What makes the prices of luxury Swiss watches ?
Luxury Swiss watches offer a multitude of brands and models at prices that can vary within a range of 1 to 1000, and models that appear similar may display substantial price differences. Such changes seems sometimes difficult to explain logically
Are they all really luxury products ? How price can be explained ?
To give a definition of a luxury watch, one can say that if it has a mechanical quality movement and careful manufacturing, then it belongs to the Swiss watches family makes for lasting that offers a high degree of quality, it which seems a good criteria for identifying a luxury watch.
However in this very broad category we observe very strong context differences, certain Swiss watches brands use standard movements such as ETA or Sellita, produced in big quantities, which are therefore quite economical, while others use their own movement.
Of course, a movement specially made is more expensive than a standard movement, although when a factory distributes its products in large quantities, the costs tend to be much lower without joining the prices of standard movements.
Other Swiss brands manufacture only small amounts of watches feature a very elaborate movement, for example “tourbillions” or other complications, usually these products needs a lot of work and leads to high costs and therefore prices can reach heights.
But whatever the context of a watch brand in Switzerland, productions are still quite expensive compared to industrial consumer products such as automobiles, home appliances etc .
Indeed, a watch is manufactured according to methods which require a lot of machining and a perfect finishing of tiny part. Machining consist to take off excess material from a solid raw with complex machines until to obtain the desired shapes. This is a costly process in comparison with cutting, stamping and molding which are the main manufacturing processes used for mass products. The luxury watch making also uses these techniques, but only at a low extent, because nothing can replace the appearance of a machined part. The need of perfect finishing is also expensive because they require careful manual work.
So a luxury watch is a product that is relatively expensive to manufacture. It’s expensive for a brand that uses standard movements, a little more for factories that produce no exceptional complications watches and this can be huge for very elaborate complications.
So the luxury watches price is basically justified by the cost of production, however, you should know that the cost of production remains low compared to the final price, indeed it needs to add the margin of the company, required for its operation, marketing costs, distribution costs and taxes and these costs considerably multiply the final price so a little more in achieving has a big impact for the customer