Initially it was thought that Apple Watch‘s 18k gold edition would retail for over $1,000. That number now seems to have been a gross understatement. Some sources within the jewelry and watch community are of the view that a price of $6,000 could be and should be expected. They are so sure that the gentleman stated that he would be shocked if the 18k gold Apple Watch cost is under $5,000.
Well the thing about it is that the casing made of 18k gold will be the cause of such a hefty price tag. Approximately 1 ounce of gold will be required to manufacture the case which will cost about $1,200. But that is just the price of 1 ounce of gold the tricky part is making the case. The malleable properties of gold make it impossible to be handled by machines. This means because gold is soft it cannot be put into a machine to be made a watch case out of. Parts of the case can be made using a machine but significant crafting would be needed to produce the final product. However, Apple claims they will be using a company-developed gold alloy that is almost twice as strong as standard gold.
Apple also just hired Patrick Pruniaux who was formerly a sales director at TAG Heuer obviously a company like Apple deliberates carefully before entering new domains. This means that pricing strategies of high end watch makers is the avenue Apple will follow. If Apple Watch is sold at retailers that generally sell high end watches then the pricing dynamics will be interesting. Generally big names keep most of the margin for their products while retailers get a small fraction. Although, if the brands are unproven retail markups go up to 50%. The question is will Apple, a true giant in their own right, be considered a big player by the watch industry? This will determine a lot about the price.
Probably retailers will keep the Apple brand to attract more buyers into their shops and this will give Apple a bargaining point. There is a hint that Apple is opening their own boutique on Madison Avenue in NYC. Investment for building the stores, promotional costs and markups point towards a very expensive product.
Those who buy these kinds of watches care about the price but not like others do. While some buy a product if it is reasonably priced luxury item consumers want covet ridiculously overpriced articles. But these luxury items have exclusivity, Apple’s business model is to get a considerable market share. In the luxury market items last generations while tech is infamous for products that are become obsolete most rapidly. Apple has always been a rebel but the 1st generation 18k gold Apple Watch cost faces a conundrum by being in the middle of the tech and luxury industry where the Venn diagrams don’t intersect.