The response so far from the Part 1 video has been extremely positive. With Part 1 our goal was to share with you the intricate details of a tourbillon cage build. By doing so it helped many gain a perspective as to where we were getting our tourbillon and how it was made. If you missed the video or would like to see it again you can click here to watch. https://youtu.be/JorTZSEPn6Y
For those of you who have followed us for sometime, you have understood the painstaking measures we have gone through to deliver on our K1 movement, going above and beyond what is possible from an independent watch company. And for the ones that are new to the community we hope this post helps put your mind at ease.
Currently many Kickstarter and Indiegogo startups market their products as Swiss Made in a questionable way and in-turn confuse, mislead and negatively impact supporters trust in their brand, and ultimately in what Swiss Made actually is.
There is no smoke and mirrors at HORAGE and to clarify things further we have collaborated on our "Misson Tourbillon" with La Joux Perret (LJP) who is located a short 45 minute drive from Biel in the town of La Chaux-de-Fonds, Switzerland. We became acquainted with LJP as their previous CEO Florian has been our expert consultant, avid K1 supporter and close friend. Jonas and Florian were instrumental in developing our silicon escapement technology which not only powers our K1 movement but also finds its way into some of LJPs latest movement designs. Having followed the K1 development you will recall his involvement. He has not only been running LJP, but also was at the helm of Vaucher Manufacture, the top notch movement manufacturer and in his early days he was involved in many ETA caliber developments. As an homage to his continuous support in the past 10 years we engraved his name on our latest 10-years AUTARK special edition marking the success of the K1 development. His 30 years experience in both the "manufacture" and the "industrial" movement manufacturing business makes him an invaluable source of expertise for our team. If you ever have this crazy idea of trying to make an own movement we strongly recommend to ask for his expert support... it might save you some millions down the road;-).
When we announced on April fools day that we had the idea for a tourbillon in mind we knew that his role at LJP could help realize this audacious fantasy and by selecting the right set of components and functionality from the vast resources of their tourbillon expertise we could cut time to market and achieve an acceptable price.
As mentioned in our original post our movement beats at 4Hz. With the addition of the latest silicon escapement geometry we hope to increased the run time significantly compared to the standard 60 hours. We are still fine tuning and testing the true run time and will provide a complete spec list once we are sure about our movements performance.
Simply do a search on the internet for Swiss tourbillon watches and you will quickly begin to understand the value we aim to deliver to our supporters. On social media and through direct email we have received a number of inquiries either blatantly stating this has to be a Seagull tourbillon or other Chinese produced movement. Everybody can be 100% sure that this is a 100% Swiss made movement with our intensive involvement and if some of you still have concerns, you can visit the LJP website and compare part by part our version of the movement with their parts catalog.
Flying tourbillons in the market touting Swiss Made for sub $2.000 on the crowdfunding platforms have either Seagull, Hangzhou or other cheaply produced non-Swiss movements and will never achieve the accuracy for what Swiss Made stands for. It is simply not possible to make a finished tourbillon watch in Switzerland at that price. The reason being is the start price for bulk OEM movement purchases is somewhere in the neighbourhood of 5.000,-CHF upwards dependent on volume and decoration. Once a brand factors in all the additional hard costs related to design, engineering upgrades, case, dial, hands, straps, sampling, assembly and packaging they can start to look at margin. Margin typically includes cost that covers, marketing, administration, in-house sales, distributor, retailers and brand profit margin.
It has been discussed in length by many young watch brands, that margin in this industry is typically in the neighbourhood of 7X to 10X of the movement price and can go north of 30X. Smaller startups have cut most of the intermediary margin suckers out and can get away with a conservative overall 3-3.5X margin. Since this is a pure once in our history fun project HORAGE looks to obtain a price that will allow as many watch fans make their dream of a Swiss tourbillon come true... including ourselves;-). Having some sports industry background we have learned how to keep costs incredibly low, while still maintaining a positive, fun environment that keeps us hungry for the next challenge.
This brings us to the pricing challenge for our tourbillon at hand. Our goal from the inception of this project was to deliver the greatest value, truly Swiss tourbillon the market has ever seen and we intend to run this project only this one time. The challenge for us has been to first be below Tag Heuer's 14.900CHF start price for the 02T and for our watch to reach a sub 10.000CHF price point. Timepieces in the category like ours typically retail north of 40.000CHF due to their higher markup requirements.
How does this look for a smaller brand. Well, the founder of CODE41 is a friend of ours and he openly communicates on his website a 3.5x margin to his supporters. We follow a similar margin system for all our other watches. This is not any get rich quick margin, because there is still a ton of work and expectation from fans to deliver on his promises.
If a brand like CODE41 were to do what we are doing with the tourbillon using a 3.5 margin they would reach a retail price for their supporters around 18-20.000CHF, which is still a very respectable price considering the work, materials and design at play.
So how is HORAGE going to pull off this sub 10.000CHF price point?
Basically the only way a brand today can manipulate pricing without impacting their own margin too much is to control production and a reliable pre-order. Partnering with LJP, utilizing our in-house engineers to develop the silicon escapement, sourcing and assembling in-house as well as only producing the quantity being sold during the upcoming pre-order time, enables us to reduce costs that independents and large multi-nationals alike might not be able to do due to their manufacturing and sales philosophy constraints.
Making the tourbillon for free is just not possible but with the support of our community and strict cost control we have calculated a break the bank 1.38 margin for this project.
In case your eyes were deceiving you let me put that in bold 1.38 Markup net without VAT.
We want our supporters to know that the watch they have on their wrist is not priced cheap, but rather we saved you from having to rob a bank to get the holy grail of watches.
We want you to be proud of the investment you have made in a watch that without exaggeration would usually start at around 40.000CHF or beyond from a major watch manufacturer.
Rather than put the cart before the horse I felt the need to transparently relay our margin and the value we aim to deliver for our supporters. We still need to run more numbers and plan to release the start price of this watch soon, but first lets let the above sink in.
Till next Tuesday….