Selling a commodity as luxury items
I’ve been a bit hesitant to post this over the past week, but two recent threads along a similar topic make it relevant to current discussions…….
Not yet finished with my first mod watch, I’ve been researching a potential second mod watch. Though not writing this to talk about my mod project, but rather to talk about the whole luxury watch industry that came from research in a mod project, and is very relevant to the question of what are you getting for you money?
An example on the low end, Seiko NH35, NH36, NH34 movements can be bought in the $25-$40 range. These of course are the external marketed named versions of the Seiko 4R35, 4R36, 4R34 movements, that are incorporated for in Seiko watches ranging from $300-$500.
It’s the high end luxury market, in particular researching the extremely successful ETA/Valjoux 775x family of movements where things get interesting. Calling that family a mass produced commodity movement would not be inaccurate. I started counting how many European luxury brands sold watches with Valjoux 775x movements only to realize it’s easier to count the ones that don’t. To name a couple: Panerai, Longines, IWC, Hamilton, Sinn, Tissot, Omega, Breitling and many smaller brands. By showing or hiding the various complications, one might think they are different watches… for example a Pan doesn’t look like an IWC pilot, yet they both use 775x movements. The movement have been around since 1973, and picked up steam in the mid-80’s. Patent have long expired. Due to its success, popularity and ETA manufacturing supply issues, there are many compatible movements from various manufacturers. The entire Sellita SW500 series of movements are ETA Valjoux 775x compatible replacements. New prices of the movements are around $350. However, watches I have seen in the above brands can go for up to $12k retail with $5k-$7k more typical. One can buy a German made chronograph stainless steel case for roughly $200 that will house 7750 or 7751 with other variants are cheaper. There are plenty of Chinese SS cases of exceptional quality at a fraction of that price. Dial and hands are even a smaller portion of the costs. In fact one can buy a pre-assembled watch with a Swiss made 7750 movement in a no-name Chinese stainless steel case that for $550 resembles one sold from one of the above brands and retails for $7,600. If you’re not particular on the Swiss mfg origin of the movement, then $280. The question came up the other day of how much one pays for a luxury name….. In this example it looks to me like $7,050. …and if you want to go super inexpensive, Miyota makes a drop in 775x compatible quartz movement (6S00) for about $30.
This info isn’t secret, since I learned it all in week or so of researching for components to build. There is a lot to be said about reassurances, warranty, brand prestige, caviar and champagne at your AD (especially if it’s really good 😂)… but hiding the amount makes it tricky for customers to make a value assessment on what they are getting on their wrist, and likely not in a prestige brands best interest to divulge.
I’m a software engineer and watch enthusiast. I’m not excited about brand or heritage, but rather engineering tech.... spring drive, solar GPS, electrostatic drive, transistor tuning fork regulation,...
This is a slippery slope. I’ve been there. A grail watch of mine, Tudor Day/date eta 2834. The movement, $150. If I want a premium one from a reputable source. Generic replacement case, $50. Original dial and hands $150. I can buy everything, either replacement or like new uses for under $500. But the entire watch is usually around $2k. But would I be satisfied?
This is a slippery slope. I’ve been there. A grail watch of mine, Tudor Day/date eta 2834. The movement, $150. If I want a premium one from a reputable source. Generic replacement case, $50. Original dial and hands $150. I can buy everything, either replacement or like new uses for under $500. But the entire watch is usually around $2k. But would I be satisfied?
Yeah, I definitely think that’s going to depend on every particular individual and what there purpose is in buying. Speaking for myself, I don’t have any interest in any of the brands that use a 7751… I just think all of the complications that a 7751 drive look cool, and that it would be an interesting mod watch to customize. It would immediately lose appeal if it had branding and diminish sense of accomplishment of self-assembly.
Back in the 80’s I use to buy Guess jeans, a popular and expensive pair of “designer” jeans. My girlfriend would make fun of me because I would cut off all the labels. I bought them because they fit sooo well, and I hated the idea of people thinking I bought them because of the brand label. Now days, I’m not going to take a dremel grinder to a Rolex to remove the labeling for that same kind of thinking…. It’s much easier to find a good watch regardless of brand….since many movements are commodities. A few months ago, I bought an $11k GS, primarily because I loved the spring drive tech, it’s uniqueness. It’s inconspicous branding is a bonus. I don’t know a single person in the non-on-line world that has heard of GS or spring drive, which is a win in my book.
Yeah, I definitely think that’s going to depend on every particular individual and what there purpose is in buying. Speaking for myself, I don’t have any interest in any of the brands that use a 7751… I just think all of the complications that a 7751 drive look cool, and that it would be an interesting mod watch to customize. It would immediately lose appeal if it had branding and diminish sense of accomplishment of self-assembly.
Back in the 80’s I use to buy Guess jeans, a popular and expensive pair of “designer” jeans. My girlfriend would make fun of me because I would cut off all the labels. I bought them because they fit sooo well, and I hated the idea of people thinking I bought them because of the brand label. Now days, I’m not going to take a dremel grinder to a Rolex to remove the labeling for that same kind of thinking…. It’s much easier to find a good watch regardless of brand….since many movements are commodities. A few months ago, I bought an $11k GS, primarily because I loved the spring drive tech, it’s uniqueness. It’s inconspicous branding is a bonus. I don’t know a single person in the non-on-line world that has heard of GS or spring drive, which is a win in my book.
That’s a great way frame of mind, and i slightly misunderstood your original post. I apologize. My interpretation was from a stance of watches costing more than the sum of all their parts.
I definitely see the appeal in using off the shelf, tried and true components on a one off project.
A few things not considered:
The case used for a $5000 name brand Watch is not off the shelf. It is designed and custom manufactured for that model. The bracelet and strap are not included. You have no design or R&D costs, no overhead, no janitorial costs or benefits you have to pay. There is no marketing. You aren’t paying for your time in shopping and putting together these watches, you aren’t even paying for your training or any rework you have to do on the watch. There is no profit above your work. Finally, you don’t have to pay a retailer with those same costs.
A few things not considered:
The case used for a $5000 name brand Watch is not off the shelf. It is designed and custom manufactured for that model. The bracelet and strap are not included. You have no design or R&D costs, no overhead, no janitorial costs or benefits you have to pay. There is no marketing. You aren’t paying for your time in shopping and putting together these watches, you aren’t even paying for your training or any rework you have to do on the watch. There is no profit above your work. Finally, you don’t have to pay a retailer with those same costs.
Yeah, I don’t think any of the cases used by any 775x are actually off the shelf… at least I don’t see much commonality of any of them. The part that is off the shelf is the movement, which with ~300 moving intricate parts might think is the bulk of the mechanical expenses. I would imagine R&D costs for Valjoux was amortized 50 years ago when it was designed, and then paid in full handsomely many times over by the many luxury labels that purchased the movement at a rate of 1/10th to 1/20th final retail. I fully agree with you on marketing costs. I would speculate marketing for a luxry brand must be incredible.
Forgot to mention Invicta is one of the consumers of those Swiss made 7750 movements.
Yeah, I don’t think any of the cases used by any 775x are actually off the shelf… at least I don’t see much commonality of any of them. The part that is off the shelf is the movement, which with ~300 moving intricate parts might think is the bulk of the mechanical expenses. I would imagine R&D costs for Valjoux was amortized 50 years ago when it was designed, and then paid in full handsomely many times over by the many luxury labels that purchased the movement at a rate of 1/10th to 1/20th final retail. I fully agree with you on marketing costs. I would speculate marketing for a luxry brand must be incredible.
When speaking about R&D in this instance, I was referencing design and development.
Bottom line is that if you are willing to put the effort in and buy 100% off the shelf and build it in your house, you will save a ton of money. If you are selling an original for profit design, you are fortunate to stay in business for a decade.
When speaking about R&D in this instance, I was referencing design and development.
Bottom line is that if you are willing to put the effort in and buy 100% off the shelf and build it in your house, you will save a ton of money. If you are selling an original for profit design, you are fortunate to stay in business for a decade.
Yes, I agree. There certainly is a lot more risk, time and money involved in developing an original in house movement. In the off the shelf movement, the risk is mitigated. Though I did read that the whole reason to be for Sellita’s SW500 series is the unreliability of ETA supplying 7750. If one builds a product line that has a primary dependency on an external company, that in itself can be a whole other issue.
There's no logic to Veblen/ Luxury products, they're supposed to be expensive 🤔
Forgot to mention Invicta is one of the consumers of those Swiss made 7750 movements.
Yes, you see the 7750 quite a bit on European shopping channels. I'm always cautious when a watch is being marketed by country of origin or the movement. There is usually a reason for it.
Yes, you see the 7750 quite a bit on European shopping channels. I'm always cautious when a watch is being marketed by country of origin or the movement. There is usually a reason for it.
Haha, yes, a healthy amount of skepticism is good! I presume in their advertising that they are refering to only that the 7750 movement is Swiss made. Whether it is then made by ETA or Sellita 🤷♂️ who knows. Given that in my quantity one search for a movement I could get the movement for around $350 which is likely higher than what Invicta could purchase in quantity, it seems like that leaves plenty of room for Invicta’s typical profit margin, and maybe then some.
In a similar vein, i had found a dealer on AliExpress that allowed one to pick their movement…kind of like picking your color choice. The Swiss 7750 movement was $550, while I believe the non-Swiss movement choice was around $280, which I presume was then a Miyota or other.
Right, the 7750 is a good movement, and is available in a number of grades. We don't know the wholesale price, but based on the AliExpress comparison something around $270 seems reasonable for a base caliber. Yes, Invicta will make a profit.
My problem is with watches using that movement being sold online, and being compared to watches of other manufacturers with the same movement that are simply not comparable.