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Old 19 November 2019, 09:57 PM   #1
Mar10652
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Profit margins for ADs?

Curious if anyone has any insight on the profit margins ADs get on the Rolexes they sell? As in, how are they incented to move product by Rolex? With demand so high and supply so scarce Iím wondering if they are incentivized at all, or if the play really is to get you in the door and hook you as a customer on other higher margin items. Also, are ADs legitimately not allowed to increase the price above MSRP, or is it just something they donít do because they donít want a bad reputation in the market?
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Old 20 November 2019, 01:05 AM   #2
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I imagine it’s probably 20-30%. Marc from long island watch in a video said his margins average 50% (tbf he isn’t selling rolexes) and that’s normal for retail.
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Old 20 November 2019, 01:14 AM   #3
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I've seen people post that dealer cost is somewhere around 60-65% MSRP.

Overall profits margin would have to factor in overhead of running a store.
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Old 20 November 2019, 01:30 AM   #4
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I would have to say at msrp, it is 35%-40%.

the real question is, do all AD's get the same wholesale price as one another from the distributor?
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Old 20 November 2019, 01:31 AM   #5
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From what I understand they pay 62% of retail.
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Old 20 November 2019, 02:38 AM   #6
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38%. They used to get a 2% bonus if their invoice was paid early. Not sure if that still applies.

Rolex contractually limits dealers to sell new watches at no more than MSRP. They are allowed to discount if they so choose. Used watches are fair game.
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Old 20 November 2019, 03:01 AM   #7
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Quote:
Originally Posted by Mar10652 View Post
Curious if anyone has any insight on the profit margins ADs get on the Rolexes they sell? As in, how are they incented to move product by Rolex? With demand so high and supply so scarce Iím wondering if they are incentivized at all, or if the play really is to get you in the door and hook you as a customer on other higher margin items. Also, are ADs legitimately not allowed to increase the price above MSRP, or is it just something they donít do because they donít want a bad reputation in the market?
Rolex doesn't need to incentivize Dealers, Dealers are stumbling over themselves just to get a Rolex contract because that Rolex sign gets people in the door.

Profit margin is net after costs, so Rolex really is not a big money maker for many jewelry stores. Most jewelry products have a much higher mark-up.

As to MSRP, it is reputation, Dealers frequently mark-up popular models if they can. It's the Dealer across town that keeps them honest, not any dictate from Rolex.
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Old 20 November 2019, 03:48 AM   #8
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Profit margins for ADs?

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Originally Posted by 037 View Post
38%. They used to get a 2% bonus if their invoice was paid early. Not sure if that still applies.

Rolex contractually limits dealers to sell new watches at no more than MSRP. They are allowed to discount if they so choose. Used watches are fair game.

This percentage is on the nose for all Rolex models from stainless steel to platinum. As far as incentives and the ability to mark up I cannot speak to.


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Old 20 November 2019, 04:14 AM   #9
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These are the years that ADs will look back on as the glory years. They’re selling every Rolex they get at full MSRP, no discounts. They’re even convincing the desperate or FOMO folks to ‘bundle’ other merchandise in with their purchase. Or even better yet, they’re convincing those same individuals to buy other merchandise with just the ‘hope’ of being able to buy a Rolex at an undetermined date in the future.

In other words, they don’t need incentives. They should be having the best years ever.
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Old 20 November 2019, 04:53 AM   #10
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As to MSRP, it is reputation, Dealers frequently mark-up popular models if they can. It's the Dealer across town that keeps them honest, not any dictate from Rolex.
Reputation keeps stainless Daytonas at $12,400 USD and not a penny more? Literally every dealer I know and have encountered recently wishes they could charge current grey prices but all say Rolex won't allow it. So, who's right?
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Old 20 November 2019, 04:55 AM   #11
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Reputation keeps stainless Daytonas at $12,400 USD and not a penny more? Literally every dealer I know wishes they could charge current grey prices but all say Rolex won't allow it. So, who's right?
This is why most dealers reserve the hard to get steel sports models by bundling these watches with slower-moving pieces.

ie. buy a two-tone datejust or solid gold day-date to be able to purchase a stainless GMT.
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Old 20 November 2019, 05:06 AM   #12
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Originally Posted by 037 View Post
Reputation keeps stainless Daytonas at $12,400 USD and not a penny more? Literally every dealer I know and have encountered recently wishes they could charge current grey prices but all say Rolex won't allow it. So, who's right?

They definitely can sell that Daytona for gray prices if they want to. How Rolex feels about it is a different story. They can cut their supply or terminate their partnership.
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Old 20 November 2019, 05:12 AM   #13
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This is why most dealers reserve the hard to get steel sports models by bundling these watches with slower-moving pieces.

ie. buy a two-tone datejust or solid gold day-date to be able to purchase a stainless GMT.
Correct. That's the only way to get around the contract. Nothing limits them from bundling or selecting their customers.

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They definitely can sell that Daytona for gray prices if they want to. How Rolex feels about it is a different story. They can cut their supply or terminate their partnership.
But, that goes back to a contractual obligation, which was my original statement. I'm not convinced 'reputation' is a factor but would be open to evidence. I've yet to encounter an Official Rolex Jeweler selling a brand new Daytona who says their price is $25,000 USD (or any random number above MSRP). Bundles then wouldn't be necessary and the highest paying customer would get the watch.

I'm sticking with contractual obligation unless proven otherwise.
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Old 20 November 2019, 08:09 AM   #14
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Rolex doesn't need to incentivize Dealers, Dealers are stumbling over themselves just to get a Rolex contract because that Rolex sign gets people in the door.

Profit margin is net after costs, so Rolex really is not a big money maker for many jewelry stores. Most jewelry products have a much higher mark-up.

As to MSRP, it is reputation, Dealers frequently mark-up popular models if they can. It's the Dealer across town that keeps them honest, not any dictate from Rolex.
This.
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Old 20 November 2019, 11:41 AM   #15
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Just to be clear, the ADs also have to buy a certain amount of product each year to keep their license, invest in new fixtures and the product they do receive is a random assortment.
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Old 20 November 2019, 12:00 PM   #16
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38%. They used to get a 2% bonus if their invoice was paid early. Not sure if that still applies.

Rolex contractually limits dealers to sell new watches at no more than MSRP. They are allowed to discount if they so choose. Used watches are fair game.
^This
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Old 20 November 2019, 12:15 PM   #17
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40% based on a cocktail conversation with good friend who works at my AD


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Old 20 November 2019, 02:39 PM   #18
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38% minus cost of shipping/insurance + advertising (when Rolex tells them they need to push the brand out there) = ~35% profit.

On top of that Rolex can tell them that in 2021 they need to renovate again at the cost of 2M USD. That's a chunk of your profit going out the window just for aesthetics.
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