Are luxury watches worth their price?

In our fast-paced and consumer-driven world, the cost of meticulously crafting watches to track every second is still a topic of debate for some. Yet there is not much doubt among luxury watch collectors and fans who follow these sparkling masterpieces of art. With their aesthetic appeal and symbolic value, these timepieces not only justify their high price tag, but also provide the wearer with a lifetime guarantee of excellent craftsmanship that will accompany the owner.

Aside from the exquisite craftsmanship and high quality materials used, watches are also impacted by fashion trends as they bring aesthetic pleasure to the purchaser. In line with the trends, watches that show price increases that are greater than the forecast can be considered as “shiny” investment assets that promise great potential. These timepieces have an incredible ability to keep and even increase in value over time.

This makes them an appealing option for investors seeking both functional elegance and potential financial gain. Given these factors, it is only right that an object with such immense potential should be accompanied by an appropriate price tag.

The reason behind the price tag

We can assume that everyone understands that a watch is more than just a wrist accessory. Watches have evolved into a social status symbol in our collective memory, rather than just a common device for measuring time. With millions of people following who wears which watch and where on Instagram, it should come as no surprise that the prices of watch models, particularly those produced in limited quantities, have reached unprecedented highs.

It is a simple scarcity theory that anyone with basic financial knowledge can understand: an existing rare product can reach new heights when demand exceeds supply.

Predicting the price of a watch is a challenging task in a market that is continually influenced by external variables and operates in coordination with the secondary market. For this task, we can start by assessing two different aspects that will influence the prices of watches.

“A Rolex will never change the world, we leave that for the people who wear them.” Rolex print ad, 1960s.

The first is the brand’s marketing strategy, which includes brand image and brand recognition. What type of lifestyle do these brands promise consumers who wear their watches? Rolex’s historic advertising slogan demonstrates that it is more than just an accessory; it’s a way of life.

It elevates the consumer to a certain socioeconomic class, or even to an elite few with enough power to alter the course of history. This impression of belonging to a unique group is nothing more than the image of a luxury watch brand, such as Rolex, that promises a privileged life. The fact that Rolex has sponsored exclusive sporting events such as Wimbledon, which is watched around the world and for which tickets are awarded through a public ballot, emphasizes the luxury factor and illustrates how Rolex closely follows the lifestyle of the exclusive customer portfolio it has created.

With many such sophisticated marketing moves, luxury watch brands have completed their transformation and climbed the social status ladder. Furthermore, premium watch brands support this exclusivity through unannounced production numbers and limited supply. The limited quantity they produce strengthens the owner’s sense of exclusivity, making them a prestige object.

The superiority of the brand also has a role in raising the price of the watch, with Patek Philippe being one of the most successful examples, making just 60,000 pieces per year.

The last factor to be considered from a marketing point of view is collaborations. These collaborations are the clearest example of how the price of watches is more than just the craftsmanship and quality materials used. Collaborations allow products that aren’t produced in the same class as the original product to come under the umbrella of prestigious brands, and perhaps be traded at a much higher price than they objectively deserve. 

Consider Omega and Swatch collaboration to create the MoonSwatch, a plastic counterpart of the classic Omega Speedmaster. Despite a retail price of $260, great demand and limited supply drove its secondary market price to climb by a whopping 250 percent. The impact of this collaboration was so significant that the price of the original Omega Speedmaster Moonwatch was also affected. 

Setting watch prices requires an objective approach. Elements such as materials, production, and craftsmanship, all result in noticeable quality disparities, and contribute to both the aesthetics and the longevity that watches guarantee.

As a result, luxury companies know no limitations when it comes to quality. Several luxury watch brands have even devised specific devices to check the authenticity of diamonds and stones. Because of this perfectionist approach and attention to detail, watches last for decades as they carry sentimental significance that can be passed down through generations.

Workmanship is blended with innovation as well as impeccable exterior appearance, and like Audemars Piguet, they stand out for their mastery of complex designs and artistic craftsmanship. These timepieces require artistic flair as well as fine, meticulous expertise for which many hours are spent. It is not surprising, therefore, that some of these objects have the value of a work of art.

Are they worth it?

The exact replicas of some luxury watches are already on the streets, no matter how hard we try to pretend we haven’t seen them. As a result, you may wonder whether anything that is so easily replicated is truly worth what it offers.

Of course, whether luxury timepieces are worth the prices they command is debatable. However, nothing can replace the original, especially in the eyes of collectors. While some say that more affordable timepieces may duplicate the functionality of luxury watches, collectors think that intangibles such as craftsmanship, precision, exclusivity, and longevity distinguish the real thing from its imitation. 

We can claim that imitating these luxury firms, which present timepieces as an item available exclusively to the privileged, would be “fooling ourselves”. Original timepieces are subjected to extensive testing and refinement to achieve unrivalled precision in timekeeping. Given the cost and craftsmanship involved, this is nearly hard to replicate. This commitment to precision and quality emphasises the notion that luxury watches are more than just accessories; they are tools that will accompany you for the rest of your life, symbolising a high quality of time keeping,

It can also make sense to think of this item as a long-term companion for you, a piece that will be a part of your future. Watches can shine as investment tools in addition to being aesthetically pleasing due to their potential long-term financial returns.

These timepieces remain scarce and in high demand thanks to restricted distribution options, limited manufacture, and strict quality control. As a result, subject to market equilibrium, they can increase in value over time. Limited edition luxury timepieces, especially those from reputable brands, have a well-deserved reputation for holding their value and even expanding. They grow to be prized items that command great prices on the secondary market.

Take the Patek Philippe Nautilus, for instance, which sells for about $30,000. This watch has a waiting list of more than eight years and is frequently resold on the secondary market for over $100,000 because of the great demand and restricted supply. This value gain of 300% serves as an excellent illustration of these watches’ investing potential.

In the long run, this exclusivity aspect, which aids in watches maintaining or even exceeding their value, also enhances consumer satisfaction by enhancing the sense of pride and individuality associated with owning a luxury wristwatch.

This ongoing tradition of satisfied customers ensures that demand never wanes, leading to the vibrant luxury watch market we now find ourselves in. 

Moreover, unlike other investments, luxury watches are a tangible investment. Unlike stocks or bonds, which can seem intangible and disconnected from everyday life, luxury watches can be worn and enjoyed on a daily basis, while potentially appreciating in value. They offer a unique opportunity to showcase personal style and taste, while also acting as appreciating assets.

It is a useful piece that looks great while it’s on your wrist. You might wonder, “Is it too good to be true?”

Although investing in luxury watches may seem unproblematic at first, there are concerns to take into account. According to consumer preferences, market demand, and the state of the economy, the selling price of a luxury watch can change. It is essential to have a solid awareness of market trends, historical performance, and the standing and potential of certain brands, in order to prevent any harm brought on by this volatility. 

We have to confess that expensive watches, whose value has generally climbed, provide a seductive alternative investment option. As long as we diversify our financial holdings, pay close attention to our investments, and take the long view.

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