Why a Rolex really is “worth it…”
…but maybe not for you.
Since its founding in 1905 by Hans Wildorf, Rolex has become inarguably the most famous watch company in the industry. The very name permeates popular culture because it has evolved to represent a certain lifestyle: the aggressive, sharp, and “I’ve accomplished things” type of living. This sort of representation is undeniably tied to the price tag that accompanies just about any Rolex watch, used or otherwise, and begs the question: what are you actually paying for, and, is a Rolex worth the price?
To answer these questions, we’ve first got to look at what Rolex started as, and how the company has evolved to become what it is today.
The beginnings
Rolex has its roots in London, where Hans Wildorf (along with his brother-in-law Alfred Davis) founded the company. It began as a business that imported fine swiss movements and placed them in high quality watch cases. The watches were sold to local jewelers, who branded the pieces themselves.
This approach to opening a watch company is not uncommon, even today. One might look at companies both in and out of the Swatch Group that use ETA movements in some very high quality cases, even in higher price brackets.
In 1915 the Rolex name was officially adopted. Not long thereafter in 1919, Wildorf left England due to heavy wartime taxes on luxury items, and set up shop in famous Geneva, Switzerland. Since then, Rolex has been developing and making its own high quality movements, though still getting other components made at separate companies (up until recently). One such notable relationship is that of Rolex and the Singer company, which manufactured dials for Rolex for some time.
During this period, Rolex gained a reputation for making reliable, robust, and accessible watches. The company famously created the first water resistant case known as the “Oyster Case,” a name still used today. These oyster cases were used in a variety of watches designed for three extremes: deep-sea diving, mountain climbing, and aviation. So reliable were Rolex’s work-horses that the first expedition to conquer Mount Everest sported a series of Rolex Oyster Perpetuals.
Indeed, this was probably the “golden age” of Rolex; the watches were bulletproof, and that’s what you paid for.
The evolution
Like any profitable and popular business, Rolex sought to become more profitable and more popular. The prices of their watches increased directly with inflation from the founding of the company to about 1975, when Rolex began to increase its adjusted prices. The figure below shows how the prices of the no-date submariner, a staple Rolex model, have increased over the last half-century or so.
Besides the obvious intent of making more money, there could be plenty of reasons that explain why Rolex chose to increase the prices of their watches. One possible motivation, which coincides with the time at which prices began to increase, could have been to ensure that Rolex survived the Quartz Crisis.
The Quartz Crisis killed countless brands, ripping them from the market by offering a less expensive and certainly more effective timekeeping instrument than any watch company could provide.
Having survived the Crisis, Rolex emerged as a luxury item. Quite suddenly, a mechanical watch became an unnecessary extravagance; mechanical watches were more expensive, harder to produce, and not as accurate as their quartz counterparts. The reliable Rolex pieces that had become partners to countless working men and women were no longer just that, they were now the symbol of reliability and luxury - a fact that changed the company forever.
Rolex today
Rolex capitalized on their new image, to say the least. Looking at data found on an analysis on the topic by Crown & Caliber, the price on the no-date submariner increased roughly 1,639 2014USD between the early 1950s and 1980. Between 1980 and 2012, the price increased by a further 3,618 2014USD. For those of you keeping tabs at home, that’s twice the increase in the same amount of time.
The modest-but-necessary price hike between the 50’s and 80’s can once again be explained by increased competition and the quartz crisis, but the jump between 1980 and 2012 can be explained primarily by one factor: marketing.
To get a holistic understanding of what Rolex’s marketing entails, one need only take a brief glance through the “World of Rolex.” Yachting, tennis, Formula 1, and golf are only a handful of the countless industries that Rolex loves to plaster its name and ubiquitous Coronet all over. The effect of this aggressive marketing is two-fold: the company appeals to a wealthier demographic that can pay their high prices, and the cultural value of “A Rolex” increases, which allows them to ask more for their pieces. Thus, we arrive in 2014, where the staple no-date sub costs a whopping $7,500 - six times what the equivalent model cost in 1950.
The modern no-date 114060 with ceramic bezel
The nitty-gritty: is the wrist decoration worth the price?
Perhaps the biggest critique Rolex faces today is the one against their prices. As we’ve seen, the prices on Rolex watches have increased greatly since the good old days, and as consumers we should expect to get something out of our product that justifies the increased cost.
Do we see that? The short answer is no; the longer answer is yes.
Rolex’s watches today are every bit as bulletproof as the originals that scaled Everest, escaped from prisoner-of-war camps, fought in the skies, and dove below the surface of the deep blue sea. The Explorer and Explorer II offer superior shock protection for summiting mountains, the Deepsea will go practically as far down as you’re willing to take it, and the Submariner will let you do everything in-between while looking like an absolute badass.
There is no question that all of Rolex’s watches have seen improvements over the years, and that those improvements are without a doubt partly responsible for the increased cost of the company’s watches. But, the entire increase in price simply does not get reflected in the technology that goes into the watch. What’s important to realize is that the increase comes with something else: an increase in the watch’s and the brand’s value.
The distinction between value and price is an important one. Value is not just the worth of the watch: it is the cultural significance, the longevity, the lack of price decay, the utility, and the life service of the watch. In short, value encompasses the entirety of what you get out of your watch, functionally and otherwise.
Given how well Rolex watches typically maintain their price, draw attention (for better or worse), last, and serve, it is not unreasonable to say that a Rolex has tremendous value - perhaps more than you get out of any other brand in a similar price bracket (Omega, Panerai, IWC).
When you pay $7,500 for a Rolex 114060, the extra $6,252 that you are paying when compared to the 1950’s price are not all going into the stunningly modern movement, the crisp lettering on the dial, or the impossibly reflective ceramic bezels. The money goes into something a little more ethereal: the lifestyle and value that comes with the watch. Ultimately, a Rolex is worth it - if and only if your criteria as a collector align with these intangible bonuses.