“TIME IS MONEY”: A STUDY ON THE PRICE

Transcription

“TIME IS MONEY”:
A STUDY ON THE PRICE-SETTING OF
MECHANICAL WRISTWATCHES
Author: Tom Cronvall
Supervisor: Joakim Westerlund
Bachelor’s thesis, 15 hp
Bachelor of Science in Economics
University of Gothenburg:
School of Business, Economics and Law
Department of Economics
Spring 2011
“TIME IS MONEY”: A STUDY ON THE PRICESETTING OF MECHANICAL WRISTWATCHES*
TOM CRONVALL
Mechanical watches are a multibillion-dollar industry. Single watches are seen selling for millions
of dollars in auction houses and retail stores. Still there is not much information on how the price-setting
is conducted. In this bachelor’s thesis a price explanation model of mechanical Patek Philippe watches is
developed using official description cards to identify factors. To see what has the largest impact on the
price, factors are divided into two groups; functional and aesthetic. The model indicates that customers
are more likely to pay for the latter.
I. INTRODUCTION
Time keeping has been an industry for many decades. Today, despite the
revolution of battery driven clocks, mechanical watches are a multibillion-dollar
industry still growing. With technical solutions being more advanced than ever before,
single complicated watches are seen selling for millions of dollars in auction houses and
retail stores. What also define these watches are precious metals like gold and platinum
or even diamonds, used to increase the aesthetic aspects. Customers may wonder what
really explains the high price tag, what the additional cost of the aesthetic aspects is or
the alternative cost of various functions. Still, there is not much information on how the
price-setting is conducted, at least not publicly available. In fact, no prior studies on the
topic could be found.
The purpose of this study is to analyze which factors affect the price of highquality mechanical wristwatches. The hypothesis is that price is a function of watch
specifications. Special attention will be devoted to the interaction between plain
aesthetic features and functionality of the watch mechanism.
Quality is hard to compare between watchmakers. There are brands that produce
low-quality watches with advanced features for $20,000, while most high-quality brands
would charge over $100,000 for the same features. The only way I can make sure that
one feature is of the same quality for all watches is to just include data from one specific
company. One manufacturer who certainly is associated with quality is Patek Philippe.
Patek Philippe was founded in the year 1839 in Geneva, Switzerland and has been
making watches ever since (Patek Philippe, 2011). Quality has always been one of the
company’s main values. Each watch is assembled and polished by hand. Over 1200
operations are required to finish a watch and 600 hours of quality control are undertaken
before shipping it off to retail sellers (Patek Philippe, 2011). In New York, December
1999, a gold pocket watch made by Patek Philippe was sold for $11,003,500 at
Sotheby’s auction house. The watch took three years to design and five years to make,
had a total of 24 complicated features and was ordered by the American banker Henry
* I thank my supervisor Joakim Westerlund for his helpful comments and advice on the calibration
of the model.
1
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UNIVERSITY OF GOTHENBURG
Graves Jr. To this day, this is the most expensive watch ever sold (Sotheby’s, 1999).
Because Patek Philippe is known for quality, this will be the business analyzed.
Patek Philippe is based in Switzerland that is the leading producer of watches. A
large attribution to this market position is a long tradition of watchmaking and their own
well-respected seal of quality; Swiss made (Federation of the Swiss Watch Industry
(FH), 2011). Timepieces are Switzerland’s third largest export good. Nearly 95 % of all
watches produced are exported. In 2010, exports valued a total of $15.5 billion. That’s
more than twice as much as the world’s next largest exporter, Hong Kong, valued at
$7.4 billion. In units, Swiss exports were 26,100,000 compared to Hong Kong’s
419,100,000 (FH, 2011). Overall, it seems like there is a high level of competition in the
industry limiting the ability to set prices. Let alone in Switzerland there is about 200
watch brands (FH, 2011). Even high-end Swiss producers like Patek Philippe face
competition from watchmakers in Germany, France and the United Kingdom.
This paper begins with a description of the regression model used to analyze the
price. Subsequently, the collected data is outlined. Next, the estimation results are
presented. The paper concludes with a short discussion about the validity of the created
price explanation model. Results suggest that the aesthetic aspects make up the major
part of the price.
II. THEORY AND MODEL
In Microeconomics, hedonic regression is a useful tool for estimating how the
price-setting of composite goods are conducted. According to this demand theory, the
market price is explained by the characteristics of the product. There are no studies on
mechanical watches but the method is often used to examine the price of apartments
(Kryvobokov, 2007; Zang, 2001) and wine (Angulo, Gil, Gracia, Sánchez, 2001;
Oczkowski, 1994).
The price of high-end mechanical wristwatches can be influenced by several
possible factors. Manufacturers often explain their prices by using description cards. In
these cards there is a resume of the watch design and a list of technical data (Patek
Philippe, 2011). By creating variables that correspond to the information in the
description cards, a multiple linear regression model can be used to see what the price is
dependent on. The equation will look like this:
(1)
𝑃𝑟𝑖𝑐𝑒 = 𝛽! + 𝛽! 𝐴𝑒𝑠𝑡ℎ𝑒𝑡𝑖𝑐 + 𝛽! 𝐹𝑢𝑛𝑐𝑡𝑖𝑜𝑛𝑎𝑙 + ⋯ + 𝛽! 𝑥! + 𝜀
The term Aesthetic equals the factors related to design and Functional the factors
related to the technical data of the watch mechanism. The variables used in the model
are acquired by including most differences listed in the description cards on Patek
Philippe’s official website (Patek Philippe, 2011). Focus will be on features that most
quality watchmakers list. These general specifications include movement, functions,
water resistance, case and strap materials, diamonds, case size, form, dial color, gender
(design), jewels, bridges and number of parts. Factors that are unique for Patek Philippe
watches will not be included. The knowledge for comparing e.g. balance wheels
between manufacturers goes beyond the knowledge of an average enthusiast.
”TIME IS MONEY”
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Some exclusive watches have engraved case details to give them a more unique
look. This could indicate higher design related costs. Therefore, a variable for case
details will be included.
The hypothesis is that the price is a function of watch specifications. This is
required, otherwise a price explanation model of this relationship cannot be created or
used to estimate which specifications have the largest impact.
The sample is not that large and there are a few watches that are very high-priced
compared to most other watches included in the sample. These watches have a great
deal of complications; because of this it is expected that they will also consist of many
moving parts, bridges and jewels. A high correlation between what gender a watch is
made for and the size of the case is also expected; this is because women’s wrists are
generally smaller than those of men. Overall, size should have a significant impact on
price as larger size implies more inputs. A larger case should also be able to fit more
functions.
A perfect explanatory model of the price cannot be expected. This is mainly
because of costs that vary between watches. Such costs are largely associated with:
i.
Research and development
Mechanical watches are built with advanced mechanical and technical solutions
that require patenting to maintain private. Also, it is possible that Patek Philippe is
paying premiers to be able to use other companies’ solutions. These costs of
researching and patenting are a known part of the price equation that cannot be
included because of company privacy.
ii.
Design
Every watch is designed in detail. The cost for this is probably a large amount of
the total. Some variables included should be able to compensate for a part of this,
e.g. case details. However, design related costs most certainly vary between
complicated and less complicated watches.
iii.
Profit margins
As in the case with design related costs we do not know how the profit margins are
structured. Depending on what price-setting strategy Patek Philippe is using, the
profit margin could be either higher or lower for a complicated watch than that of a
less complicated one.
III. EMPIRICAL RESULTS
3.1 Data
The data set is composed of 116 observations derived from the manufacturer’s
suggested retail price list (US), February 15th 2011. The dependent variable in the model
is price measured in US dollars. There are nine variables that account for the
functionality of the watch and nine that account for the aesthetic aspects.
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The functional variables are made to account for the number of bridges that
support the wheels that make the watch function, whether the watch has a chronograph
mechanism which allows measuring of time intervals, how many jewels that are used to
reduce friction in the watch movement, whether the watch has an indicator showing the
phases of the moon, the number of separate parts used in the watch mechanism, the
water resistance of the watch, the type of winding mechanism, whether the watch has a
tourbillon and the number of extra watch functions. The variable for extra functions is
partly made to account for minor functions that are not included as individual variables.
The aesthetic variables are made to account for how many carats of diamonds that
are used to decorate the watch, if the watch has engraved case details, what material the
watch case is made of, what material the strap is made of, what color tone the dial is in,
what form the case is in, if the watch has a sapphire glass-back, how large the watch
case is and what gender the watch is designed for. By including the gender variable we
can see if there is any price discrimination between men and women.
Functional
Bridges (bridges)
Chronograph (chronogr)
Jewels (jewels)
Moon phase indicator (moonph)
Number of extra functions (efuncts)
Parts (parts)
Tourbillon (tourbill)
Water resistance (waterres)
Winding Mechanism (selfwind)
Aesthetic
Case details (casedets)
Dial color (dialcol)
Diamonds (diamnds)
Form (form)
Gender (gender)
Case in stainless steel (steel)
Case in yellow gold (yellgold)
Case in red gold (redgold)
Case in white gold (whitegold)
Case in platinum (platinum)
No metal link (nolink)
Metal link of stainless steel (lsteel)
Metal link of yellow gold (lygold)
Metal link of red gold (lrgold)
Metal link of white gold (lwhgold)
Sapphire glass-back (crystback)
Size (area)
Table 1. List of explanatory variables, abbreviation in parenthesis
In Table 1, we can see that case and strap materials are dummy variables with
multiple levels. The first level of case materials is stainless steel, the first level of strap
materials is non-metal strap. Because of degrees of freedom, these first levels (steel and
nolink) are not included as variables in the regression model. The other dummy
variables are chronogr (1 = watch with chronograph, 0 otherwise), moonph (1 = watch
with moon phase indicator, 0 otherwise), tourbill (1 = watch with tourbillon, 0
otherwise), waterres (1 = water resistance of >30 m, 0 otherwise), selfwind (1 = watch
with automatic winding, 0 otherwise), casedets (1 = watch with case details, 0
otherwise), dialcol (1 = light dial color, 0 otherwise), form (1 = circular, 0 otherwise),
gender (1 = watch designed for men, 0 otherwise) and crystback (1 = watch with crystal
glass-back, 0 otherwise).
”TIME IS MONEY”
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Variable
price
efuncts
parts
jewels
bridges
diamnds
area
Obs
116
116
116
116
116
116
116
Mean
59231.9
3.206897
227.6897
27.15517
7.689655
.5151724
1091.538
Std. Dev.
58894.41
2.177023
92.32668
7.247912
2.875424
1.648573
207.452
Min
18000
0
101
18
4
0
578.6
Max
371000
7
456
45
14
8.82
1530.32
Table 2. Summary table of all numerical variables
The number of extra functions (efuncts) is based on self-winding movement,
seconds subdial (or hand), day, date, month, AM/PM indicator, water resistance (>30
m), annual calendar, perpetual calendar, world time indicator, moon phase indicator,
power reserve indicator, chronograph, split-second chronograph, sky chart, minute
repeater and tourbillon. Basic functions are considered as minute and hour dial,
manually wound movement and water resistance of ≤30 m. Watches come in different
forms and only diameter or height and width are available, size is therefore calculated to
mm2 using equation (2) and (3).
(2)
Circular: 𝐴 = 𝜋 ∗ 𝑟𝑎𝑑𝑖𝑢𝑠 !
(3)
Rectangular (and similar): 𝐴 = ℎ𝑒𝑖𝑔ℎ𝑡 ∗ 𝑤𝑖𝑑𝑡ℎ
Price information is from the US manufacturer’s suggested retail price list
(MSRP), February 15th 2011. The list was found in a thread on watchtalkforums.info
created just for the purpose of listing Patek Philippe MSRP lists (Watch Talk Forums,
2011). The same prices appear to be used by online retail sellers finestwatches.com
(Finest Watches, 2011) and luxurybazaar.com (Luxury Bazaar, 2011). Information
about watch specifications was found in the Illustrated Professional Dictionary of
Horology (FH, 2011). All specifications were found on Patek Philippe’s official
website. However, some watches on the MSRP list was not on the website. Because I
did not find all information for these watches they are not included in the sample.
3.2 Results
parts
parts
1.0000
jewels 0.8826
bridges 0.8910
efuncts 0.9104
jewels bridges efuncts
1.0000
0.8364 1.0000
0.7370 0.7619
1.0000
Table 3. Correlation matrix of Parts, Jewels, Bridges and Number of extra functions
The correlation between parts, jewels, bridges and number of extra functions in
the watch is high. Because of collinearity, only one of these could be included. After
running a lot of tests for efficiency, jewels was the variable chosen to be included in the
final model. The number of extra functions is also somewhat correlated with watch size
(ρ=0.4846). This makes sense as a larger watch should be able to fit more functions.
The correlation between the size of the watch and what gender the watch is
designed for is high (ρ=0.7284). The gender variable was not even close to being
6
significantly different from zero at a 5 % significance level. Area on the other hand,
was. Therefore, area is included instead of gender.
The final model was acquired by maximizing adjusted R-squared and at the same
time making sure that all model assumptions were fulfilled. All variables except
diamnds and the dummy variables are in logarithmic form to make the model more
linear. The reason diamnds is not, is because most watches do not have any diamonds;
the natural logarithm of zero is undefined and therefore values went missing when it
was included.
To make sure that there is no problem with collinearity in the final model I created
a correlation matrix for all variables included. The correlation between lnarea and
lnjewels is high (ρ=0.7215) but they are not perfect substitutes and both variables are
significantly different from zero at a 5 % significance level. No other variables are
highly correlated with each other and so there is no problem with collinearity in the
model. All model assumptions are fulfilled if the residuals behave in a normal way. That
is when:
i.
The error terms are not serially correlated
To test for this, the Ramsey RESET test is used. The RESET test (Regression
Specification Error Test) is a test for misspecification. A model can get
misspecified by omitting important variables, including irrelevant ones and by
other means not fulfilling the required assumptions for multiple regression
models. In a Ramsey RESET test the null hypothesis is, H0: model has no
omitted variables. If the null hypothesis can be rejected the model is
misspecified and the parameters not reliable (Hill, Griffith, Lim, 2008, s. 151152). Observed P-value = 0.0661. H0: model has no omitted variables cannot be
rejected at a 5 % significance level since 0.05 < 0.0661. In other words, the error
terms are not serially correlated and the model is not misspecified.
ii.
The variance of the error term is constant
To test for constant variance of the error term, the Breusch-Pagan / CookWeisberg test is used. The null hypothesis in a Breusch-Pagan / Cook-Weisberg
test is, H0: constant variance. If the null hypothesis can be rejected there is likely
a problem with heteroskedasticity in the model and data, causing errors (Hill,
Griffith, Lim, 2008, s. 214). Observed P-value = 0.7822. H0: constant variance
cannot be rejected at a 5 % significance level since 0.05 < 0.7822. There is no
problem with heteroskedasticity in the model.
iii.
Error terms are normally distributed around their mean, which is zero
The probability distribution of the error terms is important for the efficiency of
the parameters. On average, the value is assumed to be zero because of model
accuracy.
”TIME IS MONEY”
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Figure 1. Histogram: Residuals
The error terms seem to be approximately normally distributed around zero. All
model assumptions are fulfilled and there are no signs of endogeneity.
lnprice
lnjewels
lnarea
diamnds
crystback
casedets
chronogr
moonph
tourbill
yellgold
redgold
whitegold
platinum
lsteel
lygold
lrgold
lwhgold
_cons
Coef.
.4712466
.4793662
.1898135
.210943
1.198679
.3620158
.4212362
2.158188
.3619803
.3968561
.35382
.7987953
.0403523
.302519
.3647951
.415456
4.866499
Std. Err.
.1577567
.2142563
.0191006
.1097057
.1648288
.1000679
.0655271
.2936337
.161516
.1529541
.1512708
.1730601
.2002215
.1354561
.3438866
.1056271
1.259804
t
2.99
2.24
9.94
1.92
7.27
3.62
6.43
7.35
2.24
2.59
2.34
4.62
0.20
2.23
1.06
3.93
3.86
P>t
0.004
0.028
0.000
0.057
0.000
0.000
0.000
0.000
0.027
0.011
0.021
0.000
0.841
0.028
0.291
0.000
0.000
[95 % Conf. Interval]
.1582232 .7842701
.0542351 .9044973
.1519138 .2277132
-.0067368 .4286229
.871623
1.525735
.1634594 .5605723
.2912162 .5512561
1.575555 2.74082
.0414975 .6824632
.093362
.7003503
.053666
.653974
.4554064 1.142184
-.3569306 .4376353
.0337447 .5712933
-.3175506 1.047141
.2058688 .6250431
2.366775 7.366223
Table 4. The final model
Adj. R-squared = 0.8228. This implies that 82.28 % of the total variation around
the mean of log price is explained by the regression model. Some parameters are not
significantly different from zero at a 5 % significance level. Still, they are included
because they belong in a group of dummy variables with multiple levels. The exception
is crystback, which needs to be included for the model not to be misspecified.
Nevertheless, 0.05 > F = 0.0000, which means that jointly all parameters are
significantly different from zero at a 5 % significance level.
8
Price increase as the amount of jewels increases. The number of jewels depends
on the number of watch functions. Because jewels are used to reduce friction in the
watch mechanism, this is a sign that price depends on functionality.
Price also increases with the size of the watch. This can be explained by a larger
watch requiring more inputs, which importantly implies a larger amount of metal.
Recall the high correlation coefficient between area and gender, saying that watch size
and what gender the watch is designed for measures much of the same things. The
gender variable was not even close to being significantly different from zero at a 5 %
significance level, and was dropped from the equation. Therefore, no price
discrimination between men and women could be established.
I discovered that many of the watches in the sample made for women were not
mechanical and could therefore not be included in the model. The price of these nonmechanical watches (ref. 4907/1J, 4908/50G-012, 4908/50R-012, 4910/10A, 4910/11R,
4910/49G, 4910/52G, 4910G, 4910R, 4914G, 4920G, 4920R) ranges from $11,500 to
$249,500. Characteristics of the most expensive ones are precious metals and many
carats of diamonds, indicating that this is what brings the prices up. Let us take a look at
the extremes. The watch 4910/52G with a total of 12.70 carats of diamonds and both
case and metal link in white gold has a price tag of $249,500. The watch 4910/10A with
a total of 0.45 carats of diamonds and both case and metal link in stainless steel has a
price tag of $11,500. Even though these watches have the exact same movement the
price difference is $238,000 ($249,500 – $11,500). As the price is set by the same
company this may also apply to the mechanical watches. The statistics tell us that each
carat of diamonds increases the price with on average 18.98 % (all other factors held
constant). Though this does not yield the same dramatic increase as in the case with
non-mechanical watches, it is a large price difference not depending on any functional
use of the watch mechanism.
Even though the variable for sapphire glass-back was not significantly different
from zero at a 5 % significance level, its presence was needed for the model not to be
misspecified. This indicates that it has an impact on price.
Case details are only for the most expensive watches. The statistics show us that
these watches are generally more complicated. It is probably not the case details
themselves that make the large price increase. However, they could indicate higher
design related costs. This would make sense as these watches are usually produced in
smaller quantities and more individually formed.
We can see that price depends on advanced features. The most advanced feature
in the sample, tourbillon, is also the most costly.
(4)
!
! ! ! ! ! !! (!! !!)
! ! ! ! !
!
! ! ! ! ! !!
! ! ! ! !
= 100 𝑒 ! − 1 %
If we interpret the coefficients corresponding to case materials using equation (4)
we find that a watch with a case in yellow gold costs on average 43.62 % (48.71 % for
red gold, 42.45 % for white gold and 122.29 % for platinum, respectively) more than a
watch with a case in stainless steel, all other factors held constant. This shows us that a
watch with a case in white gold on average costs less than a watch with a case in yellow
gold. Because white gold is more costly to produce this is not expected. At the same
”TIME IS MONEY”
9
time, the difference is small and the 95 % confidence intervals for these parameters are
quite wide. By the same method interpreting strap materials, we get that a watch with a
metal link in yellow gold costs on average 35.33 % (respectively 51.51 % for white
gold) more than a watch with no metal link, all other factors held constant. The
argument about yellow and white gold makes more sense in this aspect. Overall,
materials have a very large impact on price. On average, a case in yellow gold equals a
price increase of a chronograph mechanism, a case in red gold equals an increase as
much as a moon phase indicator and the additional cost of a case in platinum is more
than twice of that.
No price difference for what color tone the dial is in, what shape the watch has,
water resistance or what winding mechanism the watch uses could be established at a 5
% significance level. These factors probably do not affect the price.
IV. CONCLUSION
In this report a multiple linear regression model has been developed to analyze
factors affecting the price of mechanical Patek Philippe watches. The model explains
82.28 % of the total variation around the mean of log price. The error term could be
explained by minor differences or absence of exact cost structure in design, profit
margin and expenses related to research and development. All model assumptions are
fulfilled and most parameters seem reliable. The hypothesis that price is a function of
watch specifications is therefore accepted. The use of this model can be to estimate and
compare prices of the wide variety of watches offered by Patek Philippe. Depending on
preferences, a customer may find it easier to estimate the value for money.
From this price explanation model, we can conclude that price depends mainly on
advanced features, e.g. tourbillon, and what materials the case and link are made of.
Aesthetic add-ons like precious metals and diamonds are most likely to make up the
largest part of the price. However, no watch in the sample had a minute repeater (a
mechanism that strikes the minutes, quarters and hours) or a split-second chronograph
(a mechanism that allows measuring of two time intervals simultaneously), two very
advanced features that should presumably have a significant impact on price.
To get a more general idea of the price-setting of high-end mechanical
wristwatches, further research can be focused on other manufacturers competing in the
same market as Patek Philippe. For example, do we get similar results for JaegerLeCoultre, Vacheron Constantin and Breguet?
UNIVERSITY OF GOTHENBURG: SCHOOL OF BUSINESS, ECONOMICS
AND LAW
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APPENDIX APPENDIX I: List of variables
Bridges (Functional)
Bridges support the wheels that make the watch function. Numerical variable.
Chronograph (Functional)
A mechanism that allows measuring of time intervals by operating push-pieces mounted on
the watch. Dummy variable:
Watch has a chronograph mechanism: 1
Watch has no chronograph mechanism: 0
Jewels (Functional)
Jewels are used to reduce friction in the movement of the watch. They are long lasting and do
not tear down easily. The jewels used in mechanical watches are often of synthetic ruby.
Numerical variable.
Moon phase indicator (Functional)
An indicator that shows the phases of the moon. Dummy variable:
Watch has a moon phase indicator: 1
Watch has no moon phase indicator: 0
Number of extra functions (Functional)
Basic functions are considered as minute and hour dial, manually wound movement and water
resistance of ≤30 m. The number of extra functions variable is then based on: Self-winding
movement, Seconds subdial or hand, Day, Date, Month, AM/PM indicator, Water resistance
(>30 m), Annual calendar, Perpetual calendar, World Time indicator, Moon phase indicator,
Power reserve indicator, Chronograph, Split-second chronograph, Minute repeater and
Tourbillon. Numerical variable.
Parts (Functional)
The number of separate parts that are used in the watch mechanism. Numerical variable.
Tourbillon (Functional)
A tourbillon is a very advanced watch mechanism made to eliminate timing errors caused by
gravity. There is an ongoing dispute about its functionality in today’s watchmaking. As this is
a report about price explanation, I will try not getting too technical about this matter. Dummy
variable:
Watch with tourbillon mechanism: 1
Watch without tourbillon mechanism: 0
Water resistance (Functional)
The watch-movement must be protected from at least humidity and dust. Most watches are
protected up to 30 meters of water pressure. Some watches are made for diving and as so they
withstand more pressure. Dummy variable:
Water resistance of >30m: 1
Water resistance of ≤30m: 0
A
APPENDIX Winding mechanism (Functional)
In this sample there are two types of winding mechanisms, manual and automatic (selfwinding). If a watch uses manual winding it is required to wind up the mainspring by hand.
Self-winding is made by a rotor on the watch which winds up by movement automatically.
Dummy variable:
Automatic (Self-winding): 1
Manual: 0
Case details (Aesthetic)
Engraved details on the sides of the case to give the watch a more unique look, exclusively
seen on high-priced watches. Dummy variable:
Watch has engraved case details: 1
Watch has no engraved case details: 0
Case material (Aesthetic)
This is to account for what the watchcase is made of. Dummy variable with multiple levels,
grouped as followed:
Stainless steel: 1
Yellow gold: 2
Red/Rose gold (alloy of gold and copper): 3
White gold (alloy of gold and white metal): 4
Platinum: 5
Dial color (Aesthetic)
The color the dial is in. Dummy variable:
Light dial: 1
Dark dial: 0
Diamonds (Aesthetic)
This variable is used to show how many carats of diamonds are used to decorate the watch.
Numerical variable.
Form (Aesthetic)
This is a dummy variable to indicate what form the case is in.
Circular: 1
Rectangular (and similar): 0
Gender (Aesthetic)
Watches are divided into two groups, watches made for women and watches made for men.
Dummy variable:
Watches made for men: 1
Watches made for women: 0
Sapphire glass-back (Aesthetic)
Some watches have a sapphire glass-back that allows you to see through the back and into the
watch mechanism. Dummy variable:
B
APPENDIX Watch has sapphire glass-back: 1
Watch has no sapphire glass-back: 0
Size (Aesthetic)
To be able to account for the size of both circular and rectangular watches in a unitary
measure, size is calculated to mm2 using formulas:
Circular: 𝐴 = 𝜋 ∗ 𝑟𝑎𝑑𝑖𝑢𝑠 !
Rectangular (and similar): 𝐴 = ℎ𝑒𝑖𝑔ℎ𝑡 ∗ 𝑤𝑖𝑑𝑡ℎ
Numerical variable.
Strap material (Aesthetic)
Material of the strap used to hold the wristwatch in place. It is usually made of leather or
metal but can also be made of special rubber on watches made for diving. Dummy variable
with multiple levels, grouped as followed:
Watch has no metal link: 1
Watch has a metal link of stainless steel: 2
Watch has a metal link of yellow gold: 3
Watch has a metal link of red/rose gold: 4
Watch has a metal link of white gold: 5
C
APPENDIX APPENDIX II: Patek Philippe US MSRP, Feb 15th 2011
Available (Online):
<http://i229.photobucket.com/albums/ee69/FL_Investor/WTF_PP_Database/Patek_Philipe_Price_List_2011.jpg
> [2011-03-30]
D
APPENDIX Available (Online):
<http://i229.photobucket.com/albums/ee69/FL_Investor/WTF_PP_Database/Patek_Philipe_Price_List_2011_a.j
pg> [2011-03-30]
E
APPENDIX APPENDIX III: List of included watches
Ref.
Description card (Online)
5116G 001 <http://patek.com/html/en/descriptionCards/ref_5116G_001.html>
5119J 001 <http://patek.com/html/en/descriptionCards/ref_5119J_001.html>
5119R 001 <http://patek.com/html/en/descriptionCards/ref_5119R_001.html>
5120/1G 001 <http://patek.com/html/en/descriptionCards/ref_5120_1G_001.html>
5120/1J 001 <http://patek.com/html/en/descriptionCards/ref_5120_1J_001.html>
5196P 001 <http://patek.com/html/en/descriptionCards/ref_5196P_001.html>
3738/100R 001 <http://patek.com/html/en/descriptionCards/ref_3738_100R_001.html>
5167A 001 <http://patek.com/html/en/descriptionCards/ref_5167A_001.html>
5167/1A 001 <http://patek.com/html/en/descriptionCards/ref_5167_1A_001.html>
F
APPENDIX 5980R 001 <http://patek.com/html/en/descriptionCards/ref_5980R_001.html>
5102PR 001 <http://patek.com/html/en/descriptionCards/ref_5102PR_001.html>
4909/50R 001 <http://patek.com/html/en/descriptionCards/ref_4909_50R_001.html>
G
APPENDIX 7119G 012 <http://patek.com/html/en/descriptionCards/ref_7119G_012.html>
[2011-04-01]
H

“TIME IS MONEY”: A STUDY ON THE PRICE

Transcription

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