A question I often get from friends and family is “why are Rolexes so expensive?”. Although it’s a pretty simple question, there’s no single answer that satisfies. Not only are there multiple price points – really price universes – in Rolex’s catalog, there are a number of factors that go into this pricing. For the sake of simplicity, I’ve broken these factors down into two categories: physical factors (materials, mechanics, quality control), and market related factors (scarcity, resale, and pricing). These categories are by no means comprehensive, but should give you an idea of what goes into making a Rolex, the avenues by which they’re sold, and ultimately, what makes them so expensive.
Rolex’s Materials, Mechanics, and Quality Control
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It’s no secret that Rolex makes some of the best watches on the market. They’ve done so for nearly a century. Following the introduction of their revolutionary Oyster case, Rolex went on an unparalleled run of releasing high-quality, capable, now-iconic watches – most of which have stayed fundamentally the same. Rolex got a head start on other watch brands: they nailed their designs from the get-go, allowing for decades of slow, intentional, iterative improvements.
Rolex cuts no corners when it comes to materials. Since 1985, they’ve used 904L stainless steel for their non-precious-metal watches. Compared to the industry standard 316L stainless steel, 904L is far more corrosion-resistant: an important feature for waterproof watches. Of course, this superior corrosion resistance comes at a cost: around 2x that of 316L. Rolex even developed their own proprietary alloy of 904L called “Oystersteel”.
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Rolex’s precious metal watches are obviously more expensive than their steel counterparts. Not only are the raw materials more pricey, the fine detail with which they’re machined, finished, and assembled is impeccable. Different materials (with different physical properties) require their own unique production processes. Rolex sells watches in Oystersteel, yellow gold, white gold, rose gold, platinum, titanium, and various combinations of those – all of which demand their own machining tools and finishing protocols. This material diversity requires extensive and ongoing research and development. Titanium, for instance, was introduced to the Rolex catalog only within the past few years, and is known to be one of the most difficult metals to machine.
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Material costs are frankly a small piece of the pie. Rolex designs, produces, and regulates their own movements in house. Every single movement is Superlative Chronometer Certified: a process that takes up a lot of time and money. Superlative Chronometers are COSC-certified (an entirely separate and expensive suite of testing), regulated to an accuracy of +/-2 seconds per day, ensured to meet their water resistance and anti magnetism ratings, and checked to make sure their rotors and power reserves are up to snuff. Furthermore, these movements are beautifully finished and will last multiple lifetimes if properly cared for, as will the cases they live in. I can’t emphasize enough how much attention Rolex puts into every one of their watches. Naturally, this level of detail restricts the amount of watches that they can produce: a number that hovers around 1,000,000 per year.
Rolex’s Scarcity, Resale, and Pricing
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I won’t get into the pricing of each Rolex model. Just know this: the cheapest Rolex you can buy at retail price is the Oyster Perpetual at $5,000 - $6,000 ( (pictured above, pricing depends on size, bracelet, dial, etc.). The most expensive Rolex you can buy at retail price is the Platinum Daytona at $75,000 (pictured below). I list these prices to illustrate the floor and ceiling of Rolex’s retail prices. Every single new Rolex – from steel OP to Platinum Daytona – is priced over retail on secondary markets. Why does that matter? Can’t I just buy it at retail? No – the majority of people who walk into a Rolex Authorized Dealer hoping to buy a watch will not walk out with a watch.
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The inability to buy a Rolex at retail largely comes down to scarcity. Again, they only make around 1,000,000 watches per year, although that’s expected to ramp up after the completion of their new factory in Bulle, Switzerland. Demand far outweighs supply, year over year. There’re also well-supported theories, shall we say, that Rolex ADs favor those with a purchase history, making it near-impossible for a brand new face to buy a Rolex at retail. This also encourages consumers to pour even more money into just one watch.