"When you first hold and inspect a Rolex watch, you are immediately struck by its beauty. Probably no watch exhibits such a remarkable sheen and presence as a Rolex. Its weight physically demonstrates its worth, as a heavier object has a higher perceived value than a lighter rival. Everyone who is familiar with the watch maker knows the reputation of their watches to be high quality, perfect time pieces, and a luxury item unrivaled in the jewelry world.
All of these factors certainly are responsible for driving up the average retail price of a genuine Rolex. But it of course also begs the question: is it worth it? And how much does it actually cost Rolex to make a watch? Mustn’t their profit margin be outlandish?
While it’s safe to say they have a high profit margin, what many people don’t understand is just what goes into the making of a Rolex watch. With many products, when attempting to determine the cost per unit to manufacture, you consider the specific parts, usually crafted at an outside company and bought in bulk, plus the man hours to assemble the product and the cost of the physical plant.
With the Rolex company, there are so many additional factors at play that nearly all of their rivals do not employ. The Rolex company is indeed a beast unto itself, and the meticulousness with which they design, construct, and finish their watches is unparalleled.
Let’s explore what Rolex does that drives up its value and therefore its price. Maybe then we’ll see actually what costs Rolex accrues to make its watches.
First and foremost, Rolex uses a type of steel that no one else uses. The 904L steel Rolex uses is much more difficult to work with but provides an unmatched sheen that truly makes Rolex watches stand out, visually, from all others. You may wonder why other companies don’t compete and use the 904L steel, as opposed to the 316L steel that is much more common. 904L steel is much more expensive to use and manipulate and requires an entirely new set of machines. Other companies who don’t have the existing name recognition cannot possibly compete with a company like Rolex who moves so many units that they could absorb that initial cost to make the transition.
Also, Rolex uses an incredible amount of high-level security measures to protect the secrecy of its operation. Rolex has its own foundry and makes all its own gold in-house. No one else does that. They have their own science lab with full-time, on-staff scientists ever working to improve upon the technology. They test every single movement and watch by hand, meticulously, to ensure perfection. They employ top level gemologists full time to ensure that no diamond is fake, and that all gems are of the highest quality, hand-set and hand-selected.
Think about the man power required for all of the above statements to be true. I bet you’re no longer wondering what could drive the price of a Rolex up!
Why do they do all this? A reputation cannot be bought; it can only be earned over generations of perfection. It is nearly impossible to mass produce products and guarantee perfection. Ask any major car manufacturer. Rolex can confidently guarantee perfection because of its unrivaled operation. After all, it takes about a full calendar year to make any one Rolex watch.
In an age where you get what you pay for, Rolex stands alone as the ultimate example of that adage."
