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 on April 27th: 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.

NEXT CHAPTER, 6 FEB: PROJECT X41 - UPDATE

Enter your email address to receive the special link that will give you access to the next chapter.

Leave a Reply

Your email address will not be published. Required fields are marked *

Filter comments:
All (84)
English (9)
French (64)
German (10)
Italian (1)

  2. j- jacques says:

    J’apprécie votre vision du marché et du monde en mouvement dans lequel nous vivons , dans lequel toutes les cartes sont rebattues , personnellement aujourd’hui la prudence est de mise car pour un client acheter c’est un risque de devenir une victime , le moindre problème sur un appareil devient une occasion chez un professionnel pour le mettre à la casse afin de vous vendre un neuf et de récupérer ” l’ancien” , de client on est passé à victime

    Reply
  3. Erich Wehmeier says:

    Hallo und einen schönen Tag,
    ich möchte gerne eine Automatik UHR die auch genau funktioniert. Ich habe einige Automatikuhren die pro Tag 10-15 Sek. zu langsam laufen. Ist das normal. Wie ist das bei Code 41? Wenn möglich eine ehrliche Antwort.
    Liebe Grüße aus Zypern aber bald wieder in Deutschland

    Erich

    Reply
    • Kasim
      Kasim says:

      Hello Erich. Keine Sorge solche Abweichungen sind bei Automatik Uhren ganz normal, es hängt alles vom Uhrwerk ab. Ein ETA Uhrwerk (Anomaly 02) wird nach 3 Tagen beispielsweise 21 Sekunden verlieren oder hinzugewinnen. Bei MIYOTA (Anomaly 01) sind es schon 60 Sekunden. In unserer neusten Kollektion wird ein Uhrwerk verwendet dass Speziell für CODE41 entwickelt wurde, mehr Infos dazu finden Sie in den neusten Kapitel auf unserer Website.

      Reply
  4. h-gritzo@t-online.de says:

    Abmelden von 31.01.2019 . Ich Horst Gritzo möchte mich von CODE 41,da kein Preisgefüge vor handen ist,Zurück tretten.
    Ich laufe under den Code : Passwort :sAzpOxwms 1iw . Ich drucke mir die Abmeldung von heute aus,damit ich beweisen
    kann das Ich die Bestellung wieder Rufen habe,h.gritzo

    Reply
    • Kasim
      Kasim says:

      Um die Preise zu sehen muss man sich nicht anmelden. Unsere Kollektionen und deren Preise finden Sie auf unserer Website, einfach nur oben links auf Kollektionen klicken und anschließend eine Kollektion wählen, dann werden auch die Preise erscheinen.

      Reply
  7. krakatau43@gmail.com says:

    intressant das zu wissen ..ich bin stolzer besitzer einer CERTINA 1883 ANALOG SPORT EDITION ..PREISSEGMENT 800 BIS 1000.. GR .. PIRMIN JOHANN ..LUZERN..

    Reply
  8. john.c.coldwell@gmail.com says:

    I no were you are coming from.But some distinctive watch brands tend to hold value.It amazes me eg,Damiien Hirst Swatch Spot watch increased in value over night.People are very pc.If your finances are extreme you tend to go top end.I wish you the best of luck to break this barrier.John.c.c.

    Reply
  9. rramella@t-online.de says:

    Endlich kommt mal Bewegung in diesen Markt, deren Preisentwicklung ich schon seit längerem als völlig unangemessen empfunden habe. Aus diesem Grund habe ich Abstand genommen vom Kauf einer Markenuhr. Ich genieße diese Offenheit sehr und es freut mich zu sehen, dass jemand den Mut hat neue Wege zu gehen. So gewinnen man Kunden wie mich wieder zurück! Gratulation und weiter so! Ich bin gespannt auf die Weiterentwicklung der Kollektion und der Marke!

    Reply
  10. Vito Colle Wincler says:

    Grazie per l´informazione,
    molto interessante avere una visione di come funziona il mercato del orologio !
    Prossimamente penso che faro un acquisto ma prima voglio vendere un orilogio di mia proprieta che non uso piu.
    cordiali saluti
    Colle Wincler Vito

    Reply