Why are luxury watches so expensive? This is one question that watch collectors and enthusiasts are often asked. However, before attempting to answer this question it is important to clarify the distinction between something being expensive and/or overpriced.

While being expensive means something costs a lot but is worth the high price, overpriced simply means the price is highly excessive compared to the total costs incurred in materials, development, manufacturing, marketing, distribution and a fair profit. Both expensive and overpriced watches are fairly common. However, if a brand is able to sell their watches despite being overpriced, can you still regard it as overpriced? Maybe you can, but you still want it right? So there is a certain value in terms of status and Exclusiveness that the brand brings along with the styling and functionality of the watch itself.

Let us take a closer look into some factors that differentiate the best from the rest.

Great Watches are Expensive to Make and Develop

A watch is only as good as the movement it uses. It is common to hear about watch movements that took years to develop and perfected. Developing a fine new caliber can cost Millions. One might wonder, why watch companies spend so much time and money re-inventing the wheel. Why develop new movements, when we already have movements that work? Each company wants to create an original watch movement that is unique in a way but still tells the time. Highly trained and specialized engineers spend years developing unique and complicated models for new watch movements on computers before they are physically made. Once the computer models are perfected, more money, time and testing is required to get the models to actually work and be durable. To add to this, designing the watch case, bracelet to survive non-existent tolerances also requires extensive research and development. Luxury watches use good materials, which require considerable skill and labor to work them into highly accurate and very tiny parts. In high end watches, these minute parts are often crafted by a skillful hand. Demand often exceeds the supply as a really good watch can take days or months to manufacture, and increasing production isn’t always cost effective.

Even for companies that buy their movements from other companies, the cost can be high. This is especially the case for sophisticated mechanical movements. The price of a basic Swiss automatic mechanical chronograph movement runs in hundreds of dollars, and Exotic Complicated Movements can go for thousands. However, Japanese made quarts movements are relatively cheaper. A new buyer must check on the movement the watch uses to determine its true value.

Exclusivity Means Limited Production- Means Higher Costs

Since most luxury watches produce limited quantities to maintain the exclusivity of the brand, the cost per watch is very high. The costs of designing, manufacturing and buying the parts that make up the watch are divided amongst the total number of watches produced. The more complicated and exclusive a watch is, the higher will be the cost. Good watches take highly skilled artists a long time to make, and this too translates to increased costs.

Moreover, most watch brands wish to be perceived as luxury brands to be adorned by starlets and socialites. While some watch brands pay big marketing money to create an elite image, others Patek Phillipe have a history of making excellent watches and association with the elite, the tasteful and stylish lifestyles. Their name is synonymous with fine craftsmanship and top-notch quality, and people are willing to pay big money to own them. When you buy a luxury watch- you pay more because the watchmakers who made them know what they’re doing, and because connoisseurs with a plethora of choices to pick from- pick this! However, clever marketing can easily create this impression, and one must learn to differentiate between reputation created by big branding budgets, and those built over years by excellence in quality and craftsmanship.