From Design to Price: How Watch Brands Shape Their Value
Decoding the Complexity of Watch Pricing
The watch industry’s pricing structure is remarkably intricate, with significant variation in price points—even within a single brand. Many brands offer over 150 distinct price points, yet only 2-5 models share the same price. Most SKUs are priced uniquely, typically determined through a bottom-up approach that prioritizes design, costs, and margin targets over psychological pricing thresholds.
In luxury categories like watches, pricing often adheres to the principle of priced-to-design rather than designed-to-price. This means models are crafted for their design and craftsmanship first, with pricing reflecting those attributes rather than aligning with market-wide thresholds or harmonized ranges. However, this approach can create price gaps around psychological thresholds, leading to alternative strategies for managing price perception..
Distinct Brand Approaches to Pricing:
Incremental Growth: Brands like Cartier, Rolex, and Jaeger-LeCoultre focus on lower entry points, with small price increments between models, especially under the CHF 100K threshold.
Moderate Steps: Piaget and Hublot adopts slightly larger price jumps between models, offering a broader price range within a similar number of price points.
Luxury Differentiation: Audemars Piguet, Patek Philippe, Vacheron Constantin, and Breguet start at similar entry levels but show significant divergence at higher tiers. For example, Breguet and Vacheron Constantin maintain a strong focus below CHF 100K, while Audemars Piguet and Patek Philippe quickly exceed this range.
Exclusive Ranges: Brands like Lange & Söhne and Jacob & Co. operate at higher starting points, with steep price escalations between models.
