Apple Watch is available for purchase, and the price starts at US$349, which is the retail price for Apple Watch Sport 38mm. But, how much the costs needed for Apple Watch manufacture? IHS has published the costs that Apple has in terms of hardware components. IHS reported that Apple spends 24% of the retail price to produce Apple Watch Sport 38mm and the cost is about US$ 83.70 with conversion cost.
“It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost,” said Kevin Keller, senior principal analyst-materials and cost benchmarking services for IHS Technology. “While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and other new Apple products, and could be of great benefit to Apple’s bottom line if sales match the interest the Apple Watch has generated.”
These costs are related to hardware only, but we need to keep in mind that we do not know how much the company spends on research and development, Operating System, services, distribution, ads and so on. Here is the summary of the estimated costs for Apple Watch Sport 38mm components:
Apple Watch Sport Cost Summary
|Direct Material Costs||$||81.20|
(Direct Materials & Manufacturing)
Source: IHS Technology Apple Watch Sport 38mm (A1553) April 2015