Watch Price Premiums: Rare vs. Shortage vs. Hype

These days, a significant number of watches sell for premiums above their original brand-new retail prices. However, amid all the excitement and increasing values, it can be easy to forget what factors are actually responsible for these increasing figures. 

The statement, “you can’t get one at retail” is often used to justify the sky-high prices on the secondary market, but a lack of availability at a retail level is not always caused by the same driving factors. The word, “rare” is often used as a blanket term to describe these watches, but there is a huge difference between a timepiece that is legitimately rare and one where demand simply isn’t able to keep up with an overwhelming supply. Furthermore, it is also important to distinguish between a model that is perpetually sold out at retailers for multiple consecutive years and one that briefly experiences a temporary surge of popularity upon its initial release.

Rare Watches

Image: Hodinkee

There are plenty of watches out there that are actually rare, meaning that the total quantity of examples in existence is a relatively small number. When you hear that some brand is only making a dozen or even a hundred pieces of a watch, and there are thousands of people interested in buying one, it’s easy to see how secondary market prices can reach multiple times their original retail values.

However, small production numbers don’t always equate to high prices on the secondary market. If demand for a specific model does not significantly exceed the overall supply, then no tangible premium will be attached to available examples. Additionally if the supply of a watch exceeds its total demand, then secondary market prices will end up being below their original retail values (like with most consumer goods). With that in mind, given sufficient demand for a watch, having a small number of examples in existence virtually guarantees that people will be willing to pay a premium to add one to their collection. 

A Shortage of Select Watches

Image: Bob’s Watches

Just because you can’t buy any Rolex at retail anymore does not mean that all Rolex models are automatically rare watches. Among the world’s various luxury timepiece manufacturers, Rolex’s output is prolific and it is estimated that the brand produces approximately a million watches per year. Walk into any management suite in an office building or even go out to eat at an upscale restaurant, and you are almost guaranteed to spot at least one Rolex. To call these watches “rare” would be highly inaccurate, but that still doesn’t mean that you will be able to get one from your local authorized retailer.

You are more likely to spot a Rolex than any other type of luxury timepiece (at least here in the United States), yet because the demand for Rolex watches is so incredibly high, there is effectively an enormous shortage of them - at least at a retail level. However, a quick look at the secondary market will confirm that many of the brand’s most in-demand models are not actually rare at all. Countless examples exist and are readily available for immediate purchase; they are all just listed at values that are significantly higher than their original retail prices. Although a retail-level shortage is certainly a legitimate reason for there to be price premiums attached to available examples on the open market, it’s still important to remember that retail scarcity is not the same thing as objective rarity.

Hype Watches

Image: Worn & Wound

Although hype watches are often those with limited production numbers or that are otherwise not easily attainable at a retail level, some are simply models that experience a massive and temporary surge in popularity. Unlike highly desirable models that are characterized by perpetual retail shortages, hype watches are almost like fleeting horological trends, where there is an initial swell in popularity and open-market prices that quickly tapers off once enough examples make it into the hands of the general public.

Models such as the Timex Q or the Swatch x Omega MoonSwatch are the definition of these types of hype watches, as they are not limited editions and have no constraints on their production to prevent supply from ultimately catching up with global demand. When it was first announced, the Timex Q quickly sold out all around the world, but within several months, Timex had produced more examples and you could easily order one directly from the brand’s website. 

On the other hand, watches like the stainless steel Rolex Daytona ref. 116500LN aren’t just hype watches, but rather characterized by extreme and long-running retail scarcity, because they have been continuously sold-out at authorized retailers ever since they were first announced multiple years ago. While it’s relatively easy to justify paying a price premium to obtain a legitimately rare watch or even one that suffers from a perpetual retail shortage, sometimes all it takes to buy a hype watch at a reasonable price is a little patience and not playing into the hype machine.

Need luxury watch accessories? Shop our full selection right here.

Image: Fratello