And to this day I still find the money side of fine watchmaking almost totally uninteresting – I’ve inherited, from those bygone days, a belief, deeply held, that an interesting watch is an interesting watch (if it is one) for reasons that have nothing to do with money, per se.

Nowadays, though, that seems increasingly naive, if not quixotic. The cost of luxury watches, whether list, street price, vintage at auction, or sold-out-the-back-door-over-list-by-minions-of-Mammon, has become, if not the only thing we talk about, certainly one of the pillars of watch discussion and the problem has been worsened over the last two years by chronic shortages of some of luxury watchmaking’s most desirable models – at least in part due to factory shutdowns and reduced production during the pandemic, and chronic supply chain issues.

Even before COVID arrived, though, the basic trend in fine watchmaking was already clear: prices go up, not down; global demand for luxury watches is stronger every year; supply does not match demand nor is it likely to in the foreseeable future. And overall, fine watchmaking has undergone premium-ization – even as production has gone up, prices have gone up as well, well beyond what you’d expect from inflation alone.

Let’s look at where things stood a couple of decades ago.

Don’t get me wrong, a  luxury watch, defined in the broadest terms, was still an expensive proposition twenty years ago (and it bears mentioning that there has never, in 183 years, been anything even remotely like an affordable Patek, with the highly debatable possible exception of the Twenty-4). But let’s look at how things have changed since 2002.

Today, the median salary for a family doctor is about $213,000, according to one source. (Actual compensation is highly location-sensitive for physicians, but that’s the median. Adjusted for inflation, the 2002 salary of $150,000 works out to around $236,000 today). A Patek 5196J, which is slightly larger than a 3919J (37mm vs. 35mm) and which uses the same movement, is now $24,600 list. (For comparison, the 2002 MSRP, adjust for inflation, would be $13,257.29 today.) That’s $6,850 over a month’s gross pay of $17,750 (and of course, you ain’t takin’ home no 17 large out of that $213,000, not after Uncle Sam’s had his way with your paycheck). Our hypothetical doctor is perhaps servicing medical school debt (which might be over $100,000 plus a lot more if you add interest over 20 years), maybe wants to start a family, maybe would like to have a decent place to live and go someplace nice on vacation, maybe there’s a car payment in there, a savings plan for when the kid or kids go to college … and so on.

So, our hypothetical physician has a salary which has more or less kept pace with inflation, depending on where they are. At the same time, the price for a Calatrava has essentially doubled, in real terms, since 2002.

You’d buy an Apple Watch, too.

My point is that there’s a whole class of white collar professionals who’ve basically been priced out of the game. A 41mm Royal Oak Selfwinding in steel is $23,600 list (assuming you can find one) and a steel Jumbo is $33,200. (The Lange Odysseus in steel listed for $28,800 at launch). Rolex, at least, is still affordable, if you can find one available at list … and you probably can’t. Still, though, a 36mm steel Oyster Perpetual is “just” $5,800 (although list is one thing and street price for pre-owned is another).

The Federation Of The Swiss Watch Industry FH publishes reports every year on distribution of prices, value of exports, and on and on. Amusingly, they break down prices into (in Swiss francs) less than 200, 200-500, 500-3,000, and over CHF 3,000 which seems like a relic from another time, but let’s work with what we’ve got.

In 2000, there were 488,000 watches exported in the over-CHF 3,000 category. In 2020, the total was 1.342 million in the same category, and while the value in that category was CHF 3.1 billion in 2000, by 2020 that value had ballooned to CHF 11.371 billion. Every other category is either flat, or down drastically, and this during a period of unprecedented year-over-year growth.

You don’t have to be Einstein to figure out where the money’s being made.

What’s the bigger picture look like? If you’re a watch lover on a budget (and more and more, we’re all starting to feel like we’re on a budget) then you don’t look at the traditional luxury brands at all. You look at pre-owned, hopefully sold with a recent and verifiable service history, and you look at high-value brands like Seiko or NOMOS Glashütte. But the lovely, old-fashioned idea of a fine watchmaking timepiece or even, why not, an haute horlogerie timepiece that you save a bit for, buy to mark one of life’s milestones, and cherish both for its quality and for the memories it represents – and hey, hand down to a loved one after a full, rich life well lived – seems to be as dead as the dodo bird.

Now none of this would matter all that much if, as prices went up, quality was maintained or improved, especially at the high end where every human touch matters. But there is reason for concern here, as well. Suppose you are a publicly traded international luxury conglomerate, like LVMH, or Swatch Group. Every quarter your shareholders expect to see an increase in share prices and company value – why shouldn’t they? – and even for privately held companies, the board of directors in general will wish to see growth, as well; privately held doesn’t mean no one ever looks at a P&L statement. So what’s a luxury brand to do?

The answer is obvious – you find ways to increase margin and cut costs.

Cutting costs can mean a lot of things, one of which is cutting out production steps – especially anything that involves manual skills that require a lot of training. It can also mean finding cheaper places to buy materials, which is why supply chains are among the least transparent aspect of fine watchmaking (with implications for sustainability, natch) as well as producing, as much as possible, components in locations where the cost of labor is as low as possible.

Increasing prices is tricky, but the answer is to increasingly charge premium prices – the rich and very rich aren’t price-sensitive in the same way workin’ schlubs are price-sensitive. And of course, it means dressing up the whole business in as much au courant glamour as possible. It’s a lot easier to create a “luxury experience” than a luxury watch.

What you end up getting, if you are not careful, is something rather dangerous: a race to the bottom in quality, and a race to the top in pricing.

Naturally, you do everything you can to ensure the image you project is consistent with a luxury price point and you control production, distribution, and allocation in order to keep your product exclusive. But overall, the temptation to go lower on quality while going higher on price is kind of irresistible. The phenomenon was ably studied in a book that anyone who’s a student of luxury, and how its meaning has changed, should read: Deluxe: How Luxury Lost Its Luster, by Dana Thomas – and if you happen to read it you’ll see that there is hardly an original thought in this entire story.

Take Laurent Junod, for instance, a master watchmaker and Director of Technical Services at Patek Philippe, who’s been with the company over 30 years. I’ve been a participant in any number of his presentations over the years and the man lives and breathes watches. It is extremely difficult to be cynical about Patek in particular and fine watchmaking in general when he’s around; he takes watchmaking more seriously than Stephen King’s gunslinger, Roland Deschain, takes finding the Dark Tower (which, if you haven’t read the books, is extremely, deadly, humorlessly seriously). I could say the same of lifers like Anthony de Haas at Lange, Jaeger-LeCoultre’s Stéphane Belmont, and many, many others.

But for the maisons, as for us, it’s getting hard to see the watches through the dollar signs.

Modern luxury watchmaking is a luxury industry, which requires highly rationalized, high-precision production lines – much more so than a lot of other luxury products. Still, the reduction in hand-finishing and hand-work is not necessarily to the disadvantage of consumers, inasmuch as it lets the brands produce luxury watches at an industrial scale with a high degree of reliability. And watchmaking is never, as a rule, going to be a domain where outright shoddiness reigns supreme. If you cut corners on the shoulder of a suit, or the lining of a dress, very few people are going to notice, but if you start cutting corners in a high-precision machine, like a Rolex or Omega or Grand Seiko, chances are it’s going to show up in performance. As much as anything else, the laws of physics and mechanics are keeping watchmaking honest (and it was ever thus).

And okay, so fewer and fewer people can afford fine watchmaking than ever. Who cares? You can’t even complain, from a moral standpoint, that it’s (for instance) price-gouging. Charging a half-billionaire $50,000 for a watch isn’t price-gouging. Charging $10 for a loaf of bread when the power’s out during a major storm is price-gouging.

But as I mentioned in another story that wasn’t supposed to be about this whole business at all, the problem is, it looks bad and that worries me. It puts people off, and I love watches and I don’t want people to be put off; it is no fun.

The constant drumbeats of scarcity! exclusivity! and ever-higher prices everywhere you look, starts to make the whole business look the way my older son meant when he said to me a few years ago, “I don’t know, Dad, the whole luxury thing just seems unbelievably juvenile.” Betting the farm on the capricious whims of a handful of high- and ultra-high-net-worth collectors more interested in flexing on social media than actual watchmaking might work – it’s working pretty damned well so far – and depending on how this big old world of ours rolls in the next few decades, it might be the smart way to go. And let’s face it, the brands didn’t get to where they are alone. They’re following the money.

There is nothing like an obsession with money to make luxury start to look cheap.