April 8, 2017

Your answers to “Why would someone pay $5,795 for a used stainless steel Rolex Submariner?”

Lots of thoughtful answers to yesterday’s pop quiz!

In case you missed it, I basically asked:

Why would someone pay $5,795 for a used stainless steel Rolex Submariner?

Here’s a sampling of responses from y’all:

Conspicuous consumption
Vanity
Owning a Rolex is fun
You can sell it in a year and get all your money back
It’s a status symbol
Because of how they feel about having that kind of watch
Some would purchase one because they can, money is not an issue because they have so much of it.
Rarity + Investment + Uniqueness + Beauty (possibly, in the eye if the beholder) + Status = value?
the “status” it gives to the owner; the “status” gained could open certain circles for different purposes (business, social, etc.)
Because it means you’ve arrived. Like driving a BMW, only cheaper.
It’s an ego boost for people with low self-esteem, and they can’t afford a Patek Philippe.
Because their father owned one.
Because it’s rare and reinforces beliefs about themselves and what they want others to think
It’s all about feeling good about themselves. That could come from impressing others, or from satisfying a long time desire, or belonging to a social group.
This watch model means a lot to buyer. Probably reminds them some sweet times, or loved ones, or they dreamed about this watch model long time ago.
That the luxurious aspect makes them feel special (i.e principle of scarcity in social psychology)
It’s subjective. It could be as simple as wanting the brand on my wrist to appear more important, or it could be something like the nostalgia of remembering a beloved late family member who used to wear that model.
The feeling (intangible) that comes from owning it, the feeling of the status, the feeling of value because you own something valuable :-)
1. Ability to Pay: $5,795.00 is not going to break them, and 2. Attributed Value: The value they place on this physical object (a watch) is greater than the value of the other physical object (a dollar bill, or many in this case).
Because it makes them part of an inner circle.
To join an exclusive club and stand out from the crowd.
In some circles, a $50k plus Rolex or other super-luxury watch is like a club membership ring, you can’t NOT wear one.

All good thoughts! Thanks so much for taking the time to reply :)

DISCLAIMER:

Watches are so different from professional services that there aren’t a ton of direct insights we can gain from their pricing.

HOWEVER:

The mind-bogglingly wide range of watch prices does reveal some important and useful truths about the subjectivity of value and the power of intangible benefits.

Of the answers above (all of which I think are valid) the ones that were closest to what I was going for were the ones that talked about:

The $5,795.00 not being a significant expense for the buyer
How owning that Rolex would make the buyer feel (for whatever reason: status, nostalgia, self-esteem, membership, etc)

From these two points, we can extrapolate some truths that are very useful for selling professional services:

The amount of time and material that goes into certain offerings has virtually nothing to do with the buyer’s perceived value of the offering
Different buyers will place different value on the same offering depending on how they feel about it
The intangible benefits of an offering can be extremely valuable to certain buyers
The more money a buyer has at their disposal, the less price sensitive they are likely to be

Or to put it more succinctly:

Always be looking for intangible benefits that are prized by the high-end of your target market. These will lead you to your most profitable offerings.

Yours,

—J