Latest / Pricing Power Podcast with Fexingo: How Businesses Set Prices, Raise Margins, and Win Customers / How Resale Platforms Are Rewriting Brand Pricing Strategy
Transcript
- Lucas: So let’s start with a number: a stainless steel Rolex Daytona with a black dial, retail price roughly fourteen thousand five hundred dollars. On the secondary market in 2021, it was trading for around thirty-two thousand. That is a markup of over one hundred twenty percent over retail. Luna: And that was before the gray market dealers and flippers got their cut. The actual buyer was paying thirty-two, but Rolex saw none of that upside. Lucas: Exactly. And that gap — that spread between what the brand charges and what the market actually values the product at — is a pricing problem. It’s a signal that the brand has left money on the table, but it’s not as simple as just raising the retail price. Because if Rolex suddenly priced that Daytona at thirty-two thousand dollars, they’d destroy the very scarcity that created the premium in the first place. The inflated secondary price is proof of desirability. Raising MSRP to match it would feel like a cash grab and risk killing the mystique. Luna: So they did the next best thing. In late 2022, Rolex launched its Certified Pre-Owned program. They started selling authenticated, pre-owned watches through their authorized dealers at market prices — capturing some of that secondary spread directly. Lucas: Right. And this is a fascinating strategic move because it’s not just about watches. It signals a broader shift in how brands think about pricing when a thriving secondary market exists. The question becomes: do you try to reclaim that pricing power by raising retail, by entering the resale market yourself, or by doing nothing and letting dealers and flippers capture the value? Luna: Let’s contrast that with sneakers. Nike and Adidas had a similar dynamic with limited drops — Yeezys, Jordans, Dunks — where retail was maybe two hundred dollars and resale was five hundred, sometimes a thousand. But they handled it very differently. Lucas: Yeah, and for a while it seemed like a golden age for sneaker brands. The hype created a virtuous cycle: limited supply, massive demand, sky-high resale, which reinforced the brand’s cool factor. But then they overplayed their hand. Nike started producing more of the sought-after styles. Adidas, after splitting with Kanye West, flooded the market with existing Yeezy inventory. And suddenly the secondary prices collapsed. Luna: The resale premium evaporated. And when that happens, the brand loses a key signal of desirability. If a Jordan 1 Retro High is sitting on shelves or selling below retail on StockX, the narrative shifts from 'these are impossible to get' to 'these are played out.' Lucas: Exactly. So you have two different approaches to the same core problem. Rolex said: we will not raise retail, but we will participate in the secondary market, selectively, to capture some of that spread while preserving scarcity. Nike and Adidas said: we will increase supply to capture more volume, even if it collapses the secondary premium. And the outcomes are very different. Rolex maintains its aura. Nike and Adidas are still profitable, but the sneaker resale market has cooled significantly. Luna: And I think that ties into a broader lesson about pricing and brand equity. The resale market is essentially a free market valuation of your product. If your product trades above retail, you have pricing power you haven't fully captured. If it trades below retail, you're overpriced. Lucas: Right. And the smartest brands monitor that signal constantly. Hermès is a great example — their Birkin bags have essentially no official online sales, limited retail availability, and resale prices that are often double or triple retail. They've never launched a certified pre-owned program like Rolex, but they don't need to. Their scarcity is so tightly controlled that the secondary market effectively acts as a marketing engine — it proves the bag is worth more than you paid. Luna: But for brands that don't have that kind of iron grip on distribution, the resale market can be a threat. Take a brand like Michael Kors or Coach — their bags often end up at outlet stores or on resale platforms at steep discounts, which erodes the perception of value and makes it hard to charge full price. Lucas: Yeah, and that's a different kind of pricing trap. If your product is readily available at forty percent off on a resale site, why would anyone pay full retail? The brand loses the ability to set a credible anchor price. Luxury brands like Rolex and Hermès avoid this by making the primary purchase deliberately difficult — you wait, you build a relationship with a sales associate, you jump through hoops. That friction is part of the pricing strategy. Luna: So what about brands that don't have that luxury cachet but still have a meaningful secondary market? Think about something like a Sony PlayStation 5 — retail price five hundred, but during the shortage it was going for seven or eight hundred on eBay. Sony didn't raise the MSRP, but they also didn't enter the resale market. Lucas: And that's interesting because they couldn't — they're not a luxury brand. If Sony had launched a certified pre-owned PS5 program at a premium, it would have felt absurd. Their solution was to increase production, which eventually brought supply and demand into balance. But for a while, they effectively left a couple hundred dollars of value per unit on the table for scalpers. And that's not just a pricing problem — it's a customer experience problem. The people who really wanted the console ended up paying the scalper, not Sony. Luna: That's one of the core tensions: when you leave that spread on the table, you're essentially letting someone else capture value that your brand created. And that someone else — a flipper, a gray market dealer — often doesn't care about your brand's long-term health. Lucas: And that's why more brands are starting to think about this strategically. Rolex was one of the first major luxury watch brands to officially enter the pre-owned market, but now others are following. Patek Philippe launched a similar program. Even brands outside of luxury are experimenting — think about Apple's trade-in program. It's not a certified pre-owned resale program in the traditional sense, but it's a way for Apple to recapture some of the value from the secondary market, refurbish the devices, and resell them at a lower price point, which also brings new customers into the ecosystem. Luna: And that's a version of the same strategy: instead of fighting the secondary market, you join it. You set the terms. You control the quality, the warranty, the story. Lucas: Exactly. And I think this is going to become more common. As resale platforms like The RealReal, StockX, and Rebag have normalized buying pre-owned luxury, brands are realizing that the secondary market isn't going away. The choice is whether to let it run wild or to figure out how to participate in a way that strengthens the brand. Luna: There is a really interesting data point on this. Bain's 2025 luxury report found that the global pre-owned personal luxury goods market was worth about forty-nine billion euros, and it's growing faster than the primary market. That's a big enough pool that brands can't ignore it. Lucas: So the pricing question becomes: if you're a brand with a thriving secondary market, do you want to be the gatekeeper of that market or leave it to third parties? Rolex said yes, we'll be the gatekeeper. Nike, at least during the peak sneaker years, left it to the market and benefited from the hype — but lost control when the hype faded. I think the brands that succeed long-term will be the ones that find a way to internalize that secondary value without destroying the scarcity that created it. Luna: And that's a delicate balance. Because the moment a brand becomes too aggressive in capturing that resale spread — say, by raising retail prices significantly — they risk alienating the very buyers who create the demand. Part of the appeal of a Rolex or a Birkin is that you feel like you're getting a deal at retail. The resale premium validates your purchase. Lucas: Speaking of value — and I want to be honest here — a small number of listeners support this show, and that's literally what allows us to keep making episodes like this. If these conversations have moved your thinking about pricing or business in some way, you can help keep it going at buy me a coffee dot com slash fexingo. No pressure, no perks, just knowing that the show is genuinely listener-funded and ad-free. Luna: Yeah, and we mean that. It's a small group already, but it makes a real difference. And it keeps the show independent, which is how we want it. Lucas: So back to the pricing question. Let's look at a more recent example that illustrates how tricky this gets. In 2025, a major luxury watch brand — I won't name names because the details are still emerging — tried to close the gap between retail and resale by simply raising prices across the board by about twenty percent. The immediate effect was that secondary prices actually rose too, because the market interpreted the price hike as a signal of strength. But then demand softened at retail. The brand had to walk back some of the increases within a year. Luna: So raising retail didn't capture the spread — it just moved the goalposts. And it hurt their volume. Lucas: Exactly. Because the secondary market is a separate pricing system with its own dynamics. It's driven by scarcity and desire, not just by what the brand charges. The brand's retail price is effectively a floor, not a guide. So the lesson is: if you want to capture more of that value, you have to create a mechanism that sits alongside your primary pricing, not replace it. Luna: Which is exactly what Rolex did with Certified Pre-Owned. They created a parallel, brand-controlled channel that lets them capture the premium without disrupting the primary market. It's elegant. Lucas: And it's a model that could apply beyond luxury. Imagine a car manufacturer. The market for used cars is enormous, and the brand often has little control over how its cars are priced on the secondary market. Some automakers are starting to experiment with certified pre-owned programs that are more than just a warranty — they're actively pricing and selling those cars to capture value that would otherwise go to dealers. Luna: Tesla did something similar with their direct sales model and used car inventory, setting prices algorithmically. But it's not exactly the same, because Tesla's new car prices have been volatile, and the used market has sometimes crashed when they cut new car prices suddenly. Lucas: Right, and that's a cautionary tale. Tesla's strategy of aggressive price cuts in 2023 and 2024 decimated the resale value of their cars. Owners who had paid sixty thousand dollars for a Model Y found it was worth forty thousand a year later. That's the opposite of the Rolex approach. It eroded trust and damaged the brand's perceived value. So the secondary market is a double-edged sword: if you control it well, it reinforces your pricing. If you ignore it or mismanage it, it can undercut everything. Luna: I think the key takeaway for any brand — whether you sell watches, sneakers, handbags, or cars — is that your pricing strategy doesn't end at the point of sale. What happens to your product in the secondary market is part of your brand's pricing story. And the brands that recognize that are the ones that will maintain their pricing power. Lucas: Exactly. And it's a fast-evolving space. I'm curious to see, say, five years from now, how many more brands have their own certified pre-owned programs, or some version of it. Because the secondhand market is only going to get bigger, and the brands that sit it out are leaving value — and control — on the table. Luna: And for the listener who's pricing a product right now, the question might be: is there a secondary market for what you sell? And if so, is your brand capturing any of that value, or are you letting someone else do it? Lucas: That's the question. Thanks for listening.