AD mark up is much more than 40%.. more in the range of 70-80%
From what I gather. Each AD charges different markup. Rolex is 40% is the lowest markup of all. Patek Philippe is the most markup at 142%.
So say you want to buy a $10K MSRP Rolex. 40% discounted is what the dealer pays for his inventory = $6K.
IF, that is a BIG IF, the dealer can sell that watch to MSRP princing. He can make $4K which is 66.6% his investment. But most of the time, they are forced to discount their pricing in the real world.
In the past, Rolexes AD used to have higher margins. What I am saying here reflects pricing structure as of 2011.
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As far as markup on reps goes.... I think it can all be worked out... it depends on the model and quantity in question. The rep makers love to reverse engineer watches, why don't we reverse engineer their pricing structure. Some models they are making a higher margin but less quantities, but some have low margin and high quantities.
It breaks down to
1. Movement (which rep makers do not make, supplied by Seagull, Hongzhou, Nanning, etc)
2. Parts + labor - case, crystal, dial, hands, lume, print, bracelet, modifications to the movement parts, etc (this is what they actually produces so where they can buried their margin)
3. Markup for maker
4. Markup for dealer
I will use an low margin but volume example. Timeshop's noob sub 21J speical for $48.
DG2813, or NN Movement takes about $10 ~ $13 I believe.
I have seen homage solid stainless steel sub with mineral crystal retailing $28 in China... I believe the cost of the various parts should be in the 12~$17 range. And given the laser etch crystal, rehaut engravings, and many other add ons will yield a bit extra. Just say it cost $20 for ease of calculation.
So we got a $30~$33 watch with $15~18 of margin shared amongst the maker and dealer. Say they play fair and go 50/50 (probably not in most cases) = $7~$9 on a product that is $48.
We are looking at a 17~24% markup. Meager ~
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But if you apply the same equation to asian 2836 (retails for $65) or a7750 (retail for $120), the "fake ETA 2836" ( no idea for the junky swiss parts mov, but genuine volume buys on ETA is about $90 for 2824 while they were still supplying)
Double or triple your parts cost for not so common models (unlike fake rollies, no readily available parts so makers need to custom make just about everything hence higher cost) But since not many ppl make the same watch, they command more $ as well.
I can safely say dealer must have 20~30% margin to make it worth while.
In terms of the lost packages ... it is like insurance, cost of doing business, how many of them do they actually get lost or seized percentage wise ?... dedicate 3~5% dealer's net cost should be more then sufficient.
In the end, it is economy of scale. A volume's game. Dealer is not interested at courting 1:1 queens. The margin is reasonable but volume is the only way they can sustain a successful business.
