As luxury watch aficionados know, these beautiful devices have a fascinating history that goes back to the 16th century in Europe. They evolved from spring-driven clocks that were made portable with the invention of the mainspring the century before. For roughly 600 years, watches were powered by springs in ever more complex collections of gears, rotating balance wheels, and other components.
This complexity meant that watchmakers had to have advanced and specialized skills. Of course, there is a cost associated with specialization and that cost was built into into the price of the watch. Then, in the late 1960s, the quartz watch was invented.
Running on electricity, quartz watches keep time with a vibrating quartz crystal. What is referred to as the “quartz crisis” put the future of mechanical watches in jeopardy, as building a quartz watch is much less labor intensive than building a mechanical one, and consequently they are sold at much lower price points, generally speaking. Consumers began to question the wisdom of spending more on a luxury watch. Fortunately, horology purists have kept the market for mechanical timepieces alive.
THE LEADERS IN LUXURY WATCHES
Today, the availability of both quartz watches and those with mechanical movements means that there are timepieces to meet every budget. On the low end, a simple quartz watch can be purchased for as little as $20. At the other end of the spectrum, luxury watch connoisseurs will spend many tens of thousands of dollars on a precision timepiece.
The leaders in the luxury watch space — names like Patek Philippe, Vacheron Constantin, A. Lange & Sohne, Audemars Piguet, and Blancpain — still build mechanical timepieces individually, piece by piece, with unwavering standards and attention to detail. While technology has advanced, their adherence to Old World craftsmanship remains.
WHAT GOES INTO THE PRICE OF A LUXURY TIMEPIECE?
As noted above, people who love watches will pay tens, or even hundreds, of thousands of dollars for the right timepiece. But what is it about these devices that allows them to command such high figures? How are luxury watches priced? There are a number of factors that explain how luxury watches are priced, including:
- Scarcity. High-end watchmakers only create so many pieces per year. As a result, they can ask a higher price. And when it comes to vintage watches, despite the best efforts and intentions of their owners, certainly some are lost or destroyed every year. As their numbers dwindle, their value to collectors increases.
- Quality materials. Luxury watch manufacturers use only the highest quality materials for every component of their timepieces. The cost of those materials figures into the price of the finished product.
- Superior craftsmanship. Producers of quality timepieces rely on the unique skills of a fairly small labor pool — and one that is likely shrinking. In order to keep the most talented people on staff, you have to compensate them well.
- Higher business expenses. As with any product, there are expenses associated with things like transporting and marketing luxury watches, not to mention supporting the retailers who sell them. All those costs are higher when the product is, essentially, a work of fine art.
- Fashion trends. Even an art that has over 600 years of history can be affected by modern day trends. The interest in vintage watches (and vintage anything, really), in recent decades has created a new appreciation for beauty and intricate inner workings of luxury timepieces and higher prices as a result.
- For many people, simply noticing a luxury watch for the first time can create the desire to own one. And when that awareness is widespread, values increase. It is said that Omega watches enjoyed a resurgence in 1995 when one of the company’s Omega Seamaster Diver 300M watches was worn by the lead character in the James Bond movie GoldenEye. Suddenly the desirability, and the cost, of the watch climbed dramatically.
- Consumer psychology. There are many examples of companies that make luxury goods (of all kinds) lowering the price of their product in the hope of raising sales. What they discover is that their customers, for the most part, want to pay the higher price. High-end watch manufacturers are certainly aware of that principle!
THE FLUCTUATING VALUE OF HIGH-END TIMEPIECES
As you can see in the list above, some of the factors that influence the price of a luxury watch remain fairly constant, while others vary widely. This means that a timepiece that is worth $50,000 today may be worth $60,000 (or $40,000) next week. Consequently, it’s important to have an authority you can turn to as needed to provide you with an accurate valuation.
This is especially important when it comes to selling a luxury watch. That is a transaction where it pays to be well informed. Estimated values you find on the internet, hear from a fellow watch lover, or get from an “expert” who may (or may not) have the necessary expertise really should not be trusted.