Is the movement the sole factor in the price of a watch?

Many people wonder how there can be such a big difference in price between watches fitted with the same movement. Understanding the price of a watch requires analyzing the production costs of each component as well as the mark-ups applied. In this article, we will explain how to assess the quality-price ratio of your dream watch.


Parts with a price

The movement

The basic element of any mechanical watch, this is often the main reason a watch stands out or is appreciated; you can't have a good mechanical watch without a strong movement. CODE41 uses two standard movements: the Miyota 82S7 (35 USD per unit) and the ETA 2824-2 (85 USD per unit). They are ultra-sturdy, reliable and easy to maintain. These movements are very common features of watches made by both renowned and lesser-known brands.

But a watch is more than just a movement, and the complexity of the other components as well as the mark-ups applied are also influential in determining the final price.

The dial

The production cost of a standard dial is around 10 USD, but as soon as a company decides they want to create something a little different, the price can quickly sky-rocket. For example, the dial of a CODE41 Anomaly-01 costs 55 USD to make, because it consists of multiple parts that are machined and assembled on several levels.

The case

As with the dial, the cost of producing a standard case is relatively low. Around 25 USD should be allowed for a round case like the ones most commonly seen. A custom design entails a specific assembly and therefore higher costs. For example, the production cost of a CODE41 case is 85 USD. The cylinders on the lugs, 'chamber' assembly and painstakingly detailed finishing touches raise the price of the watch, of course, but they also bring character and distinctiveness.

The mark-up

In a standard distribution network, mark-ups have to be factored in for all of the intermediaries (distributor, agent, retailer). This can push the retail price up by around 6 to 8 times the cost of production. CODE41 has cut out some of the middlemen by selling online and involving the community. This simplified method of distribution allows a fixed mark-up multiplier of 3.5 to be applied.

Know how to assess the quality-price ratio

So, to recap, 2 watches fitted with the same movement and with a retail price of 650 USD may very well have different quality-price ratios. In a standard distribution network (6x to 8x multiplier), the full watch might have only cost 80 USD to produce, compared to 185 USD for a CODE41 with a fixed mark-up multiplier of 3.5 thanks to our simplified method of distribution.

Prices and mark-ups are taboo subjects. It's hard for a fan of fine watches to assess the real quality-price ratio of the one they desire. This is why CODE41 has taken its chances with total transparency. Origin, cost and mark-up are all clearly explained so that enthusiasts can make a fully educated decision.


See also: Phase 1, Chapter 2: Prices, margins and positioning