Why “some watches” are so expensive?
Well, probably for 99% of the World’s population; the prices of so called “timepieces” which ranges from (at the level called haute horlogerie) €10,000 to infinity, are stupid.
An exchange for a Patek Philippe 5370p you can get a Lamborghini or an above average house. For the same money you pay for an A.Lange & Söhne Tourbograph Perpetual you can get 2 Ferrari California plus a sick vacation in Maldives.
But why? Are people who pay this amount of money to watches really that stupid? Or is it all about marketing and luxury hype that makes them pay these kind of money?
Not exactly.
Since I love to demonstrate things while talking about them; let me show you a piece and its mechanism.

The piece here is from arguably the best watch manufacturer in the world; a watch with a chronograph and a date function. Its case is made of platinum, measures 41 mm in diameter; weighs around 120 gr.
When you look at the watch from a pure materialistic perspevtive it’s impossible to justify the price. I mean, 80 gr of platinum and 40 grams of steel levers for about €90k? So what makes this piece so expensive?
It is the labor. Watchmaking is a very labor intensive industry. When you look at Porter’s 5 forces chart; you see one of them is Bargaining power of suppliers which in this case watchmakers. These watchmaking experts are very scarce and they go through intensive training for years to design a movement, applying finish and even to assembly. Therefore; this highly qualified workers are very expensive to find and of course this reflects on the pieces they create. For example; an assembler’s average monthly salary in Switzerland is about CHF 10k a month. I don’t even mention the developers, engineers…
The movement you see up there is caliber l951.6; it was started to develop from scratch in 1995 and took 4 years to turn it into a real watch. Just imagine the costs of product, labor etc.. It’s uncanny!
So, all parts there; how long does it take to assemble a watch from start to finish? It varies depending on the watch’s complexity (this subject will be enlightened later on) but the piece you see down here takes almost 4 months to create. As I’ve said before; not even mentioning the prototype period.

The piece here houses more than 1000+ individual parts and various finishing techniques. It retails around €500k. and it is limited with 50 pieces. Because; you can not produce 200 of these watches. It’ll suck all your labor force and you can not apply the principles of economies of scale to those. Therefore, you have to compensate the money you’ve invested in 50 watches.
Of course, not all the money is labor force, products and such. Marketing & PR expenses play huge role for prices. When you’re in the luxury business, you have to be one-on-one with clients and consider even the tiniest points. Events on each major city in the world, bloggers, sponsored events, collector & customer meetings in boutiques, expenses of fairs etc… All of those marketing expenses are utterly necessary; therefore have to be done.
Finally; after all these expenses, the company has to deliver a certain amount of profit and I assure you; the profit margin of watch companies is not even close to that hyped fashion houses like Louis Vuitton who sells a simple sweatpants for €800.
Overall; you pay because of artisty, years of experience and hardwork, for a unique hand-made piece that will last for decades.
Thanks for your time.
