What a Luxury Watch Actually Costs to Own

The purchase price is the number everyone negotiates and the smallest number in the equation. Here is the honest annual carry on a five-figure watch.

Buyers spend weeks negotiating a few hundred dollars off a purchase price and then never calculate what the watch costs them per year of ownership. It is the wrong place to concentrate effort, and it produces some genuinely poor decisions — most commonly, buying a more complicated watch than you want because the price difference looked manageable.

Let me itemise it properly. Take a watch bought at $25,000, held for ten years, worn regularly.

1. The spread

The largest single cost, and the one nobody counts.

When you buy at retail or dealer-retail, you pay the retail number. When you sell, you receive the wholesale number. The gap between them is the spread, and you pay it the moment you take ownership regardless of what happens to values afterwards.

On a $25,000 purchase, a realistic immediate resale to a dealer might be $19,000 to $21,000. That $4,000 to $6,000 gap is a real cost you have already incurred. It is not a paper loss, it is the transaction cost of entering and exiting the market.

Held over ten years it amortises to roughly $400 to $600 per year. Held over one year it is brutal, which is the single strongest argument against buying watches you are unsure about.

2. Depreciation, or the absence of it

Separate from the spread, and much less predictable.

Most watches from most houses decline in real terms over a decade. A small number hold. A very small number appreciate, and predicting which in advance is not a skill anyone reliably has — I have set out that argument fully in an honest accounting.

For planning purposes, assume flat to modestly declining in nominal terms and treat anything better as a pleasant surprise. On a $25,000 watch over ten years, budgeting for a modest real decline is realistic and avoids unpleasant conversations later.

3. Service

Assume two services over ten years for a watch in regular wear — a reasonable estimate if you service on evidence rather than on schedule.

Notice that the service cost of a perpetual calendar over a decade can approach the price difference between two watches. This is worth factoring in before you decide the complication is only a little more expensive.

4. Insurance

A scheduled personal property policy, or a specialist collectibles policy, typically runs somewhere around one to two per cent of insured value annually, varying widely by location, coverage type and deductible.

On $25,000 that is roughly $250 to $500 per year. It is the most frequently skipped cost and the most foolish one to skip — I have set out what actually goes wrong in insuring and storing a collection.

5. The small persistent costs

• Straps. If you wear a watch on leather or rubber, budget one or two replacements per decade. Manufacturer straps for major houses commonly run $200 to $700 each.
• Bracelet work. Sizing, replacement links, an eventual clasp repair. Perhaps $200 to $600 over a decade.
• Winders. Only genuinely necessary for perpetual calendars and similar. $150 to $600 for a decent one.
• A safe. If you do not have one, $300 to $2,000, and it protects everything you own rather than just the watch.
• Battery and pressure testing. Water resistance should be tested periodically on anything you swim with. $50 to $100 each time.

The total

So a $25,000 watch costs somewhere between roughly $900 and $1,700 a year to own, before any change in its value. Call it $75 to $140 a month.

How to think about that number

Two ways, and both are useful.

As a comparison. Against a car, a boat, a country club membership, or almost any other significant discretionary object, this is modest. A watch does not need fuel, storage, mooring or annual dues, and at the end of ten years you still have the object and it is still worth most of what you paid. Very few things behave that way.

As a discipline. Knowing the number changes decisions in useful directions:

• It argues strongly for fewer, better watches. Five watches carry five spreads, five service schedules and five insurance lines. The annual cost of a five-piece collection is not five times more interesting than the annual cost of two good ones.
• It argues for buying what you will keep. The spread is the dominant cost and it is paid per transaction. Churn is what makes this expensive.
• It argues for honesty about complications. A perpetual calendar you set twice a year is carrying several hundred dollars a year of service cost for a function you barely use.
• It argues for buying pre-owned. Someone else has already paid the largest part of the spread. This is the single most effective way to reduce total cost of ownership, and it is available to anyone willing to accept a watch that has been worn.

The spread is paid per transaction, not per year. Which means the most expensive thing you can do is not buying an expensive watch — it is buying and selling several cheap ones.

The one that is free

Worth stating plainly at the end of a page of costs: wearing it costs nothing.

Every figure above is incurred whether the watch sits in a safe or on your wrist every day. The insurance is the same. The service interval is barely affected — a watch that runs is generally healthier than one that sits. Depreciation on a well-kept watch worn regularly is not meaningfully worse than on one kept unworn, and the difference is smaller than most owners assume.

The people who get the least value from watch ownership are the ones protecting the object from its purpose. You have already paid the carry. Wear the watch.

All figures are illustrative and vary by brand, region, calibre, condition and insurer. Not financial advice.