Can Rolex ADs Charge more than the Retail Price?
According to the Distribution Agreement contract that each official Rolex retailer signs, retailers are required to follow a number of rules and requirements. In the contract, Rolex defines what an official retailer is allowed to do and not do.
But there’s a difference between what an official Rolex retailer is allowed to do and what it can do.
Rolex, like many other companies that have retailers, set a so-called recommended retail price, also known as MSRP (minimum suggested retail price) or RRP (recommended retail price). Just like with cars and other objects, Rolex wants to keep as even prices as possible across the world, regardless if you’re buying a Rolex in Dubai or in Paris. This is in order to avoid too great discrepancies and arbitrary situations.
But is a Rolex AD (authorized dealer) allowed to charge more than the retail price? Before we answer that question (because it’s rather complex), we need to understand why it is being asked in the first place.
The Rolex market isn’t like most markets
Today, the Rolex market is a lot different from most other markets. Why? Because the demand is far greater than the demand. Basic economic theory would then suggest that naturally, the prices will increase until there is a balance between the price and the demand. But when you have one key player, Rolex, dictating the prices for the products, without dramatically increasing the retail prices to a level that would create a greater balance, problems can arise.
The Rolex market isn’t like most markets because due to the huge demand for Rolex watches (which has led to long waiting lists on many models), many Rolex models sell for more than the recommended retail price on the secondary/second-hand market.
In other words, a customer could buy a certain Rolex watch from an official retailer and then immediately go on and sell it on the secondary market and make a profit.
As you can imagine, this imbalance can cause some issues.
The main issue is that the Rolex authorized dealer is expected to sell Rolex watches at the official Rolex retail price. At the same time, the retailer knows that the product that they are selling is worth much more than they are actually charging for it. And from an economic standpoint, this makes absolutely no sense, right? But that is the catch when the retailers themselves are not allowed to set the prices and must set them according to what Rolex decides.
It would be one thing if Rolex would own all the official Rolex retailers and would sell them for the retail price even though they are worth much more than that in reality. But the reality is that they don’t. All official Rolex retailers around the world (except one) are owned by independent companies. And ultimately, like any for-profit organization, its goal is to make as much money as possible.
Now that we have understood the background, let’s discuss the question:
Can Rolex ADs charge more than the retail price?
The short answer is yes, a Rolex AD can charge more than the retail price. And as a matter of fact, with the current situation of the Rolex market, there have been plenty of reports that some do.
However, that doesn’t mean that they are allowed to. Rolex expects its retailers to sell their watches for the recommended retail prices, not more, not less.
But the issue is that in many countries, Rolex is not legally able to dictate the prices that the retailer sets. This would be regarded as price-fixing which, at least in the USA (and probably many other countries too) is against the antitrust laws. In other words, if Rolex would force the official retailers to sell watches at a certain price, they would likely face legal consequences. This is why Rolex calls it MSRP (Minimum suggested retail price) or RRP (Recommended retail price). Rolex doesn’t call it just “official retail price”, or “retail price”.
In other words, Rolex cannot force the Rolex retailers to not charge more than the retail price. However, that doesn’t stop Rolex from doing anything about it. Every official Rolex retailer knows that they are expected to sell the watches for the RRP. And they know that Rolex doesn’t like it if they do it. The only tool Rolex has to combat this is that they strongly expect them to follow it (even if they cannot force the retailers). If Rolex retailers consistently deviate from the retail price, Rolex’s only (and strongest) tool is to cancel the retail agreement with them. And Rolex has done so many times. It is the strongest tool that Rolex has, and for the most part, the knowledge of if a retailer charges more than the retail price, their contract may be ended.
Of course, Rolex doesn’t strictly have to say that it is because the retailer doesn’t sell for the retail price. In the contract, Rolex says that they have the right to cancel it at any time. And this would be one of those reasons why they have this clause in the contract.
With that said, this doesn’t stop some Rolex retailers from charging more for the most popular models. But most of the time, they are extremely discreet about it because they know that if Rolex finds out about them, it may get them into trouble.
Can a Rolex retailer charge more after you have put in a deposit?
The answer to this question is yes. But only if Rolex increases the recommended retail price after you put in your deposit. This is nothing strange and not against Rolex’s rules.
For example, you order a Submariner that costs 10.000 in December and makes a deposit of 10%. In January, your Submariner arrives, but the retail price is now 11.000. This would mean that you still have 10.000 left to pay. When you pay a deposit, you are not entering a contract that confirms and locks in the price. As a matter of fact, many Rolex retailers, for clarity, inform their customers that the price may change during the time that they are waiting to avoid any confusion.
So why are retailers allowed to do this? The simple answer is that when Rolex increases the retail prices, it also means that they are increasing the wholesale prices that the retailer has to pay. In other words, the price increase is not just extra profit directly into the retailer’s pocket.
We have heard some examples of customers that have gotten to pay the previous price even though the retail price had increased during the time they were waiting. But in these cases, it is at the goodwill of the retailer. It could also have been that the retailer felt that they weren’t clear enough that the retail price could increase in the meantime and wanted to do a nice gesture. But in general, you should expect that if the retail price increases as you are waiting, you will have to pay the new retail price.
New prices also apply to old models
If you are buying an older model, also known as a “new old stock” timepiece, Rolex and retailers also increase the prices for these even if they have gone out of production. With that said, don’t be surprised that even though it is an older model, you still have to pay a higher price than what the retail price was when it was out of production. This is completely in line with Rolex’s own rules.
Retailers are “unofficially” not allowed to charge more than the retail price, but there are workarounds
As mentioned, Rolex retailers are technically unofficially not allowed to sell Rolex watches for more than the retail price, however, that doesn’t mean that there aren’t workarounds that are far more discreet than simply informing a customer about a price and charging it in the registry. After all, this is what is stated in the Rolex retailer contract:
“Jeweler agrees to allow Rolex personnel to take a complete inventory of all Rolex products in Jeweler’s possession, and to review Rolex sales and warranty records, on reasonable oral notice.”
In other words, Rolex can ask to see the sales and warranty records of official Rolex retailers in order to identify this type of “malpractice”.
So what workarounds are there that Rolex retailers can and do use? Let’s have a look.
Bundling jewelry and less popular watches
This is one of the most common ways that Rolex retailers technically charge more than the retail price, whilst not charging more.
For example, if you ask to buy a popular Rolex model, the retailer may say that in order to get to buy it, you must buy something else, usually less popular. Rolex retailers may, for example, ask you to buy jewelry, on which they have better margins or less popular watches. They may say that if you buy X, they can sell you the popular Rolex.
This practice has become more and more common as Rolex retailers are not technically allowed to charge more than the retail price.
Cash under the table
This practice is more common in countries that widely use cash and where forms of “bribes” are more common. Whilst technically, it isn’t a bribe, it is effectively charging more for a popular Rolex watch. This means that Rolex retailers charge the retail price, for example by card, so that their records are correct if Rolex would decide to do a review. But they would then get extra cash from the customer “under the table” for them to get to buy it.
This is a practice that is more commonly found in countries in the south, for example, South America, Brazil, Africa, and so on, where giving a bit of extra cash to someone for better service is common and widely acceptable.
Requiring purchase history before adding you to a waiting list
This is undoubtedly the most common way of “up-selling” and charging more for Rolex watches whilst only indirectly doing so. And this practice is, in Rolex eyes not directly unacceptable. This is because it is the practice that makes the most sense.
Rolex retailers only get so many popular watches. And so it makes sense that if they have hundreds of people on the waiting list, they allocate the watches to their best customers. This is just common business sense. With that said, a customer that has spent a lot in a store and bought many other things will get special treatment and be able to get popular Rolex watches faster than those that have never purchased anything from that store prior.
This is not a business practice that Rolex seems to strongly oppose simply because it is expected business behavior. It’s natural that the very best VIP clients receive better treatment than those that aren’t good customers.
With that said, the best way to get popular Rolex watches from a Rolex retailer that you want today is to become a good customer of the store. It is in this direction that more and more Rolex retailers move as the demand for Rolex watches only gets bigger and bigger.
