Why Are Seiko's So (Relatively) Expensive?

There are likely many things at play here. The two biggest issues IMO are both sides of the same coin; reputation. 

Seiko has one, micros do not; at least on the same level.

Seiko is attempting to leverage their reputation and move upmarket. This thread from @HotWatchChick69 does a great job explaining the why.

Micros without the same level of reputation must spec out the watches and offer them at lower prices to get their names out there and break through the noise. 

Hello, sir!  I do have an answer for you, but I suspect it will be ultimately unsatisfying, emotionally.

• Intuitively, we think that the price of a given good or service is:  (cost) + (margin)
• Businesses that price according to (cost) + (margin) are marginal producers and are unable to earn sustainable profits for the long-term.  Microbrands will price according to (cost) + (margin).  Typically, microbrands are run by 1 dude who decided he/she had to get out of the corporate grind and wanted to find something to do that they were passionate about.  So, they're willing to work for peanuts, because they've bought into the whole "do what you love" and "follow your passion" thing
• Businesses that aim to maximize shareholder value price according to "consumer willingness to pay" and employ a number of tactics to figure out their customers' needs and desires and to then charge accordingly - it's called "price discrimination."  Here are a couple of amazing examples:
• When you go into that local coffee shop, you can buy a cup of regular coffee for $1 or you can be a good human being and buy the "fair trade" coffee for $1.50.  When you look into the math behind the marginal cost associated with those fair trade beans, it's ~$0.01 per cup.  So, why do they charge you $0.50 extra?  Price discrimination!  They got you to self-identify as someone willing to pay more for coffee, and charged you accordingly!
• There's a very famous case study of, if I remember correctly, HP printers.  The expensive one printed at 20 pages per minute.  The cheaper one printed 8 pages per minute.  But, when you look into the cost of goods sold, you quickly discover that the slow printer costs more to manufacture than the fast one!  What's going on?  Turns out HP takes the fast printer and inserts an extra chip into it to slow it down from 20 pages / minute to 8 pages / minute, and it costs more money to make that chip and insert it!  This is a case where it COSTS MORE to make the cheaper product!  But, HP did it, because if you're someone who needs 20 pages / minute, you have a higher willingness to spend!

Here's a great article for the layman that explains in an entertaining way how it all works:

https://timharford.com/2005/10/go-figure-an-extract-from-the-undercover-economist-2/

Ultimately, Seiko is just trying to maximize shareholder value!

I think what he is referring to is the fact Orient is owned by Seiko, taking them out of the micro space; making the underlying question, why is a watch manufactured by the same company cost so much less?

As has been hit on, Orient is the budget Seiko now and they likely don’t want to cannibalize sales.  Seiko is trying to play in the $500-$1200 space for most their watches and save the under $500 space for Orient and Seiko 5s.

There are a number of other factors including cost/quality of material, tolerances, etc that come into play as well.

I think that you are being a little unfair to microbrand starters/owners.  In the entire history of clocks/pocket watches/wrist watches the watchmaker has been a traditional skill passed down in the master/apprentice relationship.  Like other trades it was common for the apprentice to open his own shop eventually.  The story of almost every watch brand is like this until very recently.

From the mid-70' until the mid-90's the industry consolidated and wobbled a bit.  Microbrands eventually started to break the monopoly that large corporations held.  Most of the starters of these microbrands were part of those very same corporations, many on the skill side as opposed to the marketing or sales side.  So, the industry is really moving in a small way towards its traditional model.

As for seiko pricing a watch at $300 then selling it for $175 on Amazon…I think that’s also about capitalizing on those who are willing to pay. They sell what they can @ $300,  then sell more at $175 to those willing to work harder (and unwilling to spend $300). Basically, those Amazon buyers are extra- they weren’t going to buy your product because it’s too  expensive. 
 

Even at $175, they still make a little money, and they’ve potentially created another Seiko fan who will buy more of their products in the future. And that new fan will eventually want something that doesn’t sell at a discount. Hell, maybe they’ll eventually move up to Grand Seiko. 

Thanks for all the comments guys- and @hotwatchchick69 - that HP printer analogy really rang close to home! I spent some time a few years ago working at a Xerox/IT Services business, and the Xerox models, while some of them might have different sorting/accessories- but the PPM - was controlled ONLY by a chip. If you had access, you could hack the internal system and set the PPM manually!

I think it is simply that Seiko's watches are pretty enough that people are willing to pay. The last Seiko I bought was something that from a spec-perspective could have been produced by any micro-brand. But all components came together very nicely from a design perspective , nothing felt like a "stock" or generic component. Seiko's production volumes are large enough for that.

Also, on the lower end of the price spectrum Seiko is actively supporting the modding community. If I don't like my bezel, I can pay $40 and have a different one installed within 2 days. This exists for other manufacturers, but in very limited form. Each Seiko 5 I buy is more or less part of a Lego set, figuratively speaking.

“i hate Seiko!!! Damn prices are too dang high!! Quality sucks!! No sapphire crystal! Movement is mediocre for the price!!!”

sometimes I do get tired of these complaints and all I want To say sometimes is just …”Then don’t buy it!” Simple as that! Sorry to be a downer or a negative Nelly…but it’s simply if you don’t like it don’t buy it?!!… stay with Orient or Timex or Casio…if the price is not for you then don’t purchase it!! 
Nothing against your thread and it’s a valid question…I hope I don’t get flagged for this…😕😤

You ever try make the printer do like 3,000 pages per minute???  

SKXs were dynamite watches for $125 on Amazon.  I just got an IG add for $885.  While that isn't apples to apples, since it's discontinued, I think it's indicative of Seiko's ability to command an unexpectedly high price.

I guess all watch prices have gone up a fair amount in the last few years, why shouldn't Seiko take advantage... Seiya's quartz tunas have almost doubled, for essentially the same exact watch.

I never understood why some Seikos are priced the way they are. If San Martin can develop faster production and shipping times, I could easily see them swooping in and devastating Seiko‘s and others’ shares in the market.  Maybe once they hire a designer that can make them some catchy original designs too, but they’ve got the materials and finishing down pat.

Maybe it’s just me, or maybe it’s a younger watch collector thing—I don’t care about in-house movements.  This is largely what I see the cost of Seiko‘s coming down to—movement that was produced by the company along with the original designs—otherwise, I’m going with San Martin or a different micro brand that is known for using quality materials—you just get so many features for so little money—if you can live with Chinese clone ETAs.

Even better points once you start looking at Orient—in house movement, better materials than a lot of Seiko’s, better QA (in my opinion) 

Putting my bias out there: I don’t own a Seiko, I’ve always been in the “what’s all the hype” camp with Seiko. I get the SKX and Seiko 5, and the Arnie, and Turtle, etc, etc. I just don’t really understand why people get so obsessed with so many watches that look almost the same and have the same features. I get bored seeing Seiko‘s really quickly. 

I never tried for 3000....But I'd like to see that! 

I want to clarify that SEIKO DOES NOT OWN ORIENT.  Both Orient Watch and Seiko Watch (as well as Trume Watch, and about 20 other non-watch companies) are owned by the same holding company which is EPSON.  To say Seiko owns Orient is akin to saying 'Hot Pockets owns Gerber baby food' because both are held by Nestle. (Mushy Peas Hot Pockets FTW) 

Orient was founded in 1950, bought by Epson in 2009 and only became fully integrated in 2017.

Only recently did Orient and Seiko even reach a point where they are sharing some common supply chain resources.  Their R&D, Design, Production Facilities, Marketing, management are all completely separate from each other.  

The fact that Seiko is moving up-market is it's own thing as has already been explained in the other comments. 

But to repeat- SEIKO DOES NOT OWN ORIENT 

You can get this excellent Seiko for very reasonable money on eBay... 😁😁😁

I know.. it's shameless 

While you are essentially correct that Seiko has become more expensive compared to brands like Citizen and especially Orient, I am not going to address that point. It has been excellently answered by others far more eloquent and knowledgeable than me. I would just like to point out the irony of using a discussion of the new Seiko 5 GMT as the introduction to your topic, as it is probably the least expensive automatic GMT currently available from a big brand. 🤣

Wait... Orient is owned by Seiko? 

I was today years old.

Oh, ok I read the hidden comments, So, Epson owns Seiko and Orient. That makes sense. I knew Epson was the overarching holding company, but did not know they had acquired Orient... Makes me rethink a recent Orient purchase...

What doesn't make sense is you now have a Swiss watchmaking cabal (hello Swatch group) vs. a Japanese watchmaking cabal leading to a duopoly. Why is Seiko so expensive? Like others have said, because they can. Increasingly your only other option is Swiss, which is generally another step up in terms of price... Well in the Northern hemisphere anyway. New Seiko 5 GMT here in Aus? $850! (Don't get me started on how much the new Tissot PRX chronograph costs down here!)

I also worry about the longevity of current Seikos. On my wrist today I have a 1973 Seiko Elnix SG

49 year old watch, serviced once before I got it, new battery a month ago, and it keeps excellent time. (And it's a completely defunct technology - an "electronic" watch!? WTF!?) I'm not confident that one of the "new" Seiko 5s will be in nearly as good condition in 50 years time. 

I like Seiko movements but will not buy their overpriced watches. I got a titanium NH35 invicta coming for under 80 bucks on prime day. That way i can have Seiko without all that overpriced part. I couldn't build it for that price and neither could Orient.

ha ha ha!  There are others here that will try to convince you otherwise.  😜

Thanks buddy. I was truly not trying to be argumentative, I've spent 25 years in a similar corporate structure and know how this works. Every conglomerate has individual unit leads that roll up to a larger board or leadership group. They are tasked with working together, finding synergies, and all the other cliche corporate jargon, but it became cliche for a reason. And guess what, they regularly swap leaders between the groups. It is not a coincidence Orient became a low-price alternative while Seiko moved into the $500+ space shortly after they achieved full ownership and anyone thinking it was has never worked for a business with many entities. 

To be charitable, I think, ultimately, there are 2 assertions being made:

1. Orient is not owned by Seiko (the watchmaker).  Yes, that is 100% factually correct
2. Orient is not independent, and their pricing, market positioning, product offerings and specifications, etc., etc., are all dictated at the holding company level, in such a way that their offerings must fit into an overall product portfolio strategy.  Yes, that is 100% factually correct

So, I think others were pointing out #1, and you were pointing out #2.  

It's, I suppose, the difference between "de jure" and "de facto."  So, de jure, we in America live in the land of the free.  De facto, we live in essentially a banana republic.  Both statements can be factually correct!

😜

That is 100% fair, though my larger (and I thought obvious point) is the Seiko Group owns them all. As others said, they technically all have separate companies under the Seiko Group, but anyone, as you mentioned, that has been in the business world knows it is all one company under Seiko Group and there is absolutely integration between the business units. It is like saying Taco Bell and Frito Lay are separate companies, but we all know the only reason they are serving Doritos Locos Tacos with a refreshing Siera Mist is that they are all owned by Pepsico. Those massive companies are not acting independently and neither are any of the Seiko (Group) companies. Great, now I want to destroy my inner (and outer) self by getting Taco Bell.

Dude, when I was in high school, the 59-cent menu came out!  It was like this...

It's 30 years later, and they still got a menu full of deliciousness for $1!!!

ONE DOLLAR!!!

Some people have answered this in great detail and better than I will so I won't go into huge detail on my point.  Also some of this is relevant to big brand vs micro - some in straight brand v brand analyses. 

1. willingness to pay - Seiko has "something" name/heritage/rep that people are willing to pay for so that's priced in.

2. Price target.  Related to point 1 a bit.  Things aren't designed then priced - they're priced then designed.  Seiko has an idea of who their audience is and what they'll pay and that factors into the product but also just the price.  Gets even more complex in groups where HQ is trying to slice and dice bigger markets across brands. 

2. Marketing - for a big company selling to the world marketing will be 25-40% of the cost of a product.  For niche companies like micros that might be as low as 5-10%.

3. Design effort. Manufacture is easy, design is hard.  To get the watch they want Seiko has to find a designer, throw out their rubbish, refine their good stuff turn it into a prototype and get it right.  Homage brands just take all that, give it to a factory and say make me this with a purple dial and add bracelet number 4, please.  A lot of other brands cut the process early and give us "cheap" well specced but obviously pretty rough designs.

4. Paying for losers. Big brands like Seiko don't always get it right - they have fails they have to cover with their wins.  Micros (for example) cherry-pick other people's winners and avoid losers.  (or they go bust - so point 5)

5. Surviving.  Big brands price to survive bad times and grow in good times - a lot of other micros/mushrooms just make money today and every chance they'll be gone tomorrow.  I read a round-up of 'hot new micros' from 2016 a little while ago and every brand on the list is no longer operating.

6. Just higher costs.  Older brands have historic debts, infrastructure, payroll, inventory etc newer/smaller brands just dont.

7. Sales method. Direct sales where there's no retailer adding a margin vs sales via a third party distributor and retailer both adding their cut makes a massive difference and then just when you've figured it out someone goes and offers discounts screwing up all the sums again.



 

Wow!  Absolutely FANTASTIC points!!!

The HP printer case is a little more nuanced than that. The cost to build a printer back then might only cost $200. However, the cost to design the hardware cost many millions. When you project the cost of design, you have to factor in the number of units sold. So that $1,200 printer really cost $1,000 each over the projected sales, if they factor in design costs.

Now comes along the idea to make a $400 printer, to enter the lower market. Considering the duty cycle of this printer is much lower, they can make it on the cheap for $100, however designing the internals for it from the ground up would cost far more than using what they already designed, and just slowing it down. If they make it the same speed, it will eat into the sales of the $1,200 printer, so they would have to charge more for the $400 printer, as its sales now would need to cover design.

Panasonic also does this with their cameras. It cost millions to design the chip for their high-end cinema cameras, but only a few dollars to manufacture the chip. So they use that chip in their consumer products and just disable features, as that cost less to do than designing a new chip, and they can then sell it for less to the end user.

From here in asia, I agree that Seiko is moving upmarket. Alba, the subsidiary of Seiko, used to be very... let us say unappealing. They're not really popular and used to be seen as inferior. But lately Alba is becoming more and more the go to watch brand if you want an affordable, stylish watch. Most of them are quartz, but in that price range most people aren't looking for movements, they're looking for style and wearability. There are Alba mechanical watches, but they don't seem to be the main focus.

I don't know if it's just me, but I do see fewer and fewer Seiko quartz offering on the lower price range. I assumed it's because they're handing off that part of the market to Alba (and Lorus maybe).

All the while, Orient is coming in strong with their offering. While Orient isn't exactly part of Seiko, I feel they are filling in the empty space left by Seiko. Plus they are still technically competitors since they have Orient Star line with more upmarket watches.

Right now it feels like the "levels" according to price is:

Alba (and Lorus) < Orient < Seiko < Grand Seiko

PS: I know some people want to emphasize that Orient is NOT a part of Seiko. But to be honest, here where I'm from Orient isn't as well known as Seiko. So when I'm talking to my friends about Orient watches (trying to pull them into the hobby lol) , the fact that they're from Seiko Epson is a good sign. It's like a mark of quality, like they sound more appealing because of the relation to Seiko. Funnily enough, ALBA is more well-known among the non-watch people here compared to Orient.

No worries mate! 

I think you may be comparing value in the wrong direction. 

In the UK the full RRP for the SPB147 is £900. This is a beautiful ISO rated diver's watch...and a real strapmonster. The optional sapphire crystal observation back on a Speedmaster is £800...extra to the watches RRP.

Which represents the better value?

I don't quite understand the reductionist arguments "this has sapphire", "this has a ceramic bezel"...therefore they are better value. Doesn't that mean that subbies and explorers and nautilus and royal oaks, etc, are just stainless steel watches?

Oh. It's that really funny guy Leslie Nieson. I have to say, between him and Chevy chase, they redefined the term "Got lucky in show biz".