PRICES, MARGINS AND POSITIONING

Today the price of a watch is mostly dictated by product positioning. If the difference between the price and the intrinsic value of a watch becomes too great, there is the risk of a explosion. We have decided to be completely transparent about our prices, and to use a price multiplier of 3.5.

Positioning

Today the price of a watch is mostly dictated by product positioning. Target consumers are defined by analyzing their behaviour; their buying habits, the brand of their toothpaste. Finally their dream watch can be created, suited to their budget.

After the positioning and price have been defined, production costs are optimized by playing with the origin, the complexity of the construction, and the quality of each component.

The goal is to match the industry standard multipliers, which are generally 6 to 8 times cost price. In practice there are ‘aggressive’ brands which use a multiplier of 5 and, rarely, some who have succeeded in creating a perceived high value, allowing them to apply a multiplier of 10 or more.

Usually the retail price is equal to the cost price multiplied by 6 to 8.

PRICES GO UP PRICES GO DOWN

Between the years 2005 and 2012 the Swiss watch endlessly broke export records. During this euphoria, the general trend was rising prices – meaning a change in market positioning – which has not always translated to rising quality. Often it is simply a case of the margins being raised.

Pricing policy relating to product positioning (which essentially states that the price of a watch should match the price the customer is willing to pay) can lead to excessive variation between the price and the intrinsic value of the product. This pricing approach represents a huge risk at a time of sudden fluctuations in the economy or in purchasing behaviour, as has been the case recently with the global crisis, the strong Swiss France and smartwatches. Prices are not infinitely elastic, and the consumer is not stupid.

In this new environment, many brands have lowered their prices and returned to a reasonable quality/price ratio. This is a healthy reaction, but some consider it to be too late. Inventories have grown amongst retailers who find themselves in a very difficult position. This creates a situation where alternative networks (the secondary market and gray market) are often the only safety valve preventing the explosion. We will go into further detail on this in Chapter 3 on April 27th: Exclusive distribution and community power.

If the difference between the price and the intrinsic value of a watch becomes too great, there is the risk of an explosion.

PRICE TRANSPARENCY

Purchasing behaviours are changing. The consumer compares, shares and comments. They want a watch that is well designed, loaded with emotion, and that has a high quality/price ratio.

We plan on doing two things to mark the foundation of our pricing policy: first, following our commitment to remain transparent we will communicate and explain the production cost of all of our watches. Secondly, by selling directly to the end consumer e will be able to apply a uniquely low multiplier of 3.5 to our production prices. The retail price will not be the result of product positioning; rather it will be directly related to production cost.

Some brands have already started selling online directly to the end consumer, thereby eliminating retailer and distributor margins. We believe this is a trend that will continue to grow in years to come. That said, our approach goes a step further. We will be selling our watches worldwide through our website, but not exclusively. More will be explained in the next chapter: Exclusive Distribution and Community Power.

The retail price will not be the result of product positioning; rather it will be directly related to production cost.

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  1. Beppe Vai says:

    Finora non sono riuscito a vedere i vostri modelli e prezzi. Forse potete darmi delle indicazioni di come fare. Grazie

  2. Xhauflaire says:

    Bon je veux bien lire toute votre philosophie mais j’aimerais quand même savoir si vous avez reçu ma commande et si oui 😄quand vais je recevoir ma montre??
    La fête des pères et je suis grand père est là et je ne vois rien venir comme Soeur Anne
    Un petit effort d’info me ferait plaisir…
    Pourquoi est-ce que tous vos mails datent du moi passé ?

    • Valentine
      Valentine says:

      Bonjour Isabelle,
      Je vous invite à voir notre dernière newsletter à ce sujet 🙂 nous y travaillons dure!
      Bonne journée 🙂

  3. Marc Ouellette says:

    Comment tu peux passer de 700 € à 5500 € en si peu de temps . J’avais l’intention d’en offrir une à mon père . Mais là vous dépasser de beaucoup mon budget . Dommage c’était un beau projet . Je vais en Suisse du premier juin au 9 juin . C’est possible aussi que j’ai mal compris votre principe .

    • Valentine
      Valentine says:

      Bonjour Marc,
      Merci pour votre commentaire. Effectivement la collection X41 est un projet à part. Nous ne sommes pas sur le même gamme de produit. La X41 est une montre avec un mouvement conçu, fabriqué et assemblé entièrement en Suisse en petite série. L’architecture et le design est exclusifs réservés à la communauté CODE41. Cette collection est l’opportunité de porter une pièce de Haute Horlogerie à un prix défiant toute concurrence.
      Par contre nous n’avons pas abandonné nos gammes Anomaly et nous sommes en train de travailler sur une future collection femme qui restera plus dans cet esprit.
      N’hésitez pas à faire un tour sur notre page de collection, je suis sûr que vous trouverez une montre qui conviendra pour votre père 🙂
      https://code41watches.com/fr/collections/
      Bonne journée!

  4. Nicola says:

    Buonasera
    Cortesemente vorrei sapere quale meccanismo montate e su quale orologio, in definitiva ho letto il commento di un iscritto che mi sembra molto tecnico.
    L’articolo recitava testualmente che avete in montaggio due tipi di meccanismo uno cinese ed uno svizzero.
    Cortesemente vorrei sapere su quali modelli esattamente montate uno ed altro.
    Vorrei una informazione Chiara in quanto desidero acquistare un prodotto svizzero e non cinese anche se si trattasse di un meccanismo che ritenete valido
    So molto bene che forse è un pre concertoa la mia politica di acquisto è questa e non sono disposto a scendere a compromessi.
    Molta gente vedo che acquista Rolex coneccanismo semi automatico da Dubai per blasonate un Rolex al costo di un Casio …. Il Casio funziona meglio ironia vero ?
    Sono interessato ad un prodotto in acciaio con il meccanismo svizzero.
    Qualcosa mi dice nel mio DNA che tra qualche anno avrò un prodotto con un valore intrinseco notevole .
    Grazie
    Nicola

    • marcia
      marcia says:

      Buongiorno Nicola,

      I nostri orologi ANOMALY-01 hanno un movimento giapponese MIYOTA 82S7, mentre gli ANOMALY-02 sono dotati di movimento svizzero ETA 2824-2. Sono movimenti di qualità, precisione e affidabilità elevatissime.

  5. JAEGER Denis says:

    Bonsoir Mr,
    Je fais suite à notre dernier entretien téléphonique, et vous prie de bien vouloir m’inscrire à votre liste d’attente pour l’achat d’une montre suivant votre projet X41. Merci de me tenir au courant.
    Cordiales salutations,
    Dénis JAEGER

  6. Giuseppe says:

    sarei tentato nell’acquisto ma il sospetto che sia una “bufola” mi balena sempre in testa. E’ possibile pagarlo in tre rate?

    • Angelo
      Angelo says:

      Grazie per il messaggio Giuseppe! Nessuna bufala (ci mancherebbe!), abbiamo già venduto migliaia di pezzi e da poco ci stiamo espandendo anche sul mercato italiano. Non esitare a scriverci a team@code41.com per maggiori informazioni sui prodotti e modalità di pagamento. A presto, Angelo.