13
Apr
2016

Phase 1 , chapter 2

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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    • Zaineb
      Zaineb says:

      Bonjour Jean Luc,

      Les prix varient selon le modèle, le boitier choisi, le bracelet…etc. Pour avoir les prix exacts, rendez-vous sur la partie ‘Projets’ du site web, vous y trouverez le prix des montres en stock ou en pré-commande.

      Pour ce qui est des montres qui ne sont pas encore en pré-commande, vous aurez un prix estimatif. ⌚

      Reply
  3. Christopher Scott says:

    Christopher Scott.I have not yet had the opportunity to afford or own one of your watches but I will try..the watches that you produce are beautiful and yet look rugged I love the whole collection.

    Reply
    • Zaineb
      Zaineb says:

      Hey Christopher,

      Great news! You can pay for some watches in 4 or 6 transactions. For example, the X41, currently in pre-order. 🙂

      Reply
  6. Deirdre Haugh says:

    Hi code 41
    Yes, I am interest in purchasing a ladies wrist watch, but price has to be in my sparse budget.
    I am almost at pension age, and would like to treat myself to a decent watch.
    You have to be very honest with me
    And give me prices, absolutely no messing with me.
    Can you forward me options to suit me please??
    Many thanks
    Deirdre Haugh

    Reply
  7. Martin Peter Burri says:

    Guten Tag
    Ich finde Uhren und Geschichte sehr spannend. Gerne möchte ich mir die Modelle mal physisch anschauen. Wo ist dies möglich? Eine Uhr muss man sehen, spüren, am Handgelenk sehen.:-)
    Herzlichen Dank für eine Antwort.
    Mit besten Grüssen
    Martin

    Reply
    • Kasim
      Kasim says:

      Vielen Dank für Ihr Interesse! Unsere Uhren werden ausschließlich nur auf unserer Website verkauft, jedoch gibt es ab und zu Events wo man uns besuchen kann und die Uhren betrachten und anprobieren kann. Bei dem nächsten Event ist das Thema NB24 angesagt, es wird am 25.11. in unserem CODE41 Hauptsitz in Lausanne stattfinden.

      Reply
    • Osman
      Osman says:

      Hallo,

      Vielen Dank für Ihr Interesse an unseren Uhren!

      Leider verfügen wir nicht über einen Produktkatalog. Alle unsere Modelle sind auf unserer Website zu finden und Sie können die Preise auf jeder unserer Projektseiten überprüfen 🙂 Hier finden Sie eine Liste der Durchschnittspreise:

      ANOMALY 01- Geschmiedeter Kohlenstoff : 1800CHF
      ANOMALIE 02 : 1100CHF
      ENTWICKLUNG DER ANOMALIE : 1250CHF
      DAY41: 1200CHF
      X41: 5390CHF
      NB24: 4600CHF

      Die Details zu den Preisen sind nur wenige Wochen vor dem Beginn der Vorbestellungen bekannt, die nächstes Jahr für das ANOMALY EVOLUTION und das X41 stattfinden werden.

      Wir stehen Ihnen für alle Fragen zur Verfügung!

      Osman

      Reply
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