Why are luxury watches so expensive?

I was reading an article over at Forbes the other day and wanted to share some of the information they wrote up.  It delas with the difference between a a watch that costs a couple hundrend dollars vs a watch that costs tens of thousands of dollars.

Most of the price of these watches deals with the hand finishing.

An appreciation of finishing is an insider passion even today. But a basic understanding of it can give the nonfanatic a new perspective on the price-value relationship of timepieces. Here are key points to remember.


Robotics have lowered the cost significantly for all luxury watches - A modern CNC cutter or spark- erosion machine can turn out parts that without further finishing can be assembled into high-precision micromachines. The 'bots make possible entry-level mechanical watches from Swatch, Seiko, Citizen, Orient, and Timex of a precision that would have been impossible at such a price point (often less than $500) a few decades ago.

Your watch is not more accurate from more finishing - Top-grade hand-finishing is really the connoisseur's delight--beauty in the eye of the beholder who knows how to recognize it.

Quality of finish and price tag don't always match - If a particular model becomes a collectors' darling (like the stainless steel Rolex Daytona chronograph), or if a brand is just plain hot, price follows suit, even if the watch has little or no hand-finishing.

Precious metals and gemstones (like diamonds) can quickly up the price - A machine-finished watch with one or both can cost more than one that is hand-finished. Rarity and peculiarities can make a watch expensive regardless of finishing.

Absent those factors, higher price means more finishing. A $12,000 watch, as a rule, has more hand-finishing than a $8,000 one.

At the high end, it's the finisseur. His painstaking work & skill bestows a pedigree price. A $1,000 chronograph with industrial finishing becomes a $25,000 one with hand-finishing.

Above that, complication comes into play. At the very high end, it drives price as much as finishing.

Finally, finishing is a three-tiered cake: basic (robot), machine, and hand.

1. Basic Finish - Mechanical watches that sell for less than $1,000 compose the base. They have little or no finish beyond that produced by the robots that manufacture the movement.
2. Machine Finish - ($1,000–$12,000) are mechanical models with varying degrees of machine-executed decorative finish: attractive beveling, blued-finish screws, gleaming countersinks, and engraving. Watches at the upper end of this layer also have some hand-finishing.
3. Hand Finishing ($12,000 and up) in the top tier starts to predominate. North of $20,000, you're getting the full-on haute treatment, horology's equivalent of haute couture. A premium-grade movement like Vacheron's caliber 1400, the caliber 215 from Patek, or the caliber 3120 automatic from Audemars Piguet, is a singular object: The hand-finishing means no two are exactly alike.

One of the top watch finisseurs in the world is Maik Pfeiffer, the gentleman who finishes Lange watches.  He actually used modified dentals tools to hand finish watches at Lange.  See a picture of him below at work.

We understand why people ask,  "Why is a top-notch timepiece so expensive". But when you multiply the number of hours it takes to hand-finish just one part--more than half a day in some cases--by the number of components in the movement (easily 115 pieces in a Rolex watch) and then by the number of years it takes to learn how to finish a piece of metal the size of a fly antenna, it's easier to see how the price starts to add up. It's the hundreds of hours of niche expert human labor concentrated in a small universe on your wrist.

Read the original article here at Forbes.