Apple is charging a premium for its smartwatch at $350 for the base model, making it significantly higher than other smartwatches in the market today, but why is that? Could it be that the Apple Watch components cost more which is why Apple needs to charge more just so they can turn a profit?
Maybe not because according to a report from IHS Technology (via VentureBeat), it turns out that the Apple Watch’s components cost a total of $81.20. Throwing in an extra $2.50 for manufacturing costs, it brings the total to $83.70. According to IHS, this makes the Apple Watch have the highest markup amongst Apple’s products so far.
The most expensive component according to them is the display which costs $20.50 for the Ion-X version. No word on how much the sapphire or Edition bodies cost. That being said how accurate IHS’ estimates is unclear. A few days ago, Apple’s CEO Tim Cook addressed reports of cost breakdowns, claiming that so far none of the breakdowns he’s seen about any of their products is close to what the reality is.
We suppose it is entirely plausible given that Apple might get cheaper components because of the amount of orders they place. There are also other factors to take into consideration, such as the hours put into manufacturing the product in which salaries needs to be paid. There is also the process of designing the product, testing it, and also marketing it, all of which have costs that need to be factored into the final price as well.
[Image credit – iFixit]
Filed in . Read more about Apple Watch, Smartwatch and Wearable Tech.