Are CW Too Affordable?

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Re: Are CW Too Affordable?

Post by angusbon »

BobMunro wrote:Anyone who pays more than say £100 for a watch is considered by most to be a very strange animal! I say that knowing it applies to pretty much everyone who reads this post, and certainly to the person writing it!

There is, if we are brave enough to admit it, a certain snobbery when it comes to brands and that applies to watches as much as anything else. It seems somewhat perverse in saying this, although I believe it to be true in many cases, but CW may very well be perceived not as too affordable but too cheap - you can hear the whisper 'yes but there must be a catch, I would rather pay more because there is more perceived value and recognition in other brands.

We all know there isn't a catch and that CW offers quality way above its price point - but we the readers of this forum and buyers of CW watches are in a tiny minority of WIS.

The moral of this story - CW needs to increase prices so they are not perceived as cheap imitators of swiss horology!
I actually think that snobbery works both ways Bob....
I've seen guys get lambasted for buying a certain brand and get the " but you could have got a CW for a fraction of the price" quote.
I know what you mean mate, and this is going off on a tangent from the original post.
I know it's a cliche, but value is relative and if the buyer thinks he's got value for his money who is anyone to say otherwise Image

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Re: Are CW Too Affordable?

Post by timor54 »

In a previous life I worked in product development, albeit in IT services rather than primarily on nuts-and-bolts products. The 3 x component cost is a very broad brush starting point for establishing an end sale price for a product:

1/3 capital cost of the product; the physical bits than constitute it.
1/3 operational cost of doing business; premises, energy costs, people, sales, marketing, support and misc. thing like filling up the coffee machines.
1/3 gross margin; profit before tax.

Obviously it’s not a simple as that but it gives you a starting point. Now MF’s oft repeated mantra of 3 x cost could therefore be interpreted as they are trying to run the business with a gross margin in the region of 30-40%. Given that they are continually discounting that is going to eat into the margin.

It would seem, although the accounts are somewhat opaque, that CW as a business is barely profitable and they have been going for growth over profit. CW produce a very high quality product at a modest price but as of yet possibly haven’t established their true reputation and value within the industry and potential customers perception.

This is why they’re doing things like the C60 Concept at the same time as trying to ship barrow loads of their lower cost models. I feel it’s inevitable that as they succeed there will be pressure and a desire to increase prices; not least from the new investors.
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Re: Are CW Too Affordable?

Post by H0rati0 »

It's going to be interesting to see the 2021 accounts which are just about due.

2020 loss 1.875M
2019 loss 368k

From Companies House filings.

I very much hope they do better, but it ain't easy.
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Re: Are CW Too Affordable?

Post by johncolescarr »

There are 2 questions here:

1. Are CW too affordable
2. Are CW priced too low

My answer to question1 is no, the brand still trades on affordability, I’ve tried others such as Longines, Certina, Squale etc etc (similar priced watches) and CW are certainly a step up. Affordability is subjective. But most of us in Western countries can mostly get a CW, either as an inconsequential spend or something you need to plan and save up for.

For question 2, the answer is maybe. If CW are not making a profit after exceptional circumstances have been removed then clearly this could be an issue, unless this is an agreed approach with investors to grow the company’s market presence.

As for whether CW should push upmarket into the £2-5k segment I’m not sure this would work as this is getting into Tudor and Omega money, the residuals of CW in this segment would be dismal and the watch would have to be very very special to compete.

I see CW aiming squarely at say Oris, a good place to be with fewer competitors. Certainly my C60 mk3 GMT could only be improved upon with some expensive upgrades such as in house movement, something is not pay for.

I certainly think the move away from the £100-300 range was a good one as the market is totally saturated with micros in this space.
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Re: Are CW Too Affordable?

Post by albionphoto »

There is another issue too. Could CW survive on their business model of ten years ago. The market for low priced quartz watches has pretty much collapsed. The advent of the smart watch means that sub 300 or 400 pound quartz watches are not a growing market. Indeed the various Morgan Stanley reports on the state of the Swiss Watch industry confirm that for the Western markets CW primarily serve the market for inexpensive quartz watches is not one a company wishing to grow should serve. CW saw this several years ago when they made the move out of quartz. The rose-tinted, "ooh, in my day" view would have killed the company many times over by now. You might not like this and wish for cheaper, olden times but it's true nonetheless.
So how does CW grow? It can reduce costs or it can sell higher priced watches which deliver more margin to the company> More margin means more pounds to the bottom line. Again, referring to the Morgan Stanley reports, the segment of the market which is growing fastest is the > 5,000 chf market. It's going to take quite a long time for CW to get to that point.
We can presume that CW are a bit smaller than Oris in terms of units sold (30k v. 35k - estimated) and you know that Oris have an AD network and, presumably, higher costs. So we might see CWs move to the Oris price bracket. Don't forget that Oris' watches have also seen a considerable price gain over the last five years or so.
The old days of ten years ago aren't coming back. They are not coming back. Please face that fact. If we want CW to survive then it must be profitable in the forecastable future. If you want this to be the case then the answer is to buy the higher priced watches. Higher price equals higher margin and more to the bottom line. Sad but true. Otherwise CW will have to cut costs and sooner or later the customer experience and the watches will suffer. I don't want to see that and neither should you.
This is the case for higher prices in case you hadn't figured that out already.

Edit adding link to Monochrome watches and their editorial on the 2020 Morgan Stanley report.

https://monochrome-watches.com/top-50-s ... editorial/

And some stuff from Not So Obvious Watches
https://www.youtube.com/watch?v=xNjdLX1lu20
https://www.youtube.com/watch?v=M4VVN1SLaHY
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Re: Are CW Too Affordable?

Post by FloridaPhil »

albionphoto wrote: Wed Nov 24, 2021 10:17 pm There is another issue too. Could CW survive on their business model of ten years ago.
Excellent post. :clap:
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Re: Are CW Too Affordable?

Post by monkeymax »

albionphoto wrote: Wed Nov 24, 2021 10:17 pm The old days of ten years ago aren't coming back. They are not coming back. Please face that fact.
Wow - I wasn't expecting a small comment in my post to give this reaction. I didn't mean to wind anyone up! If anything, I'd say we probably feel the same thing...

I also don't want the old days of ten years ago - I fully accept that things have moved on for the better and I think CW is in a great place right now. I think the lower end is already well served by plenty of mass produced units that being there would be hard for any smaller outfit as the profit margins must be absolutely tiny per unit.

I made the comment about CW 'back then' because affordable is - as others have said - rather subjective and to that end I don't think that for most people it would appear affordable anymore.

Do I think they're too expensive, though? No - not for what you get.
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Re: Are CW Too Affordable?

Post by JAFO »

I wasn't sure of the adjective to use in the thread title. Affordable, Inexpensive, Cheap. It was more to consider that it's very hard producing a high quality product at a lower price. Normally high quality costs more.

As I say, it was prompted by a somewhat comparable offering (royal mint coins - luxury type non essential) where the vendors were adding a much bigger mark up than CW. Virtually double. I was also bearing in mind that the C60 concept was not just a bit under-cutting competitors, it was savagely competitive.

Tribus apparently failing to achieve greatness may have been in part to things other than price. Now they have substantially sold all their old stock it will be interesting to see the new lines in 2022. I assume it won't all be the 41mm case next time. I assume they might have sales, but I think their reward points are now going to be redeemable against full priced stuff only, rather than sale items.

There's been some very interesting thoughts in this thread, and thanks for responding.
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Re: Are CW Too Affordable?

Post by Mkutch »

H0rati0 wrote: Wed Nov 24, 2021 7:32 pm It's going to be interesting to see the 2021 accounts which are just about due.

2020 loss 1.875M
2019 loss 368k

From Companies House filings.

I very much hope they do better, but it ain't easy.
Ouch, Should that trend continue then there isn’t much choice but to change the business model and market strategy for their product.

That said, CW currently does offer tremendous value for the price point, no doubt the majority of CW knowledgeable persons agree with this. And if their reportings continue to show struggles then I would expect a product-pricing update to occur along with some internal CW structural changes pertaining to development, design, and production.

One other point, I do admire the civility of this thread. This could have been a sensitive subject where the productivity of the conversation quickly spiraled out of control.
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Re: Are CW Too Affordable?

Post by albionphoto »

monkeymax wrote: Thu Nov 25, 2021 12:02 am
albionphoto wrote: Wed Nov 24, 2021 10:17 pm The old days of ten years ago aren't coming back. They are not coming back. Please face that fact.
Wow - I wasn't expecting a small comment in my post to give this reaction. I didn't mean to wind anyone up! If anything, I'd say we probably feel the same thing...

I also don't want the old days of ten years ago - I fully accept that things have moved on for the better and I think CW is in a great place right now. I think the lower end is already well served by plenty of mass produced units that being there would be hard for any smaller outfit as the profit margins must be absolutely tiny per unit.

I made the comment about CW 'back then' because affordable is - as others have said - rather subjective and to that end I don't think that for most people it would appear affordable anymore.

Do I think they're too expensive, though? No - not for what you get.
I see a lot of posts saying, generically, "X pounds for a CW, it should be quartz and then I'd buy it." Your original post was on point. The watches you can see at H. Samuel or wherever appeal to a different market that CW can't access and stay in business.
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Re: Are CW Too Affordable?

Post by albionphoto »

After a little thought it struck me that there is a marker for the fully absorbed cost of a CW. By fully absorbed I mean including cost of sales, customer service, R&D, debt payments and so on. Take a look at the big sale in January. Typically you'll see that no watch is sold at less than 50% of the new RRP. I would guess that the true cost is not 33-ish% (for a 3X multiple) but 50% of the normal price. So CW could or, perhaps, should be charging more to cover all costs and not just cost of manufacture. Not a popular idea I will admit.

Here's an example:
My Sealander ELite cost $1600 before duties. Using my model above I would guess that it cost $534 to make but the real fully absorbed cost is $800 and so CW should have charged $2,400. Hmm... Now, this is complicated by buying on a bracelet and not a strap and a titanium bracelet is not cheap but the "real" price probably should have been higher.

MF normally says that the price is the "cost" times three. In the business I work for we would use a different cost basis than bill of materials + manufacturing. CW should not go down the "value pricing" model but I would argue that they under price.

And no, I don't have an MBA and I'm sure an accountant will blow this argument apart.
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Re: Are CW Too Affordable?

Post by Mkutch »

Curious if there is a link here between their financials and the recent influx of challenged 60/60 warranty claims that have been posted…. Meaning there’s a CW directive to start plugging some of the holes that are bleeding money.

Not based upon anything more than the anecdotal data and generating a hypothesis.
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Re: Are CW Too Affordable?

Post by Bungle-ator »

I don't think they're too cheap at all. In comparison with the likes of Hamilton CW are probably overpriced.
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Re: Are CW Too Affordable?

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Amor Vincit Omnia wrote: Wed Nov 24, 2021 4:53 pmNow, I know that there are different segments in the so-called luxury watch market, and I know that CW doesn’t have to pay the middle-man, as it were. That makes a difference. There are brands using the same Sellita movements as CW and charging twice as much for the watches. There are brands using ETA/Sellita ébauche movements, titivating and renaming them and charging four or five times as much. I’ve got one, and I love it. But…should my Cartier Tank really be valued at four times the price of my Sealander? I doubt it, if I’m being perfectly honest.
The movement, in many instances, is one of the cheaper parts of a watch and in my view, the cost of the end product of x versus y, can only be considered when all other features are identical. In other instances, the cost is determined by improvements made to the base movement, watch design, materials used, complications, cost of development, manufacturing costs, packaging,marketing and inevitably, brand reputation and where it sit's in the market. .
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Re: Are CW Too Affordable?

Post by Caller »

strapline wrote: Wed Nov 24, 2021 5:04 pm Look at what Certina offer for example, a Swiss company with almost 140yrs of heritage. £1,000 seems to get you quite a lot of watch from them.
Certina are owned by the Swatch group, and as such, their pricing and product placement is determined for them, in line with other Swatch brands. On saying that, I too think they offer great VFM, along with the other lower to mid-price brands in the group.
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