Watch value and depreciation, honestly

Almost every watch you can buy new is worth less the moment you walk out with it, and most of them keep drifting downwards for years afterwards. That is the ordinary case. It is not a scandal, it is not evidence that you bought badly, and it is exactly what happens with cars, furniture, cameras and every other durable consumer good that is sold through shops.

The exception is loud enough to drown out the rule. A small number of steel sports references from a handful of well-known brands have traded above their retail price for stretches of the last decade, and because those are the watches enthusiasts photograph and argue about, people generalize from them. If you take away one thing here, take away this: those references are a rounding error in a market that ships millions of watches a year, and planning your purchase around joining them is a bad plan.

Where the money goes on the first sale

Retail price is not manufacturing cost. It carries the brand's marketing, the cost of the distribution network, and the retailer's margin for holding stock, staffing a counter and handling returns. Brands do not publish the split, and estimates in the trade press vary widely, but retail margin on a mechanical watch is generally described as a large fraction of the ticket price, in many cases approaching half.

None of that is recoverable. A private buyer on the second-hand market is not paying for the advertisement you saw or the boutique you sat in. They are paying for the object.

There is a tax layer on top, and how visible it is depends on where you are buying. A US list price is quoted before sales tax, which is added at the register and varies by state and often by city, so the ticket price understates what you actually hand over. Many other countries do the reverse and fold a value added tax into the displayed figure, commonly at a rate near a fifth of it. Either way, none of it comes back to you when you sell. Second-hand sales are treated differently again: several countries operate a margin scheme under which a dealer reselling a used watch accounts for tax on their profit rather than on the whole price, which is part of why a dealer's second-hand price is not simply retail minus wear. A sale between two private individuals is normally outside the system altogether, and that is one small structural advantage the private market has over the trade. The rules differ by country, and in the US by state, and they change, so check the ones that apply to you.

Put those together and the shape of a typical depreciation curve makes sense: a steep drop in the first year or two as the retail apparatus is stripped out of the price, then a long, much shallower slope as the watch ages, and eventually, for a small minority of references, a flattening or a slow rise once the watch becomes hard to find in good condition.

What actually supports residual value

Some factors matter enormously and some barely register. Ranked honestly, from the ones that dominate to the ones people talk about far more than the market rewards:

The first two rows do most of the work. A watch that is available to order today, from a brand a non-enthusiast has not heard of, will struggle on resale regardless of how good it is. That is a comment on the market, not on the watch.

Three things people believe that are not true

Precious metal protects you. It does not, at least not to the degree people assume. A solid gold case and bracelet contain a real weight of metal with a real bullion value, but that value is usually a modest fraction of the retail price. What you paid for was the metal shaped into a watch, and the shaping premium is what evaporates. Gold watches often depreciate harder in absolute terms than their steel equivalents, because the pool of buyers is smaller. Metal choice is worth understanding for wear and appearance rather than for value, which is the angle our case materials guide takes.

Limited editions appreciate. Most limited editions are limited to a number the brand was never going to exceed anyway. A run of two thousand pieces from a brand that sells a few thousand watches a year is a marketing device, not a constraint on supply. Genuine scarcity, the kind that moves prices, usually comes from a reference that was unpopular when new and is loved now, which nobody can identify in advance.

Complications add value. They add cost. A perpetual calendar or a split-seconds chronograph costs more to buy, considerably more to service, and appeals to a far smaller set of buyers when you come to sell. Buy the complication because you want to live with it, not because you expect it to pay you back.

The cost of ownership nobody calculates

Depreciation is one line in a longer sum, and almost nobody does the sum.

Call the purchase price P. Over ten years of ordinary ownership:

Every one of those coefficients moves. Servicing is the volatile one: a simple three-hand automatic and a split-seconds chronograph are not in the same universe, and an independent watchmaker and a brand service center will quote very differently for the same job. The resale coefficient moves further still, from close to zero on a reference nobody wants to something above 1.00 P on the handful that appreciate. Put your own numbers in rather than ours.

Two things fall out of that sum. First, servicing and insurance together are not a footnote: over a long ownership they can rival the depreciation. Real-world service pricing varies enormously by movement and by who does the work, and our servicing and care guide explains what drives it.

Second, look at the resale line. A dealer pays you one price and lists the watch at a higher one. That gap, the spread, is the dealer's margin for capital, warranty risk and the months the watch may sit in a case. It is a real transaction cost that most owners discover only at the point of sale, and it is the single strongest argument for selling privately if you have the patience. The trade-offs there are set out in our guide to selling a watch.

How the market moves, and why hype is a bad guide

The second-hand market for the most heavily traded steel sports references rose sharply through 2020 and 2021, peaked in the first half of 2022, and then fell substantially over the following years. Plenty of people bought at the top because everybody around them was talking about how these watches only went up.

That cycle repeats in miniature all the time. A model gets attention on forums and social video, prices firm, the brand responds by making more of them, attention moves elsewhere, and prices soften. Enthusiast consensus is a lagging indicator of price and a poor leading one. By the time a reference is the watch everybody agrees you should buy, its price already contains that agreement. Currency movements, retail price rises and simple production volume push the market around more than any individual watch's merits.

A watch is not an investment

That is not a moral position, it is a practical one. Collectables sit outside the disclosure rules that apply to regulated investments. There is no prospectus, no audited valuation, no compensation scheme, and the person telling you a reference is undervalued is very often the person selling it.

The better question

Replace "will this hold its value?" with "what will this cost me per year of enjoyment?"

The second question has a defensible answer, and it reframes the whole purchase. A watch you wear every day for fifteen years at a net cost of a few hundred dollars a year is excellent value, even if its resale price is a third of what you paid. A watch you wore twice and kept in a safe because you were worried about scratching it is terrible value, even if it sold for what you paid.

That framing also changes which watches look sensible. It favors things you will genuinely wear, sized correctly for your wrist, robust enough for your life, and serviceable at a price you are willing to pay again in five years. It disfavors the piece bought as a hedge, or bought to impress an audience that is not looking. If you are thinking beyond a single purchase, our guide to building a collection takes the same approach.