With everyday expenses increasing, watch prices on the secondary market have been shooting up to stratospheric heights. Below we explore two leading watchmakers’ pricing strategy in the current economic climate:
The King of watchmaking always updates its price list at the beginning of the year and again in April, when new models are usually launched. In 2021 Rolex raised its 2020 prices by around 7% on average, and also increased the value of its Oyster Perpetual, Submariner and other collections when new sizes, movements and dial options were introduced. So far in 2022, Rolex’s average price increase is 3.7%, but this doesn’t tell the whole story.
With demand for Rolex timepieces at an all-time high and the supply chain being squeezed, the price increases this year are not evenly spread. Stainless steel models from the “Professional” range (the Explorer, Daytona, Submariner etc.) are up 9% on average. Precious metal offerings have seen a 2.5% increase, while “Classic” models (the Datejust, Oyster Perpetual, Sky-Dweller, for example) are up a relatively low 2-3%.
The GMT-Master II “Pepsi” ref. 126710BLRO leads the charge with an 11.3% price rise. The most surprisingly small increase is another one of Rolex’s most sought-after models, the 41mm Oyster Perpetual “Tiffany,” with a paltry 3.2% increase to £4,850. Given the watch fetches north of £20,000 on the open market, it’s quite the bargain if you can secure it at retail.
This rival dominant brand has increased prices by 4% across the board this year, compared to 2021. While the high end increases aren’t as significant as Rolex’s, a wide selection of Patek’s offerings have gone up as much as 6-8%. This is well in excess of inflation and above what we would typically expect.
With an 8% rise, three models from the Nautilus collection have seen the most significant price increases this year. With the largest gain, the ref. 5980/1R has risen from £74,690 to £81,060, the ref. 5712/1A has increased from £34,610 to £37,530, and the ref. 5726/1A-014 has gone from £38,710 to £41,900. Given Patek’s decision to discontinue several Nautilus variants, the demand for these will naturally flow into the few Nautilus variants still remaining and, as such, lengthen waiting times. It therefore seems logical that Patek will increase prices more than normal, given the current state of the market and the insane levels of demand that their sports watches are attracting.
What do higher prices mean for the market?
Secondary market prices are being led by numerical necessity. As investors cash out, they will sell only for higher prices due to their greater acquisition cost. Likewise, dealers are spending more to acquire their stock and this increase is being passed on to the consumer to retain profit margins.
The heightened cost of entry is pricing people out of waiting lists and making investing less attractive while the market is still correcting. This will inevitably lead to higher prices on the secondary market as both investors and dealers strive to keep their percentage gain constant. Therefore, as the total cost of watchmaking increases, Rolex and Patek Philippe are right to capitalise on the demand while keeping their offerings consistent.