Price for Craft (PFC) index - An attempt to give meaningfulness to watch prices

As a watch enthusiast, I often struggle to find meaningfulness in the prices of some brands. Is a higher watch price always related to longer hours of delicate, handmade craft manufacturing spent on it? Not sure. Therefore, I am hereby proposing what I call the Price For Craft (PFC) index, which attempts to give an answer to that.

Aim of this article is to show readers that for different watch price ranges, the level of handcrafted production (number of watches produced per employee thus level of delicacy handcrafting or mass production) may vary greatly from one brand to another for a same price range.

That way, some brands appear more worth to buy than others as more handcrafted produced, for a same price range. This, apart from the personal tastes of the buyer, differences in caliber precision (roughly similar), and assuming (without being too mistaken I think) that the admin and R&D staff of the brands will be a fixed share being proportional to their turnover.

To do this, I propose the Price For Craft (PFC) index which shows in graphic form the turnover per watch of each brand, in relation to the number of watches produced per employee. The data used are those that anyone can find on the internet.

What is the Price for Craft index? 

The PFC index is a scatter chart representating the turnover generated by one watch sold by a brand (vertical axis), in function of the number of watches produced per employee per year (horizontal axis) for the same brand. The chart shows data for selected major watch companies, has a logarithmic scale and uses available open source intelligence (OSINT) information.

The "turnover per watch" of a watch brand (vertical axis) does not exactly reflect the price per watch as there might be a difference between turnover and wholesale/retail overall sales. However, in relative values, the "turnover per watch" gives a rough indication of the commercial watch value when comparing different brands each others. 

The "number of watches produced per year per employee" (horizontal axis) directly reflects the production type (crafted or mass-production) used by the brand to manufacture a single watch. It is likely that the higher the value, the more mass-production (thus less crafted) the manufacturing of the brand. Conversely, a watch brand showing a low "number of watches produced per employee" is likely to have a more crafted, handmade, delicate and prestigious manufacturing process.

Tudor brand for example is located rather on the right-hand-side of the graph with 769 watches/employee produced, meaning that the production is much more industrial than other brands located on the left-hand-side of the graph, which is confirmed throug the following video showing Tudor's manufacturing insight:

 

 

It's interesting to see that once drawn for selected brands, the PFC index clearly shows the direct correlation between the two variables among all the watch brands: the higher the commercial value for a brand (top of the graph), the lower the number of watches produced per employee, and likely the more delicate and crafted the manufacturing. And conversely, the lower the commercial value, the higher the number of watches produced, and likely the higher the mass-production.

The graph assumes that operational functions of the watch brands such as administration and marketing & distribution are roughly equivalent between the brands, when related to their overall turnover. 

Why is the Price for Craft index relevant?

The PFC index is an additional buying criteria that anyone interested in purchasing a watch can use to verify if the commercial value proposed by a watch brand (turnover/watch) matches its level of crafting (watches/employee), when compared with the market benchmark.

It would likely not make sense for any watch purchaser to overpay a watch that is excessively made on a mass-production level, when compared to other brands.

How to use the Price for Craft index?

Examples of chart readings and interpretation:

• For a similar commercial value of ca. CHF 25K, the watch brand Parmigiani Fleurier has less watches produced per employee than Patek Philippe (4 and 23 watches/employee respectively). Meaning that for a same price level, the manpower and craft spent for one a single watch is much more important for Parmigiani Fleurier than for Patek Philippe. So the Parmigiani Feurier is likely to be more worth to buy than the Patek Philippe for a same price range (personal tastes of the buyer set apart).

• For a similar watches/employee (production) value of ca. 20 watches/employee, the watch brand Breguet has a lower commercial value than Audemars Piguet (CHF 12,143 and 40,200 respectively). Meaning that for the same level of production thus craft, the Breguet watch is likely to be more worth to buy than the Audemars Piguet one.

The chart trend line reveals the overall direction of the data. The farther the brand point is from the trend line, towards the top-right-hand side of the graph, the higher the commercial value (price) and the higher the manufacturing mass-production at the same time. A brand located in that area of the chart is very likely what a watch purchaser may not favor when comparing it to other brands being closer to the trend line.

Conversly, the farther the brand point is from the trend line, towards the bottom-left-hand side of the graph, the lower the commercial value (price) and the higher the handcrafting of the manufacturing at the same time. Any watch enthusiast is likely to favor brands going to that direction as quality for price is likely to be higher compared to other brands being closer to the trend line.

Conclusion

By comparing the commercial value with regards to the level of production (handcrafting of mass-production) of different watch brands, the Price for Craft (PFC) index attempts to objectively compare the watch prices each other for customers. 

Hope this tool will help any person willing to purchase a watch soon to better understand what is behind the price.

Best

Julien

Sources:

Employees: https://www.carrieres-rolex.com/content/LENTREPRISE-ROLEX/?locale=fr_FR

Employees: https://www.linkedin.com/company/omega-sa/

Employees: https://www.rts.ch/info/economie/13454210-francoishenry-bennahmias-ma-seule-mission-est-de-faire-perdurer-audemars-piguet-encore-200-ans.html

Employees: https://www.linkedin.com/company/patek-philippe/

Employees: https://www.linkedin.com/company/richardmille/

Employees: https://www.longines.com/fr/universe/human-resources

Employees: https://www.iwc.com/en/company/careers/why-iwc.html

Employees: https://www.linkedin.com/company/breitling/

Employees: https://www.linkedin.com/company/vacheron-constantin/

Employees: https://www.linkedin.com/company/tissot-s-a-/

Employees: https://www.linkedin.com/company/hublot/

Employees: https://human-resources.tagheuer.com/fr/#:~:text=Notre%20pr%C3%A9sence%20est%20mondiale%20%C3%A0,start%2Dup%20de%20158%20ans.

Employees: https://www.linkedin.com/company/jaeger-lecoultre/

Employees: https://www.linkedin.com/company/tudor-watch/

Employees: https://www.linkedin.com/company/blancpain/

Empoyees: https://www.linkedin.com/company/swatch-ltd-/about/

Employees: https://www.linkedin.com/company/piaget/

Employees: https://www.breguet.com/fr/carri%C3%A8res#

Employees: https://www.linkedin.com/company/alangesoehne/about/

Employees: https://www.linkedin.com/company/jacob-&-co/

Employees: https://www.linkedin.com/company/official-zenith-branch-of-lvmh-swiss-manufactures-sa/about/

Sales, prod. employees (2014): https://www.letemps.ch/economie/fondateur-marque-montres-raymond-weil-decede#:~:text=Son%20chiffre%20d'affaires%20est,industrie%20horlog%C3%A8re%20suisse%20(FH).

Prod., employee (2020): https://www.24heures.ch/un-ceo-qui-aime-profiter-de-la-vie-882588272624

Employees: https://www.linkedin.com/company/glash%C3%BCtte-original/about/ https://www.ablogtowatch.com/visiting-glashutte-original-manufacture-watch-design-production-assembly/#:~:text=With%20its%20750%20employees%20and,but%20in%20Germany%20as%20well.

Sales, prod: https://www.bloomberg.com/news/articles/2023-05-09/swiss-watch-ceo-triples-sales-with-focus-on-red-hot-tonda-line?embedded-checkout=true

Employees (estimation 350 + 100): https://www.parmigiani.com/en/the-house/

Sales: https://www.24heures.ch/ba111od-invente-lheure-qui-ne-tourne-pas-rond-518770226967

Employees: https://ba111od.com/blogs/news/ba111od-a-bright-future-ahead-for-the-swiss-watch-company#:~:text=Strengthening%20the%20Team,across%20two%20sites%20in%20Neuch%C3%A2tel.

Prod.: https://www.bilan.ch/story/quand-les-horlogers-independants-font-le-pari-de-la-communaute-894977215595

https://www.lepoint.fr/montres/horlogerie-qui-sont-les-milliardaires-du-swiss-made-07-04-2023-2515313_2648.php#11

Photo de Luke Miller

Copyright Julien Tromenschlager