QUOTE: "HOWEVER, I fail to see how anyone feels good about spending $10,000 for a watch that likely costs less than $500 to make, just to feel prestigious..... All it does is line the pockets of the manufacturer."
Really less than $500? The Patek 3919 I just bought for $8K originally sold for $12,000 has over 1 oz of solid 18K gold in the case alone. Does .75 oz of 24K gold cost more than $500? Do you think all the parts are free? Where do these parts come from? Do you think the trained technician that assembled it was free? Or his training? What about the R&D? Is the building they work in provided for free? How about their training, was that free to? Do you think there were any advertising costs involved? Any other costs?
Do you think the cost of the materials for the watch are the total cost to deliver goods? Do you think the materials cost for this specific watch are what % of the total cost? Do you think the materials costs for the watch are more or less than 1/2 the total cost to sell this watch?
Really, I would love to read your answers.
Owning several businesses, I can assuredly tell you that revenue does not equal profit. Would it surprise you that often in manufacturing businesses, the cost of materials is usually, USUALLY only around 5% and very rarely more than 10% of the total costs?
Bonus points if you can tell me what step 2 is:
Step 1: collect underwear
Step 3: profit!