terms of their importance - we want them more precisely because they are so unattainable, and we often overlook that a lot of these watches are nothing special beyond their price tag.  The Swiss are "haw-haw"-ing all the way to the bank.

Emperius
Emperius

Agreed entirely except on your biased iPhone example. The iPhone since it's existence from 2007 is twice the phenomena of tnat example of yours about CPI. The iPhone changes nothing other than basic chip upgrades and resolution increases, yet all stays the same, along with the most boring OS yet. Your switch to affordable steel watches is that of the equivalent of Android, meanwhile the iPhone of that of your paranoid expensive watches.

aleximd2000
aleximd2000

@Jatlifefyre look for Archimede watch made in germany in bronze case! It is pretty cool and with the peanut price!  Or Schaumburg germany too

Cheers

aleximd2000
aleximd2000

@bruno bruneau yes indeed you'll right with Zenith!

I've noticed that very very peculiar. But you know something: the grey market is not happy about that

They say ,mean the businessmen that it is a wrong politics and the watches cannot maintain their value!

i similarly believe that Zenit and a few remaining one are on a rapidly dissapairing niche of very very good watches with affordable prices or let say nicely common sense prices.

And with Kar Wai Law _ indeed the profit is over that 500%.But as with television if you don't want or like the prices you don't have to buy.  Cheers good people

zaki2004
zaki2004

@funkright 

You can buy a fine watch to show to your neighbors or you can buy it because you like it.

It all depends on the reason you bought your watch.  In your case it appears the reason was not because you liked the watches yourself and therefore ended up selling those.  

Good for you.  Good also for those who do buy and keep the watches because they love these little mechanical marvels.  


clueless1
clueless1

Why are you browsing watch forums? Obviously you must be attracted to the mechanics, art, design or functionality of certain watches. We browse forums to learn more, and to share our passion. Sounds to me like you had a good life, lots of money, lots of watches, and then, ran into financial difficulty, sold the watches and bought a cheapy, and now just bitch about the watch industry and people who can afford to pursue their passion whilst trying to sound noble. funkright, you sound fake.

Emperius
Emperius

@funkright I appreciate your honesty. But nonetheless, if you can afford a high brand watch no more than $10k which it would be peanuts for somebody but yet not show it off and still have enough cash... why not?

DG Cayse
DG Cayse

@Mister_w+1 for Chris Ward...although I do see him underwriting some hipster trek led by a 20 year-old Cambridge University student Tajikistan. A bit of a waste, IMO, but hell, if could tag along and send back youtube vids of the trek I'd do it. Although to be honest, Tajikistsan is not the best place to be with a high dollar sponsor masking it public....if one understands my meaning...(kidnap-ransom-head on stake kind of thing)

cptodd
cptodd

@Emperius Actually, his analogy is dead on. Unless you think that the multiple man hours that go into creating new chips and improved cameras and the time it takes to design and add new hardware such as "retina displays" are nothing or that these things just drop out of the sky and into the phones then his example is spot on. You might not like the iPhone but they do put work into improving its hardware. I might also add that they put lots and lots of work into improving the functionality of the devices as well (iMessage, etc). Just recognizing that is not "biased" at all. Denying that and denying that it is a legitimate example of incremental improvement for the same price (or "bang for your buck") is a symptom of delusional thinking. Furthermore, the way in which you phrased your critique ("Agreed entirely except on your biased iPhone example." and "Your switch to affordable steel watches is that of the equivalent of Android, meanwhile the iPhone of that of your paranoid expensive watches."), if I understand it correctly, is a symptom of your own paranoid thinking. 

funkright
funkright

Wow, what vitriolic words... Am I supposed to say ouch? Was that supposed to hurt? You infer and apply supposition inaccurately. I appreciate the effort that goes into some time piece more than others (say spring drive or an IWC Portuguese Perpetual).. What I don't appreciate is the never ending drive that we seem to be on to one up the other. Just this past week I almost travelled the path again, but managed to check myself before taking the leap, only needed to ask myself why 'I' was going to drive down the same road.

We've increased our charitable donations substantially over the last 5 years due to those around us suffering, for someone to malign or use that position as an attack demeans the circumstances of others who, through no fault of their own, weren't allowed the same opportunities or paths that you or I where.

Those with plenty need to help those with less. Ignorance certainly isn't bliss, it's just ignorance. What a sad position one must be in.

funkright
funkright

Ignorance is Bliss then I would ask why? Are you a better person because of it?

Emperius
Emperius

@cptodd @Emperius Excuse me but a phone that is designed once, and later shipped for Chinese manufacturing for a cost no more than $180 is exorbitantly ridiculous. How is this not compare to a 'Swiss' non in-house watch made for a couple hundred for later to be inflated for $10k? In fact the comparison between electronics and watches is slightly off in my opinion, but for the sake of the argument, the iPhone is overly inflated to the point where everybody has it, not a Swiss watch.

Emperius
Emperius

@funkright Absolutely not sir. But if a father is inheriting such watch, or you'd have always had a desire to have a Rolex/Omega alongside the tonne of G-Shocks, well why not heh? I do appreciate your honesty though, I certainly do and will do the same. Show off and ego will only deter you from becoming a better person.

funkright
funkright

I'm looking forward to Apple entering the watch arena.. If the highend watch houses think there is nothing to worry a out, they'd better think again.

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