You are assuming that Apple is interested in maximising the number of watches sold. Apple could easily sell 200 million watches a year if they wanted (by giving a $5 watch away for free with every iPhone sale).
No, I am saying it's too expensive for what it is. Therefore shaving perhaps >25% off the current prices might make it more of an impulse purchase than it currently is. More watches sold means Apple might invest even more resources into the project than they currently are as as they see healthy returns, plus we might actually get a smart watch that is actually pretty good instead of incredibly mediocre.