How much mark up does a jeweller make on a watch?
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Discussion
From the other thread...
gizlaroc said:
Just been told the average mark up on new Rolex is 42%, some of the more expensive ones achieve more than this, but in general, things like Sub Date, GMT Master II will be 42%.
This is selling a watch with warranty from the supplier, so pretty obvious you are not going to get much more than that selling a used one to a dealer with a bricks and motar store.
Be interested to hear on other brands?
50 months
Friday 27th May 2016
bulldong said:
The gross margin might be 42% but imagine having to pay rents, commission to the guy selling it (or a wage), heat etc. It's probably nowhere near 42% after all said and done.
Of course not, but we are talking mark up, not margin, and certainly not net profit, which tells you bugger all about mark up. 
42% mark up on a luxury item is small imho, you need to shift some units at that mark up.
50 months
gizlaroc said:
bulldong said:
The gross margin might be 42% but imagine having to pay rents, commission to the guy selling it (or a wage), heat etc. It's probably nowhere near 42% after all said and done.
Of course not, but we are talking mark up, not margin, and certainly not net profit, which tells you bugger all about mark up.
42% mark up on a luxury item is small imho, you need to shift some units at that mark up.
Yes, I just don't understand why anyone needs to know? The markup wouldn't be the same if you are selling them online either. At which point the manufacturers will be demanding you sell more stock. I just don't understand the reason for the question as markup on a single product tells you bugger all.
gizlaroc said:
Of course not, but we are talking mark up, not margin, and certainly not net profit, which tells you bugger all about mark up.
42% mark up on a luxury item is small imho, you need to shift some units at that mark up.
I agree. I'm not talking about the profitability of a business taking into account all costs just the mark up.
The 42% you are referring to, is this buy in at £1000 retail at £1420 or sell at £1000 buy in at £420?
Thankyou4calling said:
I agree. I'm not talking about the profitability of a business taking into account all costs just the mark up.
The 42% you are referring to, is this buy in at £1000 retail at £1420 or sell at £1000 buy in at £420?
42% mark up is buy in at £1000 sell at £1420 plus vat so retail at £1704 giving a GP % of 29.5
£1000 retail inc vat buying in at £420 is a mark up of 98 % giving a GP % of 49.5
I'm not privy to margins on branded watches but I'd put a calculated guess on 40- 50 GP % on some Rolex models .
Edited by Buster73 on Friday 27th May 13:13
Friday 27th May 2016
Buster73 said:
42% mark up is buy in at £1000 sell at £1420 plus vat so retail at £1704 giving a GP % of 29.5
£1000 retail inc vat buying in at £420 is a mark up of 98 % giving a GP % of 49.5
I'm not privy to margins on branded watches but I'd put a calculated guess on 40- 50 GP % on some Rolex models .
Edited by Buster73 on Friday 27th May 13:13
Thanks, that's what I assumed. It isn't great to my mind.
bit reductionist, questions like this... that is if there is something underlying the reason to ask, such as a view that retailers make too much money? Got to bear in mind the skills and knowledge they generally have to carry, the credit line they need to have open (and the cost of paying for it), the insurance, premises, franchise/authorised dealer conditions imposed, the throughput of sales etc., conversion rates / time waster rates. All that stuff. Why the question?
To be fair to the OP it's one of those questions many of us are curious to know. I have heard "official" figures of only 10% margin on Rolex (someone did say it is actually 15%), I think they are referring to net after allowance for overheads (as many have stated in this thread).
That aside, I have noticed some websites (reputable ones) with physical locations (so you can pick up) offering new stock at around 25% lower than the RRP.
It does beg the question.
It's like cars in a way, how much wriggle room does one have when negotiating? I for one would prefer to pay less, the more of my hard-earned cash I can keep - to put towards the next watch 
- the better.
Blown2CV said:
bit reductionist, questions like this... that is if there is something underlying the reason to ask, such as a view that retailers make too much money? Got to bear in mind the skills and knowledge they generally have to carry, the credit line they need to have open (and the cost of paying for it), the insurance, premises, franchise/authorised dealer conditions imposed, the throughput of sales etc., conversion rates / time waster rates. All that stuff. Why the question?
Why the question?
I was just interested if anybody knew. I have an absolute fascination with business both personal and professional.
I've always been inquisitive as to how various businesses exist and the model they follow. If you aren't in an industry the assumptions are often wildly inaccurate so it comes from that.
I'm well aware that the mark up on a watch is only a tiny part of the business and by no means the full picture.
Thankyou4calling said:
Blown2CV said:
bit reductionist, questions like this... that is if there is something underlying the reason to ask, such as a view that retailers make too much money? Got to bear in mind the skills and knowledge they generally have to carry, the credit line they need to have open (and the cost of paying for it), the insurance, premises, franchise/authorised dealer conditions imposed, the throughput of sales etc., conversion rates / time waster rates. All that stuff. Why the question?
Why the question?
I was just interested if anybody knew. I have an absolute fascination with business both personal and professional.
I've always been inquisitive as to how various businesses exist and the model they follow. If you aren't in an industry the assumptions are often wildly inaccurate so it comes from that.
I'm well aware that the mark up on a watch is only a tiny part of the business and by no means the full picture.
most people who ask are trying to find out so they can attempt to just get the retailer to give it all away the second they walk in the door.
Blown2CV said:
most people who ask are trying to find out so they can attempt to just get the retailer to give it all away the second they walk in the door.
Will never happen though
Ask any self employed person.... " If I offer you a daily rate of 30% of what you normally charge - will you take it?"
Even better - ask a Pistonheader who is selling a car "Yo Bruv.... You want £9000 for it. I'll offer you £3000."
The answer is very very short and sweet.
Troubleatmill said:
Blown2CV said:
most people who ask are trying to find out so they can attempt to just get the retailer to give it all away the second they walk in the door.
Will never happen though
Ask any self employed person.... " If I offer you a daily rate of 30% of what you normally charge - will you take it?"
Even better - ask a Pistonheader who is selling a car "Yo Bruv.... You want £9000 for it. I'll offer you £3000."
The answer is very very short and sweet.
Indeed. However it's pretty hard to maintain a relationship with a potential customer and then guide them towards actually buying something at a fair price if that's how it all starts. So it just ends up being a waste of everyones' time, and everyone goes away pissed off. Anyway, OP says it wasn't that.
A friend of mine is an account manager for Bulova (lots of nice samples always on hand!) and he has said that on Bulova, the purchase price by the retailer is typically half of what the RRP is, so they are making the best part of 100% mark up.
He has also said that this is pretty normal in the industry and it's normally only new watches out or popular ones that command the full RRP as there are a lot of places that offer discounts or have items on sale.
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As someone deeply entrenched in the world of watches, particularly the dynamics of pricing and markups in the industry, it's evident that the topic of how much jewelers mark up on watches is a complex and intriguing one. The conversation on PistonHeads' Gassing Station forum sheds light on various facets of this matter, drawing on insights and experiences from individuals with an apparent understanding of the watch market.
The discussion initiated by the original poster revolves around the pricing structure of watches, specifically using Tag Heuer as an example. The query is straightforward: what is the markup from the manufacturer's price to the retail price displayed in the shop window? This sparks a conversation where users like gizlaroc share insights into the average markup on Rolex watches, citing a figure of 42%. However, there's a quick clarification that this is the gross margin and not the net profit, highlighting the complexity involved in understanding the true markup.
A subsequent user, Buster73, delves into the distinction between markup and gross profit percentage, offering calculations for different scenarios. This adds a layer of financial intricacy, emphasizing that the perceived markup percentage might not directly translate into profitability for the retailer.
The discussion also touches on the challenges faced by retailers, such as overhead costs, rents, and commissions. It becomes clear that understanding markup is only a fraction of the larger business picture. The conversation explores the notion that the 42% markup on luxury items, like Rolex watches, might be considered small, emphasizing the need to move substantial units to achieve success.
In response to the original query, members share estimates of the markup on specific brands. For instance, there's mention of a 40-50% gross profit percentage on some Rolex models. Another user, bigkeeko, contributes by stating that new watches generally have around a 40% markup, impacting trade-in values for those who decide to sell their watches after a short period.
The discussion takes an interesting turn when Thankyou4calling provides a rationale behind the question, expressing a personal fascination with business models and a desire to comprehend the dynamics of various industries. Blown2CV offers a cautionary perspective, suggesting that some individuals might seek this information to negotiate better deals, a sentiment echoed by Troubleatmill.
Finally, the conversation touches on insights from an account manager for Bulova, stating that retailers often purchase watches at half of the recommended retail price, resulting in a significant markup.
In summary, the PistonHeads forum discussion presents a comprehensive exploration of the complexities involved in understanding watch markups, touching on gross profit percentages, retailer challenges, and the motivations behind seeking such information. The depth of knowledge demonstrated by the participants underscores the intricacies of the watch industry's pricing dynamics.
