When asking the question of why buy luxury watches, I believe that there are various answers to this question. However, I feel that the truth is a base of the value of the watch is to the buyer how it makes the owner feel. The price of the watch itself has to take into account the research and development of the product, marketing and materials used that pay a contributing element to price, but that only takes it so far.
The complicated part of pricing is typically driven by the perceived value which is usually made up of certain elements such a brand, history and uniqueness.
A good example of why buy a luxury watch is to compare two almost identical watches from different brands, one known worldwide as a luxury brand and the other being a newcomer to the market with less brand history. The Rolex Military Submarine ref 5517 and the Steinhart Ocean Vintage Military. The price difference between these two watches is quite large, the Steinhart model priced at $500 U.S dollars and the Rolex being an antic is only available to purchase through auction at a price of $150k dollars. Both models are made of the same steel, with identical 300-meter water resistance, further, they both Swiss made mechanical movements. So ultimately what is the difference?
The Rolex is an original design in comparison to the Steinhart is just a homage. The original 5517 Rolex having a historical rich background interlaced with British Military history. When looking at the Rolex brand in detail being founded in 1905 it’s the older of the two businesses Steinhart only being established in 2001. Known worldwide as a symbol of international luxury that has For over a century, Rolex watches have accompanied explorers and achievers around the world, from the top of the highest mountains to the deepest reaches of the ocean (Rolex, 2017). Unlike Steinhart which most people would never have heard of.
Another comparison that could be made between the two companies is their craftsmanship, Rolex having their own in-house craftsman whereas the Steinhart simply contains an off the shelf estimated time of arrival component. For certain people, the importance of owning a piece of original history would be worth the price difference of $150K, no matter of the difference in material value.
Understandably this may seem a rather extreme example, however, I think it illustrates my point. To certain individuals, the subject of pricing can be an intricate and within the world of luxury goods it is often asked as a debatable question such as “What are certain people willing to pay?”. However most watches cost over $1000, you as the customer are not just paying for the watch but also components such as marketing, the brand and the history of material quality.