The Cost of Quality, Part II…

Last August, when we raised prices $25, I wrote about the new and improved bracelet and clasp we were using in our NTH Subs, in a blog post called “The Cost of Quality.”

In that post, I mentioned that our prices had not gone up since we launched NTH in 2016, over two years earlier, despite our costs having gone up several times since then.

I was trying to make the point that we’d held prices steady for more than 2 years, in spite of steady cost increases, most of which were just thrust upon us, not necessarily due to any change in the product. But we couldn’t continue to hold prices steady while also making quality improvements which came with cost increases of their own.

Later this week, we'll be raising prices another $25 again. Based on some of the comments I’ve read online since making that announcement, I think all some people got out of that August post was, “new bracelet, so you pay $25 more,” which was almost the opposite of what I was saying.

Let me put it as simply as this – we’ve had several cost increases, some having nothing to do with product changes, but we’ve also had several cost increases directly resulting from product improvements. Eventually, we have to raise prices, in order to keep up, and keep this business viable.

Talk to anyone who knows what’s been happening with movement prices. Movement costs are always going up, especially now, as Swatch Group is tightening up on the supply of ETA mechanical movements.

We’re seeing prices and lead times going up on all mechanical movements as a result. When this happens, it often coincides with a higher defect rate, which in turn increases our returns and replacement rates.

Recently, we’ve seen tariffs on goods from China more than double, from 10% to 25%, on top of ordinary customs duties.

With the improving worldwide economy, we’re seeing increased demand – and as such, higher prices – for raw materials and labor. Shipping costs are also up, due to increases in labor and fuel costs.

Those are all costs we can’t control, and don’t have much to do with changes to the product. They just make everything more expensive. But there are several things we’ve done to improve the overall quality of our product, beyond the new bracelet and clasp, which also add costs, and I want to make customers aware of them.

We’ve tightened up on specs for several components, made incremental quality improvements to all aspects of “fit-and-finish”, tightened up our QC standards, and lowered our tolerance for manufacturing variations. We’re now rhodium-plating the applied indices on our dials, in order to prevent the loss of brilliance from oxidation (rhodium is related to platinum).

We’re regulating to a much tighter accuracy standard than the manufacturer’s spec on our movements. We’ve increased the adhesive strength of our bezel inserts by 50%. We’ve improved machining on our bracelets and clasps. We’ve made some subtle changes to our boxes, to improve their quality and appearance.

We’ve started using more expensive variations of our movements, to eliminate the “phantom date change position” (the date-change position of the crown with a no-date dial), which seems to bother some enthusiasts.

Not every improvement is immediately or clearly visible, but they’re there. They all add up to a better product, one that’s also more expensive to produce.

We’re not done yet. Not done making improvements, not done seeing rising costs, and probably not done raising prices.