Watchfinder - Massive profit margins?
Discussion
Earlier in the year I asked WF for a trade in price on my Omega I bought from them 5 years ago for £2,150. Its still in the same condition it was when I bought it.
They offered me £1,075.
They have just got the identical watch in stock which they are advertising at £2,950.
So if I had sold them mine for £1,075, they would be advertising it for £2,950 - an £1,875 gross margin.
I was a bit surprised at the colossal profit margin they seem to work on. A great business model for them provided people will tolerate it and continue to buy and sell to them.
Are such huge profit margins normal in the second hand watch industry?
They offered me £1,075.
They have just got the identical watch in stock which they are advertising at £2,950.
So if I had sold them mine for £1,075, they would be advertising it for £2,950 - an £1,875 gross margin.
I was a bit surprised at the colossal profit margin they seem to work on. A great business model for them provided people will tolerate it and continue to buy and sell to them.
Are such huge profit margins normal in the second hand watch industry?
kick buttowski said:
Earlier in the year I asked WF for a trade in price on my Omega I bought from them 5 years ago for £2,150. Its still in the same condition it was when I bought it.
They offered me £1,075.
They have just got the identical watch in stock which they are advertising at £2,950.
So if I had sold them mine for £1,075, they would be advertising it for £2,950 - an £1,875 gross margin.
I was a bit surprised at the colossal profit margin they seem to work on. A great business model for them provided people will tolerate it and continue to buy and sell to them.
Are such huge profit margins normal in the second hand watch industry?
You're making an assumption that they are buying in watches now at the same prices they were earlier in the year. I'm not sure that is valid. Earlier in the year when the covid crisis started, I think (based on comments made on threads on other forums) that they were actively trying to manage inventory levels by offering really low prices to discourage sellers from turning watches into cash and them ending up with lots of expensive stock in a slow market.They offered me £1,075.
They have just got the identical watch in stock which they are advertising at £2,950.
So if I had sold them mine for £1,075, they would be advertising it for £2,950 - an £1,875 gross margin.
I was a bit surprised at the colossal profit margin they seem to work on. A great business model for them provided people will tolerate it and continue to buy and sell to them.
Are such huge profit margins normal in the second hand watch industry?
If someone was in a position where they had to accept their lowball offers, then tough luck. They're running a business, not a charity.
What we really need to know is what they paid for the one they have in stock now.
Massive shock as company tries to make a profit!
Your watch is now 5 years older and may well need servicing etc plus putting a warranty on it in order for them to sell it.
Just because it's marked a certain price doesn't mean that is what it actually sells for.
Also just like wbac if it's in demand they pay well for it but if it's older and less demand they will be I'd you in the balls as it could take them an age to sell it.
Your watch is now 5 years older and may well need servicing etc plus putting a warranty on it in order for them to sell it.
Just because it's marked a certain price doesn't mean that is what it actually sells for.
Also just like wbac if it's in demand they pay well for it but if it's older and less demand they will be I'd you in the balls as it could take them an age to sell it.
Mezzanine said:
Watchfinder are renowned for buying at very low prices and reselling at very high prices, it’s what they do.
Plenty of more agreeable sellers out there!
I disagree, I have sold them several watches and at far higher prices than I was offered elsewhere and they advertised them at a very reasonable markup on what they paid me.Plenty of more agreeable sellers out there!
Mezzanine said:
blue_haddock said:
Welshbeef said:
Could you share some alternatives
Stick it on chrono24Or Neil at Chronomaster.
Or Jonathan at Edinburgh Watch Company.
Obviously Dominic at Hackett Watches.
Hi all
An interesting post and my thanks to those of you that shared your kind comments on dealing with my company (Edinburgh Watch Company)
For those who run limited companies you'll already understand what I note below but for those who may not know how dealer margins for pre owned watch dealers/used car dealers etc who operate on the VAT margin scheme I thought my take on a breakdown below might be useful information.
Let's imagine that a pre-owned dealer actually sells that watch at £2700 after some reasonable negotiation.
The first dent on the margin goes to HMRC for VAT on the whole gross margin (£2700 - £1075)
That amounts to £270.83 It's calculated on reverse VAT.. divide profit by 6
We now have £1354 left.
A watch of that age will require a service at circa £500.00 ex vat and then if done in house the company will provide the customer with a 12/24 month warranty.
Our £1354 is now sitting at £854.
If 0% finance is offered there will be a cost to the dealer, the watch will need photographed/various marketing etc which lets say is £100 per watch. Special Delivery postage or courier costs are likely to be circa £20
We now have around £734 and typically there is 20% Corporation Tax to pay for a Ltd Company which is £146. That's a very rough figure of CT as there will many other company costs to be taken from a year's business costs.
We are now at £588 and this excludes staff costs, potential overdraft/loans costs etc.
So the above is not exact but hopefully gives an idea of where the the gross to net position ends up.
Directors of limited companies taking dividends then pay upwards of 7.5% on the profits after various taxes too.
Forgive me for any errors in the above but just thought some insight into how pre-owned car and watch dealer margins work.
Having said that a circa £500 margin on a £1100 investment is a great return. I treat all deals the same by that I mean I endeavour to offer the same level of service regardless of the price.
All the best and hope that this finds you all keeping well and no doubt looking forward to better times.
An interesting post and my thanks to those of you that shared your kind comments on dealing with my company (Edinburgh Watch Company)
For those who run limited companies you'll already understand what I note below but for those who may not know how dealer margins for pre owned watch dealers/used car dealers etc who operate on the VAT margin scheme I thought my take on a breakdown below might be useful information.
Let's imagine that a pre-owned dealer actually sells that watch at £2700 after some reasonable negotiation.
The first dent on the margin goes to HMRC for VAT on the whole gross margin (£2700 - £1075)
That amounts to £270.83 It's calculated on reverse VAT.. divide profit by 6
We now have £1354 left.
A watch of that age will require a service at circa £500.00 ex vat and then if done in house the company will provide the customer with a 12/24 month warranty.
Our £1354 is now sitting at £854.
If 0% finance is offered there will be a cost to the dealer, the watch will need photographed/various marketing etc which lets say is £100 per watch. Special Delivery postage or courier costs are likely to be circa £20
We now have around £734 and typically there is 20% Corporation Tax to pay for a Ltd Company which is £146. That's a very rough figure of CT as there will many other company costs to be taken from a year's business costs.
We are now at £588 and this excludes staff costs, potential overdraft/loans costs etc.
So the above is not exact but hopefully gives an idea of where the the gross to net position ends up.
Directors of limited companies taking dividends then pay upwards of 7.5% on the profits after various taxes too.
Forgive me for any errors in the above but just thought some insight into how pre-owned car and watch dealer margins work.
Having said that a circa £500 margin on a £1100 investment is a great return. I treat all deals the same by that I mean I endeavour to offer the same level of service regardless of the price.
All the best and hope that this finds you all keeping well and no doubt looking forward to better times.
WF used to pay good money for watches and sell them for good money (their part exchange deals were really good) and of course via finance which increases the profit, they now pay poorly and sell for more than most.
I bought and sold to them for 4-5 years but in the end the spreads became too wide, the spreads on Rolex are crazy, far better alternatives out there but they have a solid rep so you can buy with confidence especially with so many Rolex fakes around.
But it's their stock and their business so they can price and sell as they see fit.
I bought and sold to them for 4-5 years but in the end the spreads became too wide, the spreads on Rolex are crazy, far better alternatives out there but they have a solid rep so you can buy with confidence especially with so many Rolex fakes around.
But it's their stock and their business so they can price and sell as they see fit.
Mezzanine said:
Interesting insight Jonathan 
Absolutely, good to read an informed opinion regarding the reality of profit margins.Just to add a little balance, I recently traded in a WG Rolex Daytona with WF that I bought from them, and got almost exactly what I paid for it 4 years ago despite some damage from daily wear. Presumably their offers must also take into account stock levels and ease of sale? I also turned down their (IMO pretty generous) offer on a 'hulk' that I bought new 7 years ago because I just like the watch and decided to keep it. Same as car dealers or any other commodity I think, sometimes the offers are attractive, sometimes not.
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