Why are Platinum Watches so Expensive?

Why are Platinum Watches so Expensive?

Platinum tends to make for the most expensive wristwatches.

When looking at the prices of watches, it can come as a shock to see that a platinum watch can often cost twice as much as the same version in full 18k gold.

Take, for example, the Rolex Daytona in full gold. The retail price is today around 32K Euros. The same model made in platinum, on the other hand, has a retail price of roughly 68K EUR. In other words, the platinum version of the Daytona costs more than double the full gold version.

Platinum watches are almost mythical in the watch industry. Only the most expensive, and often most complicated watches, are equipped with platinum cases. And because of their price tags, they have remained exclusive, rare, and exclusive. And because they continue to be rare, they retain their high price tags.

But what is it that makes platinum watches so expensive? Continue reading and find out…

Why are platinum watches so expensive?

The first question is obviously, in terms of material cost, whether platinum as a material is expensive, and how much more expensive than gold it is.

The gold and platinum prices constantly change, but a few years ago, platinum cost 1500 USD per ounce, and Gold cost 1400 USD per ounce. Today, gold actually costs more than platinum does.

This means that platinum was 7% more expensive than gold. But how is it then that a platinum watch can cost double the price of a gold one?

So this leaves us with the question, how can a platinum watch cost so much more than a gold one? Of course, it also depends on which gold and platinum watch you compare, but we refer to the identical reference numbers, only in either gold or platinum for easier comparison.

So, this leaves us with the question: Did the raw material of platinum decrease in value get passed onto the consumer or just make precious metal watches now much more lucrative?

The price for platinum, you can see below, and from 2010 onwards, the prices have only continued to decrease.

So.. would that mean platinum watches are so much more profitable for watchmakers to manufacture? There are many speculations, and one theory is that due to the high price tag platinum watches have, people can feel that they have something more limited and unique as only a limited number of people will buy them. In other words, platinum watches are priced at a higher profit margin with the expectation that fewer will be sold. As a result, the customer can enjoy higher exclusivity.

Another theory is that by not regulating prices with raw material content, there is price stability and purchasers are not losing money when precious metal prices move.

There is of course not just one answer to this, but one reason can be that the price difference is a historical vestige of the times when platinum cost much more than gold and that for marketing reasons Rolex (and most of the jewelry industry) has decided that platinum will be their most exclusive material.

Manufacturing costs

Yes, there is some truth to the fact that platinum watches are more difficult to manufacture. Platinum is harder, and thus it is more difficult to machine it than gold.

However, let’s not forget that Grade 5 titanium is also a very tough and hard material to machine, and companies manufacture watches out of platinum for far cheaper than the platinum counterpart costs. This includes brands such as Tudor and Grand Seiko. But because Titanium does not have the same desirability and is not a precious metal, it can’t be sold on the same basis as platinum.

When it comes to manufacturing, platinum is denser, and therefore, it takes its toll on the instruments used to shape and fabricate. Platinum (PI) takes about 4 times longer to mill, polish, etc, than gold.

Furthermore, Rolex, for example, uses 75% pure gold and 95% pure platinum. What’s more, platinum is 11% denser than gold. This means that it takes more mass to achieve the same dimensions. This is why the numbers above of how much gold respectively platinum cost can be misleading because it takes more platinum in terms of weight to achieve the same volume. As a result, the cost of platinum material for a watch will be higher than for gold, despite gold being more expensive. This is also why platinum watches are so incredibly heavy.

But while this explains a bit, this small weight difference is far from enough to justify the high premiums you have to pay when you want your watch in a platinum case instead of a gold one.

But at the same time, when it comes to platinum watches, do you really have to justify them? It’s not about counting grams and seeing which material brings you the most value because that will always be steel. Instead, if you buy a platinum watch, it’s about something else. It’s about passion and that you simply enjoy the watch, the craftsmanship, and the feeling it brings you.

Another point to bring up is that because most watch brands position platinum as ultra-luxury, they reserve the material for only the finest watches. This is why you also need to factor in the model itself. But with watches like the Daytona, it’s easy to calculate the value when you have it both in gold and platinum.

Conclusion

The decision of buying a platinum watch is not rational.

Now, it’s difficult to motivate the reason why platinum watches are so expensive. However, the purchase of an expensive wristwatch is not rational in any way. A full gold Rolex Daytona costs about 30K EUR, but the gold value is just a small fraction of that cost. Despite this, people still buy them. It’s not about the value the raw materials have. It’s about the feeling you get when wearing it, and whether or not you see the value in a watch due to its history, complications, craftsmanship, and immense attention to detail. In most cases, the price of high-ticket items, it’s not about the raw material cost, but about something else.

There are some explanations you can use to explain the high cost of platinum watches, but when it comes to a price that is more than double the same version in gold, it’s difficult to come up with reasonable arguments.

And maybe that’s the charm of it? Platinum is expensive because it’s exclusive. Maybe it doesn’t matter what the cost of platinum per gram is. Maybe it is more about the exclusivity of wearing one and the feeling it gives you.

A platinum watch is an experience. Its luster is much softer than that of stainless steel, and it even displays a subtle difference compared to white gold. The discreet platinum case will go much more unnoticed than gold, but those who know, will know exactly what you have.