Patek Philippe

mkvc
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"If the client doesn't complain about the bill, you're charging too little."

Thus said an eminent attorney of my acquaintance. Patek certainly is in business to make money, so it's hard to fault them for charging as much as possible.

I'm confident that they charge based on mathematical analysis: they may make more profit selling, say, 100 watches at $50K than 200 watches at $30K. This effect is emphasized when their production capacity may be insufficient to meet demand, as is the case now.

Extracts from the archives are a special case, although I'm not sure they're really priced consistently with it. They legitimize a watch: I suspect that the primary market for extracts is second-hand dealers who know they can charge higher prices if they provide extracts. In a situation like that, Patek should charge the pricing increment less one franc. I think they charge much less, and that may be because they want purchasers even of second-hand watches to have some sense of connection to the current company. (Note n a similar vein that owners of second-hand watches are invited to join the mailing list for Patek's magazine.)

Straps are an even more special case. Their pricing is certainly intended to signal that Patek takes a "nothing but the best" approach at all times. The market breaks down into two groups: those who must have an original equipment strap and therefore will pay the high price and those who will not pay but will be impressed by the price. I would submit that a lot of those straps are bought by people who did not buy their watches from an authorized dealer, so the strap may by the company's only opportunity to extract money from them. As you pointed out, the strap sale is an opportunity to maintain the relationship with the customer; presumably the value of that opportunity has been quantified and included in Patek's pricing algorithm.

There is another aspect to the strap strategy that I think requires consideration: straps are a pain to sell. A customer can take just as much time to decide on a strap as on a watch; installation labor is required; straps do not stay "fresh" (that is, new-looking) under shop conditions; etc. I'm not sure it's really business that Patek or its dealers want.