Why are watches so expensive?

From traditional, everyday watches to luxury watches, cost remains one of the top things we look at when purchasing. Even though the luxury watches that we sell at Nordgreen do not cost anywhere near what the market pricing is, it still makes sense to understand what goes into wristwatch costs.

In this piece, we take a deep dive into what makes high-end, traditional, and luxury watches go for the prices they command – and if they are worth those costs in the first place.

 

Why is a watch so expensive?

There are a series of factors that could contribute to how much you have to pay for timepieces. Note that the concept of expensive is different for diverse sets of people. After all, what's expensive to some might be right within the ballpark for someone else.

Taking a general overview of expensive watches, though, here are some considerations to make when brands set the price tag.

 

Production Costs

This is the first place to look since the production costs will define the prices at which the non-luxury or luxury brands will sell their units. Every wristwatch comes with simple and complex components that cost a price to procure, which adds to the price that the watchmaker lists for interested buyers.

For example, a steel watch will cost more than one made out of plastic. The same thing applies when the wristwatch is studded with diamonds or some other special stones.

Besides the parts that went into manufacturing every watch, there is also the cost of labor that went into that production.

Thus, the more complex a wristwatch is, the higher the chance of it selling for a higher price than another watch in the same category.

 

Watch Components

This was mentioned under the production costs section above, but it deserves a section of its own.

One of the reasons why we have been able to keep the prices of our Nordgreen luxury watches down so well is because we do away with all of those complex components which you might never need anyway.

We also opt for the quartz movement over picks like mechanical watches, which requires more process to get working. While the quartz movement is less expensive, though, it is as reliable, accurate, and dependable as any other watch movement out there.

 

Complications

The extra features that ship on a watch besides the basic time-telling are referred to as its complications.

These add extra functionality to the watch and, as such, require extra mechanisms to work. This ties into extra components as described above and will drive up final purchase prices for these watches.

The complication could range anywhere from the date window/ display to a GMT hand, chronograph, alarm, etc. The importance of the complication, and the accuracy of the mechanism behind it, will tack on extras to the timepiece's price.

While they can make watches so expensive, you can usually do away with a lot of them and reduce your cost of purchase.

 

Exclusivity

Some lovers of luxury watches do not just want any expensive watch, but one that carries some prestige with it. That is why they will go with brands that develop exclusive timepieces.

Besides the extra attention to detail and premium value of components that go into these limited editing watches, buyers are also paying for the prestige of that rare model.

Likewise, the principles of economics state that there will be a price increase when demand outpaces the supply. Since these watches are available in small quantities, there will be more buyers than the watches – thus driving up the price such that only those that are willing and able to afford it can get one.

Luxury watch enthusiasts also believe that they are not necessarily spending on expensive timepieces but investing. The exclusivity of those watches means that their prices will go up in time (because they are rare), and these buyers can cash in on that later.

While this truly works for some luxury watches, it is not true for all of them.

 

Demand

A watch doesn't have to come in limited quantities to suffer a price hike on the back of demand.

When watch brands produce truly iconic pieces that get the attention of the market, they could become faced with more orders than they can handle very fast. The economic thing to do would be to increase the cost of the watch so that only those who are willing to meet that supply at the new price are attended to first.

Later on, though, most watch brands keep the new price instead of crashing it to the old values. That way, they don't insult the spending of those that bought at the higher price, and they further reward the trust that first buyers who got at a much lower price put into the brand.

 

The Watch Brand

Just like almost everything else, the brand that you are buying from is a solid indicator of what you should expect.

Some fashion brands make expensive watches that are not sold at the right prices but at an inflated value. They can do this and get away with it due to the brand image that they have created.

These brands work with designers, celebrities, and influencers to drive a movement around their watches. In this case, the number you see on the price tag is not necessarily a reflection of the production costs or components that went into the design but also the market hype.

 

Research and Development

A watch does not just happen in a day. Well, a proper watch, at least.

There are many months, if not years, of research and development that go into watch design and manufacturing.

From understanding the various parts that could go into the watch to choosing the right ones to combine for the best effect, it doesn't end there. The design team also needs to work hard on getting the right form, shape, and flow for which watch to produce.

This R&D does not have a specific number pegged on it as it varies from company to company, depending on what they are trying to achieve and the resources available to them.

Thus, when the R&D takes years, the company has to compensate for all that human power and other resources that have been expended in making that fine watch a reality. Hence, another added cost.

 

Are Expensive, Luxury Watches a Waste of Money?

Yes, and no.

An expensive watch can be a good investment when you choose it right. As mentioned earlier, some luxury watches are made as limited-edition pieces, and getting one of those well-made watches could earn you a good payout in some years to come.

There are a lot of watch collectors, fans, and enthusiasts looking to pay a premium price for such exclusive timepieces.

The best part is that most of them won't even mind signs of aging, wear and tear on the watch as long as it is not subjected to abuse. Such signs indicate the age of the watch, telling the buyers that they are getting good value for their money.

In other words, you get to wear your watch as you like and market it for a premium higher than what you paid for it.

However, this does not mean that you should abuse your luxury watches. If not for the sake of how much you spent on the purchase, consider the fact that you might want to pass it on – or even sell it – later in the future.

At the same time, you could lose your money on expensive watches that don't have anything to them other than the hype.

These watches do not have any pedigree, a legacy to fall back on, or the backing of quality materials to prop it up there. Therefore, they are only usually as good as the hype lasts, and their prices come crashing down massively. In fact, after unboxing these kinds of watches, the value goes down drastically.

 

What is so special about expensive watches?

Let's address this from the least special thing to the most special part of it all.

For one, expensive watches – assuming they are made by truly reputable brands – add many impressive features and components. From the frame to the bracelets and choice of movement in the watch, these watches are made with truly premium materials.

Most expensive watches come as mechanical watches, which are not as trusted as the quartz movement but give off a premium appeal. They are also usually handmade, which means that more attention was paid to the details of every part. This is evident in picks like expensive swiss watches where the movement and mechanisms are made to look as beautiful as possible.

Furthermore, expensive watches are expected to tack on extra features. It could be a GMT hand and bezel, tachymeter, special chronograph, or something else. Working those extras into the watch makes it possible for the wearer to get even more out of their watches.

Finally, and perhaps most importantly, is the prestige that comes with wearing such watches.

Some people want the attention that comes with stepping out with a watch that gets instantly recognized. Here, the watch is no more a functional timepiece but a piece of jewelry.

That is not what we aim for with our high-end, luxury Nordgreen watches, though. We focus on truly timeless, uncomplicated designs that offer you everything you need in a watch, plus the simplicity that you need to stand out in an already busy world.

After all, your watch should not be yet another source of clutter for you.