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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  3. Fichou says:

    Bonjour, je serai intéressé par une X41 mais je ne connais pas le prix. Merci de répondre à ma demande, cordialement

    Reply
    • Valentine
      Valentine says:

      Bonjour Loic,
      Merci pour votre message 🙂
      Les X41 commencent avec un prix à 5390 Eur. Pour le moment elles ne sont pas en vente sur notre site internet. Par contre vous pouvez vous inscrire sur la liste d’attente, puis être informé en cas d’ouverture de nouvelles ventes ou même d’annulation de commande.
      Bonne journée!

      Reply
  4. David Eyton-Williams says:

    Very impressed by the way in which you have approached this venture and also by the video you provided, I particularly like the very original plate design and layout, the hand finishing and assembly which I believe counts for a lot. I’d be interested if an automatic watch is on the horizon.

    Reply
  5. Akin Abisogun says:

    Hallo,
    was ist zu Zeit Ihre beste Angebot bez. X41 für ein Mitglied? Es wurde mich sehr interesiere und vielleicht motivieren zu kaufen.
    Danke

    Akin

    Reply
  6. Studer says:

    Bin von der Eleganz und der feinen Mechanik der Code41 völlig fasziniert. Wäre schon Stolz, das Edelstück mal am Handgelenk zu haben

    Reply
  7. Rolland says:

    Cela fait très longtemps que je suis à la recherche d une montre, original, et me l offrir , quand j aurais le coup de cœur pour celle ci.
    Et voilà, je l ai euQuand j ai vue votre fabrication, vos montres sont vraiment magnifiques, bravo à vos équipes pour ce magnifique travail,

    Reply
    • Valentine
      Valentine says:

      Bonjour Rolland,
      Merci pour votre message!
      J’espère alors que vous suivrez tous les votes! rien de tel que d’avoir une montre à laquelle nous avons participé un peu à sa conception 😉

      Reply
    • Valentine
      Valentine says:

      Dear John,
      Thank you for your message.
      All our watches are on the website and we do not have any showroom.
      We do some events sometimes, that’s why make sure that you have subscribe to our newsletter 🙂

      Reply
  9. Brigitte Roland says:

    C’est une montre suisse et beaucoup de vos explications la rende tres attrayante mais, a l’heure ou de plus en plus, les gens veulent acheter au Moins europeen, combien de composants viennent de chine. Est_ ce des elements chinois assembles en Suisse?

    Reply
    • Valentine
      Valentine says:

      Bonjour Brigitte,
      Merci pour votre message.
      Cela dépend du modèle. Par contre si vous parlez des ANOMALY, voici le détail:

      DESIGN: SUISSE
      ÉQUIPE: SUISSE
      ORCHESTRATION: SUISSE
      FABRICATION: CHINE
      CUIR: ITALIE
      MOUVEMENT: JAPON (Pour ANOMALY01)
      MOUVEMENT: SUISSE (Pour ANOMALY02)
      Si vous avez d’autres questions, n’hésitez pas à contacter notre service client.
      Bonne journée!

      Reply