Firstly, Rolex is one of the most cautious, successful and most standardized brands in the world, it produces its watches with the finest, precious and most expensive materials (Gold, Silver, Diamonds, Ceramic, Stainless steel, Precious stones etc.) which has been meticulously designated and regularly reassessed to warranty its performance and its flawless aesthetics (Rolex,2014). According to sources Rolex is said to have the largest consumption of gold in Switzerland and in average the price of gold increases by 14.4% every year, in 2013 it increased from -29.4% to 2.8% in 2014 and the prices fluctuates every day as gold is an example of a luxury good which has boosted the price of a Rolex (The Journal, 2013). It’s also the only brand that does its own alloying and by doing so it has managed to maintain a full uniqueness and having a high control of its quality, with such a rare and unique quality the demand for a Rolex is relatively high due to consumer’s choice of owning an exclusive product, in the market economy high demand leads to an increase in price so this has an impact on why the price of a Rolex is high.

The price of a product is majorly determined with a mechanism which involves supply and demand; in this case the price of a Rolex is determined by supply side factors and demand side factors because the supply is said to be below its market equilibrium which results to a shift of the demand curve to the right and creating its high increase in price. Rolex is a monopolistic competitor, it produces its goods to be differentiated from its competitor’s product, and therefore it is a price maker which allows the firm to place the price of a Rolex above market level to interest the consumer surplus. So doing, the firm being a price maker qualifies it of being a profit-maximizer as output increases only if its marginal revenue is greater than its marginal cost (Sloman.J, 2010) .