The Speedmaster Standard – Linear VS Exponential Price Increase

On May 25th 2013, published an article titled Founder Worries About The Fragility Of High Watch Prices by Richard Paige. The author, a veteran of the watch industry, questions the steep rise in Swiss watch prices over the last few decades. Richard Paige cites an evolutionary hypothesis called the Red Queen Effect, based on which a system needs to keep adapting and evolving in order to survive in an ever-changing environment. According to the founder of, the technological advancements brought to watchmaking in the last decades should have translated into lower prices for the exact same product.

Richard Paige draws a parallel with the consumer electronics industry, where products of Apple Inc. keeps innovating one product generation after another by offering more performance… without substantially raising the price. The exact opposite seems to happen in the watch industry, observes Timezone’s founder, where the cost of an Omega Speedmaster rose from USD 225 in 1973 to USD 4500 in 2013.

I do personally share Mr. Paige’s feeling. In 1995 I was considering purchasing my first “expensive” Swiss watch, an Omega Speedmaster, and I can clearly remember the retail price being slightly over CHF 600 at the time. In defense of Omega, user Azua commented Richard Paige’s article:

Your math is flawed. Omega is a Swiss watch to the price increase over time should be compared to the rate of inflation in Switzerland. Also regulation and labor laws have changed drastically since the 1970’s…Especially in the European Union which all adds to the costs

But is Mister Paige’s math really flawed? Are there so many variables that it is impossible to account for the price increase over a time span of more than 40 years? Let’s try to see step by step what we know for a fact and what is left to guessing…

Omega Cal. 1861 Chronograph Movement

The Speedmaster Standard

The Gold Standard is a monetary system based on a standard of gold that remains unchanged in content and quantity throughout decades. As Richard Paige mentions, the Omega Speedmaster Professional has kept the same specifications between 1969 and 2013. Besides improvements in water-resistance gaskets and lubricating oils, most of the components of a 2013 Speedmaster Professional are made with the same alloys and materials today as used back in 1969. To see how much R. Paige’s claim of unjustified price rise holds, I have attempted to take into consideration the economical and marketing aspects of this product.

Geopolitics One On One

Before anything else, I need to outline that Switzerland is located in the European continent, but is not a member of the European Union. It did enter the European Free Trade Association in 2004, adopting a common visa policy with 25 other European countries and abolishing passport and immigration controls at their common border. Switzerland still has sovereignty over its currency, constitution and tax laws.

Comparing apples and apples

The obvious flaw in Richard Paiges’ parallel between consumer electronics and watchmaking is that the first benefits from Moore’s law while the latter doesn’t. In a 1965 paper, Intel co-founder Gordon E. Moore speculated that technological advances would allow the industry to double the amount of transistors on an integrated circuit every year and that postulate has so far proven to be very accurate. The law also helps to explain how Apple Inc. can manage to increase the performance of its consumer electronics products without raising prices.

In watchmaking, Moore’s law helps to explain how Casio can keep on adding features to its electronic G-Shock collection, but the law cannot be applied to the field of mechanical watchmaking, where Omega’s Speedmaster falls into.

Nominal Value VS Real Value

Now regarding the financials, commenter Azua is correct in pointing out the flaws of comparing the nominal value of a product across a time span of over 40 years. Richard Paige already ran his number to take in account various variables: inflation, purchasing power parity, and so on…

In this essay, I will try to look at the question from another angle: historical hourly wages and real estate price in Switzerland. The nominal value of a Speedmaster at a specific point in time could be expressed in work hours necessary to earn sufficient funds to purchase it. I am not an economist, so I welcome comments or corrections from experts in the field.

The following graph combines the minimum Swiss wage based on official Swiss government data, the average price of real estate in Switzerland according to the Swiss Central Bank and the price of the Omega Speedmaster Professional between 1970, 1995 and 2013. See a more detailed Price Chart from 2003 to 2015 by Theodossios Theodoridis at

Online Graphing

Based on the Swiss government data, wages followed a linear increase between 1970 and 2013. The evolution of real estate price followed a boom-and-bust curve, reaching a peak in 1992 before collapsing and rising again in 2000. The green curve, showing the price of the Speedmaster, follows an exponential curve that steeply rises between 1995 and 2000. There are several factors behind this sudden change, namely: brand re-positioning, “planned” components scarcity and basic rules of supply and demand.

  • I used the calculator for historical currency nominal exchange rates
  • I used the public records of the Swiss Wage Index for historical Swiss wages
  • I used the overall average O43 Real Estate Price Indices from the Swiss National Bank for historical prices of real estate in Switzerland.
  • Employment laws are very liberal in Switzerland and unions are not very powerful, so officially there is no such thing as a minimum wage like in neighboring France. That being said, the country is currently debating the possibility of running a poll on a CHF 22 minimum wage before the end of the year 2013. I extrapolated earlier wages by combining the CHF 22 figure and historical Swiss Wage Indexes.

In the second part of this essay, we will look at the birth of the Swatch Group, their decision to structure brands in a price pyramid and to upscale the Omega brand.

Cover image, credit Shane Lin.