Screw the Customer

Aside from watches, one of my other passions is contemporary art. There is a distinct form of art that offends me, however: art that makes fun of art collectors. Regrettably, this is not very uncommon. The main message communicated is usually some form of, “By the nature of you paying exorbitant sums for this, you prove that you are yuppy scum and I, oh great artist, am superior.” Perhaps this is inevitable in an industry where the creators often spend a large portion of their lives below the poverty line, and with any success the consumers are firmly in the 1%, but that reality makes it no less detestable to me.
The luxury watch industry is particularly vulnerable to a version of this mentality given the intrinsic uselessness of mechanical watches and their exorbitant prices. As the saying goes, “there’s a sucker born every day.” Sometimes I think this is the entire business model of some companies.

The question I get asked the most by watch-Muggles (that 99% of society who does not and will not ever understand why I pay $80,000 for a watch) is “What makes a watch worth $80,000?” Curiously, this is a question that we watch collectors very rarely ask ourselves. Perhaps ignorance is bliss and turning a blind eye to the absurdity of it all is necessary to the full enjoyment of the hobby. But there is a line, and sometimes it gets crossed, even by some of my favorite brands.

The newly released Richard Mille RM27-02 will run you a cool $800,000 (not a typo)

And so we cross the line from products to ethics. Capitalism, supply and demand, we are taught in business school that a firm can charge what the market will bear, with no judgments associated. I think this is wrong and short sighted. I believe that for the long term health of a company and the market as a whole, each product should be priced to provide as much value as possible to the buyer. It’s a simple concept actually: make the best product you can make and don’t fuck people over, even if they are complicit in it themselves and ultimately responsible for their own money.

And what of the media? We’ve read the same story countless times. “Watch X does such and such, is made of such and such, is really cool and a great achievement.” The last paragraph contains some astronomical price that is delivered with the dead pan of a congressional jobs report. Now, I am not naive. I understand the paradox of expecting outlets who are funded by the brands to be critical of their most indefensible crimes, but I do think that the stakes are higher than we think. Ultimately, these are not transactions in a vacuum. The pricing problem is the single biggest threat to the entire industry.

Over the last 15 years, average retail prices throughout the industry have consistently increased year over year, every few years discarding an entire “generation” of collectors. The sentiment expressed most often by the group of collectors I have known for the longest is that they are not interested in buying anymore, mainly due to pricing — not that they can’t afford what they want, but for those of us who are not new to the market, it is simply impossible to see the value at current prices.

There are some fantastic watches being made right now, and many have somewhat justifiable prices. One of my favorite posts on this blog is my thoughts on how to actually sell a $100,000 watch. I am not calling for an angry mob to burn the entire industry down. But when the most common question any sane person would ask is, “What makes watch Y worth $XXX,XXX,” I do think it is a point that we need to look at and have start the process of critical thinking toward. At least it would save me from having to spend an hour of my morning ranting on my blog.