Why are watches so expensive?

When watch lovers discuss their latest acquisition or perhaps their pride and joy with friends and family, the reaction that they receive sometimes can be one of disbelief. How could they waste such an enormous amount of money on a something to tell the time. In response to the quite understandable reaction – why are watches so expensive? I thought I would share with you my take on this.

 

First of all let’s be clear, what I’m not talking about here is the question of why a luxury watch costs as much as it does? That question has been asked and answered elsewhere many times.

 

What this is about is relative cost and not priority. I’m not making any judgements on priorities or life choices here; I’m merely making financial comparisons.

 

Now that we’ve got that over with, let’s look at some facts.

One of the most popular watches that we sell is the 1990’s – 2000’s Rolex 14060 Submariner at approximately £10,000. So, we will be using that for this comparison. The lifestyle choices that we’re using are wine, cars and holidays. No judgement here, no question of giving up one to fund another. Heaven forbids because I love all of them.

 

Wine
Wine is one that many people don’t think about. If you’re reading this page and you like a glass of wine, then you’re probably spending at least £10 – £15 or so for a bottle of your favourite tipple. We are told that a healthy amount of wine to drink is one glass day, and I’m sure that we drink a bit more at the weekends. Let’s say that an average wine lover drinks two bottles a week at £10. That’s £1042 a year or a little over £3000 in three years…

 

I love a glass of Rioja if anyone’s buying…

 

Cars

Cars are an easy one because the figures are readily available. If we keep our sums modest and say that you spend £40,000 on car, then after one year it’s worth around £30,000 and after three it’s worth around £20,000.

 

The cost of depreciation alone for your car is £20,000 over three years.

 

Holidays
Finally, holidays. If you’re family with 2.2 children and a taste for foreign travel, a comfortable but unexceptional two week summer holiday won’t give you any change from £10,000.

 

Do that once a year for three years and your total bill is £30,000.

 

You come back rested, relaxed and you have some great memories.

 

Luxury Watches

Now let’s look at your watch and try to give a little justification to the question – why are watches so expensive?

 

The initial cost of your Rolex will be on average £10,000 and that will buy you a world class example of a 2002 No-Date Submariner.

 

If you keep your watch for a year and decide to trade it back in, it’s now gone up in value and worth approximately £10,500. So, you have made £500! Now here’s the thing, if you keep it three years, it could continue to go up in value at 5-10% a year. I can’t guarantee that it will, but it often does.

 

Conclusion

In summary, over three years your holidays are costing £30,000, your car is costing £20,000 and you’re spending £3,000 on the odd glass of wine.

 

Suddenly, spending £10,000 on a Rolex which could be worth over £11,000 in three years, doesn’t sound too bad does it? As to convincing a doubting loved one who asks “why are watches so expensive?” Over to you!

 

If you need more advice, read our ‘Expert Guide to Investment Watches’

 

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