How are watch prices paid by AD and distribution model work? Is it more of scenario #1 or #2 below or something else?
#1: AD pays for say 70% of the retail cost and pockets the difference between price sold and cost. For example, if retail cost is $10,000, AD pays $7000. Watch sold to consumer for $11,000 a year later because manufacturer raises retail price. Therefore, gain to AD is $4000
#2: AD gets a float on the inventory and pays a % (say 70%) to the manufacturer when watch is sold. Using the example above, watch is sold for $11000 and AD pays $7700 and pockets $3300 as gain.
If distribution model is #1, does it mean that the AD has more price flexibility for older models than new issued models or for in-stock models than special order models? Thank you