If you are looking to buy a high-quality watch, it can be depressing and demoralising to see the price increase while you hesitate, or try to decide precisely which timepiece to buy. In many ways, it is similar to the experience of those who waited too long to get into a strong bull market on the stock exchange, or Bitcoin.
Nevertheless, as you probably know, Rolex and many other luxury watch brands are situated in Switzerland. Therefore, if the US Dollar loses value against European currencies, the price rises for US consumers. However, there are also a number of other explanations for price increases, as we will explain in this article.
Short-Term Reasons: Currency Exchange Rate
The primary short-term reason for Rolex price increases is, as previously mentioned, currency exchange rate changes. So, for buyers in the United States, the price of a Rolex will likely increase if the value of the US Dollar falls against European currencies like the Swiss Franc and the Euro.
From 2017 to 2018, there was a fairly significant fall in the value of the US Dollar against the Swiss Franc, which resulted in some price increases. However, this experience is not limited to customers in the United States.
Buyers in the United Kingdom, for example, experienced a 10 percent price increase of Rolex watches in 2016. The primary reason for this was the fact that the British Pound suffered a major loss in value compared to other currencies in the wake of the country’s decision to leave the European Union.
In fact, in that particular example, Rolex’s decision to increase prices for the UK market actually followed a similar decision taken by Audemars Piguet earlier in the same year. This highlights the fact that the luxury watch industry, at large, responds to changes in global market conditions.
Short-Term Reasons: High demand
There are several Rolex watches in low supply and high demand. Unless you get on a long waiting list in several Rolex Shops, you will have no chance to buy those. If you only have one Rolex store near bye, a lot of specific Rolex Models could be difficult to get. Of course at Jaztime.com you can get almost any Rolex watch almost immediately. Because of the high demand those watches, they usually cost more on the free market, than in a Rolex boutique. => read more about Rolex Waiting List Watches
Mid-Term Reasons: Inflation / Purchasing Power decline
Another reason for Rolex price increases, which is still linked with currency, occurs over a slightly longer time period. Inflation is considered a mid-term cause, because although it refers to a sustained increase in the price of goods, its effects on the price of specific items become more apparent over time.
In the United States, over the past 10 years, the average annual inflation rate has been 1.67 percent. In 2017, the inflation rate was actually 1.99 percent and prices in 2017 were 18.1 percent higher than prices in 2007.
What this means is that $100 in the year 2007 is equivalent in purchasing power to $118 in the year 2018. In other words, the exact same Rolex watch that cost $10,000 in 2007 would cost $11,800 in 2017, as a result of inflation. This amounts to a price increase of 1,800 over the ten year period.
Since the creation of the Federal Reserve the purchasing power of one US-Dollar declined all the way to have only 5 cent worth of purchasing power left. The Fed actively tries to keep the Inflation rate at 2% per year.
Long-Term Reasons: Luxurification
Finally, there are also some long-term explanations for why prices increase over time. For example, many Rolex models have increased in price over longer periods – say 30 to 40 years – at a rate that is significantly above the rate of inflation over that period. This is partly because average incomes have increased faster than inflation too.
Additionally, there are several other long-term factors at play. For example, there is an increased demand for luxury items today, compared to 50 years ago, and this “luxurification” of society means brands can charge more.
Meanwhile, it is important to remember that technological innovation means that products today are not really “the same” as they were in previous decades. A Rolex watch released in 2018 will typically make use of a more advanced movement, more robust materials and have more complicated features than an equivalent from the 1970s.
All of these factors, when combined, help to explain why the price increase of, say, a Rolex Submariner over the past five decades is disproportionate to changes in currency valuation over the same period. In terms of affordability for the average consumer, however, Rolex watches have rarely, if ever, been as affordable as they are today.
Get the Best Price at Jaztime
We can not change exchange rates, inflation or Rolex price policy, but we strive to offer the lowest price possible for all watches in our shop. You can get the best discount in our On Sale section.
