Rolex Prices—a History of MSRPs
It might come as a surprise (although probably not if you are familiar with the brand) that it was only a couple of years ago Rolex started publishing prices on its website. Until then, it was very much just a place to go to see beautifully shot images of their portfolio, whether you were actually in the market for one or were just there to drool over something you aspired to own in the future. Either way, it seemed the company adhered to the old ‘if you have to ask, you can’t afford it’ philosophy.
From sales figures to watch costs to case backs, transparency isn’t really Rolex’s thing.
But that seems to be changing, ever so slowly, in recent times. Although most of the extremely high end pieces, those forged in platinum for example, still have the ominous ‘Price on Request’ label where the dollar value should be, Rolex is starting to open up about its rates.
It certainly makes for an interesting subject, as perhaps the word most synonymous with the brand name in many people’s minds is still ‘expensive’.
So we thought we would take a look at Rolex’s pricing over the years; how and why it has changed, why some models change more than others and how it affects us all here in the pre-owned market.
Rolex MSRP—Manufacturer Suggested Retail Price
I’m not saying being able to buy a Rolex Submariner for $150 is the only reason the 1950s were known as the good old days, but it certainly didn’t hurt. That was the price for a steel no-date example (the only type available) of the world’s most iconic dive watch in 1957.
If you wanted a GMT-Master from the same year, again in stainless steel, you would have to dig deep and shell out an exorbitant $240. For an extra $15, you could have a Datejust.
The same watches today? Well, the latest comparable Sub is $7450. The newly released steel GMT-Master II with the Pepsi bezel is around $9250 (and best of luck finding one of those), while the DJ comes in at $6750.
Now you don’t have to be an economics guru to work out those prices have risen a touch more than the rate of inflation in the last 60-odd years. In fact, just looking at the Sub, its adjusted price today would stand at about $1,500 give or take, about five times less than its current retail figure.
So, what gives? Why such a massive difference in the then and now?
Well, there are a number of explanations, but among the most important can be summed up in one word: quartz.
When Watches Became Luxury Items
The 1970s were by far the darkest days for the Swiss watchmaking industry. A tidal wave of cheap, disposable and insanely accurate quartz watches from Japan and America swept through the enclaves, wiping out more than two-thirds of traditional manufacturers by the end of the decade.
Rolex fared better than most, shored up by their excellent reputation, but even they weren’t immune to the invasion. Although they tiptoed half-heartedly into quartz technology, with battery-powered versions of the Datejust and Day-Date, in the end they decided to go in a different direction. Rather than trying to compete on things like price and performance, which would have been a losing battle from the start working with springs and gears, they instead decided to dial up the exclusivity factor.
Two aspects quartz watches couldn’t hope to match, which Rolex had in spades, were heritage and craftsmanship, and the brand capitalized on them mercilessly at the start of the heady 80s. Their marketing department set about transforming what had been the ultimate in tool watches into status symbols in the eyes of consumers, and the company logo was soon seen at the most prestigious events, from tennis and golf championships to yachting regattas and even the symphony.
Part and parcel with this change in social standing came an increase in price. Where our Sub was still in line with inflation in the mid-70s, by the end of the 80s it had grown to more than double where it ‘should’ have been. It is a trend that has continued, and accelerated, ever since, with Rolex investing heavily in ensuring their name is inextricably linked with only the most prominent and esteemed events and individuals.
Obviously if Rolex had just continued to churn out the same models they always had but simply charged three or four times more for them, customers would have eventually caught on and cried foul. The only way to justify the price rises, beyond the carefully cultivated image of success and achievement, was to make sure the product still stood head and shoulders above the competition.
Rolex’s outlay in new technologies, materials and techniques is unrivalled across the industry. They are one of the very few manufacturers to build everything entirely in-house, exercising complete control over each aspect of the watchmaking process, even down to forging the metals they use in their own foundry.
They have their own proprietary alloys for their three colors of gold as well as their 950 platinum, and are the only watch brand to use 904L steel. Switching from the 316L used by the majority of their rivals required a complete retooling at enormous expense, and the material itself is especially difficult to work with, requiring the industry’s most highly specialized workforce.
Similarly, it was Rolex who pioneered ceramics as a replacement for aluminum in their bezels and, on the inside, their calibers lead the way with revolutionary components such as the Parachrom Bleu hairsprings, as well as new generations of lubricants to keep the whole thing running.
All these things need to be factored into the final costs of the end product. It has been a decades-long endeavor of constant refinement.
Can You Still Buy a Rolex at MSRP?
If you look back at our three 1957 prices and compare their inflation adjusted equivalents, you’ll see that something is amiss. Whereas the Datejust was originally more expensive than the no-date Submariner, nowadays the Sub has overtaken it.
Although both have evolved just about evenly over the years in terms of looks and technology, it is the diver which has become the more recognizable of the two, particularly among non-watch nerds. Everyone knows a Submariner when they see one (possibly down to the ‘007-effect’; a phenomenon I may have just made up, but which seems to make sense) and so it remains in greater demand. That translates into Rolex charging more for them because, well, they have a business to run.
The Sub is by no means the most sought after model in the stable either. At the moment, that is probably a close run thing between the latest steel Daytonas and the newly released Pepsi GMT-Master II. In theory, you can buy these for $12,400 and $9,250 respectively.
Except, you can’t. The Daytona is so coveted that waiting lists hover around the three to five year mark and, as a friend of mine put it, the GMT is so rare “it may as well not exist”.
Rolex has worked very hard to earn themselves an aura of extreme exclusivity. If anyone can just wander into a dealer and pick up one of their watches whenever they want, that impression is diminished. So they severely restrict the number of models they distribute to their network every year, driving fans into a near frenzy.
Enter the Flipper
Yet, just because they are hard to get hold of, it doesn’t stop people wanting them. In fact, human nature being what it is, it makes them even more desirable. And that has given rise to a different sort of problem—the flipper.
While an established part of the real estate industry or the stock market, flipping is relatively new to horology.
It involves certain individuals cultivating relationships with watch dealers over the years, so that they find themselves top of the list when the latest big releases come out. They can then buy the hottest ticket items at or near retail and sell them on for a profit. Those who do it as a day job will have contacts with a number of different vendors, buying up multiple pieces at a time, and it can add up to a significant income, all at the expense of collectors who have a real passion for the watches and who aren’t in it for the money.
And it is a vicious circle. The more watches a flipper buys from his retailers, the more that retailer wants to keep him or her as a customer, so the more access they will gain to the most exclusive pieces.
How bad is it? As an example, that $12,400 steel Daytona can easily be sold for more than $20,000. The GMT? Even marking it up by 100% and offering it at $18,500 will lead to any number of desperate fans trying to bite your hand off to get at it.
There is a move by the more reputable dealers to try and curb flipping as much as possible, but it is obviously not an easy thing to do. You will find some who hold their own sort of lottery among the names on a particular model’s waiting list in an attempt to make things as fair as possible, while others will remove and keep the watch’s security sticker when it is sold. A genuine customer won’t care, but it can be a disaster to an opportunist when they try to sell it on as an ‘As New’ item.
How Often does Rolex Change the MSRP?
External factors play a large part in when and by how much Rolex change their pricing structure.
An obvious example is fluctuations in currency. If the U.S. Dollar loses value against the Swiss Franc or the Euro, American consumers will be hit by an increase.
In the U.K., 2016 was a particularly bad year. On top of losing Bowie, the British Pound plummeted against other European currencies due to Brexit, leading to a 10% rise in the cost of a Rolex. We were hit by another 5% increase last October for the same reason. It can be incredibly frustrating news for eager customers sitting with their names on a waiting list, as they see the price for the same watch grow ever upward.
Another influence can be the value of the materials that go into building the piece in the first place. Between 2006 and 2012, for instance, gold nearly tripled in price, leading to a huge jump in the cost of many of Rolex’s precious metal models. It is the same story with diamonds and other gemstones often used on bezels and dials.
And the switchover from 316L to 904L steel, and similarly, Cerachrom bezels replacing aluminum, with the mammoth research and development that entailed, all translated to a price hike.
It can be difficult to keep track of, and when an increase does happen, it is often with very little warning. It is not unusual for retailers to be given as little as a two week heads up before they come into effect.
Rolex pricing is a complex issue. There is no doubt the brand has poured countless billions into their output over the years, and each generation improves on the one before. Whether that justifies the cost of buying a brand new model is open for debate, and has been for a long time.
But if you take into account the reputation, the legacy, the timelessness of the designs and just how well a Rolex watch performs on the preowned market, there is practically no other luxury item comes close in terms of value for money.