iim7v7im7
501
Some thoughts...
Jan 12, 2014,07:33 AM
John,
Let's follow your line of thinking a bit.
If we fully burden the $80k/year salary by almost doubling it and use $150k/year. Divide that by 2,000 hours/year and you get $75/hour. Now, take your 3-8 hour estimate and you get $225 - $600 for your proposed time estimate. Let's now add the $50-100 in parts as you suggest. So we're up to $275 to $700 in burdened labor and components. Let's add 30% profit ($84 -$210) and we're up to ~$360 - $910. Because SG publishes their standard service pricing, I will use them to test my hypothesis that they are not "break even" business centers.
Blancpain - $580 -$1,940 (and by estimate)
Breguet - $660 -$3,460 (and by estimate)
Glashutte Original - $375 - $2,050 (and by estimate)
Jacquet Droz - $560 - $1,300 (and by estimate)
Omega - $490 - $1,280 (and by estimate)
Longines - $225 - $610 (and by estimate)
Sure warranty work is a negative factor on that group, but some assumed percentage is factored into the standard cost of the watch when sold. Also, keep in mind the direct sales approach captures both the wholesale/retail side of the profit (minus boutique costs).
I do think even with the costs outlined above and profit applied, there is room to ensure business unit profitability. I also think that publicly traded luxury conglomerates like Richemont and Swatchgroup don't make business moves without profitability and their shareholders in mind. Perhaps to your point, product quality issues negatively impact the best laid business plans.
We obviously disagree on this point which is fine. Thanks for chiming in a contrarian opinion though. I greatly value your opinions and perspectives as a watchmaker.
My $.02,
Bob