Movement. This is basically what makes the hands turn, the engine inside the watch. The watchmakers who design and create their own signature movements or calibres have spent years honing their skill and this results in magnificent pieces of art and engineering masterpieces. You are not paying for a watch, you are paying for years of craft and continuous process improvement. A fine example of this would be F.P. Journe and Richard Mille.
Materials. Only the finest materials are used in the creation of luxury timepieces. These make a difference when it comes to how it feels when wearing it, how it looks and how long it will last. Gold would be most commonly used in the best watches. It is the finest marker of quality. It is used in many parts of the watch even small delicate pieces within the movement. Other materials include Platinum, used mainly in high end luxury pieces, Titanium, which is lightweight, durable and hypoallergenic and Ceramic, which has been seen in Audemars Piguet and Hublot.
Production time. Unlike mass produced watches made in China, it takes longer to produce luxury timepieces. Whilst the entire watch is not hand assembled, the movements are, and with hundreds of tiny parts, it is a slow process. A recent Deloitte report showed in 2019 over 640m watches were exported from China versus 20m watches from Switzerland, yet the value of the watches from Switzerland was much more.
Compliance and Regulation. To attain the Swiss Made label, manufacturers are required to fulfil a certain criteria. A watch is considered a Swiss watch if:
a. its movement is Swiss;
b. its movement is cased up in Switzerland;
c. the final inspection of the watch is conducted by the manufacturer in Switzerland; and
d. at least 60 per cent of the manufacturing costs are incurred in Switzerland.
Here is more information on the Ordinance on the Use of «Switzerland»or «Swiss» for Watches
This all adds to the costs as labour in Switzerland is more expensive versus China.
5. Demand. These are prestigious and luxury items that some people are happy and prepared to pay for, sometimes as much as 20% more. If you want a new Rolex, you need to go on a waiting list that could last years or purchase on the grey market for a much inflated retail price.
Of course, this article relates to the upper end of the luxury market. You can of course buy Swiss Made watches from Broad & Swan for under €200. You won't find 18carat gold or engineering marvel in the movement (yet), but you will get a quality well made watch that complies with the Swiss Label regulation and it could mark the beginning of a Swiss watch adventure.
I haven't gone into too much detail here as I know your time is precious but I hope I have provided some insight into costs associated with Swiss Made watches.