I'm sure they've got a ludicrous markup and I'm not going to try to justify it, but I've been wearing the sports watch night and day and it's so comfortable I sometimes forget it's there. R&D did go into that thing, $48 worth per band (minus packaging etc), hell no, but its not just a "rubber band".
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Apple Watch U.S. Sales Estimated at 2.8 Million, Sports Band May Have Base Cost of Just $2
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I'm sure they've got a ludicrous markup and I'm not going to try to justify it, but I've been wearing the sports watch night and day and it's so comfortable I sometimes forget it's there. R&D did go into that thing, $48 worth per band (minus packaging etc), hell no, but its not just a "rubber band".
The dollar menu at McDonald's USED to mean 'everything is $1' - NOW it means that the items START at $1. Heck, the Jalapeño Double is on the dollar menu, but it's $2.50.
Really? Is this a surprise? What about the silicone and leather iPhone cases they've been selling for upwards of $40-50? Apple is a profit making machine. They always have and always will be. Just like all of the other brands that can charge a premium for their products.
$10,000 / 2.8million = less than half a penny per watch.
Or lets try your guess of hundreds of thousands in R&D costs, $100,000 / 2.8million = 4 cents each watch.
Exactly!
What about gas you put in your car? It's FREE - it comes from the ground - yet it's $3/gallon! The machinery to get the gas from the ground, and the refining process are all irrelevant, right? Because the ACTUAL cost of gas is nothing.
On another note, when do you reckon Apple will finally give us sales figures.
It seems to me the real story is lost in all this blather about the gross margin on plastic bands. What about the sales number, 2.8 million watches? That estimate is far below the whisper numbers (one was seven million) that were being floated recently.
A genuine Tag Heuer silicone strap is €150-200 depending on the watch model.
I have one for my Monaco and is way less comfortable than Apple's one.
I have one for my Monaco and is way less comfortable than Apple's one.
Way less than that. A burger cost 1 cent to at cost when I worked there more than 15 years ago. And that was cost to the store, not the main company which had sold the material to them.
Worked at Radio Shack in high school. 100ft of phone cable was $19.99 and cost the store 5 cents.
Everything has a large markup. Do you think your car costs anywhere near what you pay for it? Or the food you buy? Remember there are other costs here. While the Apple band may cost just $2 to make, they're not accounting for the R&D, factory costs, packaging, shipping, and everything else that goes into it. While it certainly doesn't make the band cost them $49 but it's not simply $2 and that's the end of it.
Are the bands “overpriced” maybe, probably.
Are the band inexpensive to manufacture right now...maybe
Did Apple spend lots of money making the bands right...you bet.
Apple is not afraid to spend money to making something “right”
They spent money and time on the design, including width, length, hole size/spacing, buckle, tapering edges feel, texture, etc.
They spent time testing the material for usage. You want something soft, but not too soft it rips. Something gentle on the skin and not tugging on arm hairs.
Apple spent time making sure the colors will remain consistent over the long haul in production. Creating the many molds, and machinery to do it the “Apple Way”. Sending over Apple folks to ensure QA is proper and train those making the bands and the QA folks there. Then the packaging, marketing, shipping costs, plus store-front materials and space.
My Apple MacBook Pro costs more than my co-workers IBM/PC laptop. But I can easily see just on the outside the there is more care in the design of the MBP than the other laptop. The whole MBP package is much better than the cheaper laptop.
I’m not saying Apple is always justified in pricing. I am not saying other companies don’t put time into their products. But as a whole, Apple spends more time ensuring things are “right” than other companies...and not saying there is never a “bad Apple” we know that NOT to be the truth.
Are the band inexpensive to manufacture right now...maybe
Did Apple spend lots of money making the bands right...you bet.
Apple is not afraid to spend money to making something “right”
They spent money and time on the design, including width, length, hole size/spacing, buckle, tapering edges feel, texture, etc.
They spent time testing the material for usage. You want something soft, but not too soft it rips. Something gentle on the skin and not tugging on arm hairs.
Apple spent time making sure the colors will remain consistent over the long haul in production. Creating the many molds, and machinery to do it the “Apple Way”. Sending over Apple folks to ensure QA is proper and train those making the bands and the QA folks there. Then the packaging, marketing, shipping costs, plus store-front materials and space.
My Apple MacBook Pro costs more than my co-workers IBM/PC laptop. But I can easily see just on the outside the there is more care in the design of the MBP than the other laptop. The whole MBP package is much better than the cheaper laptop.
I’m not saying Apple is always justified in pricing. I am not saying other companies don’t put time into their products. But as a whole, Apple spends more time ensuring things are “right” than other companies...and not saying there is never a “bad Apple” we know that NOT to be the truth.
My designer computer desk was custom built for me by a prestigious designer, and the price landed at $2000. The wood and metal is worth around $100.
Should he have charged me $100? Would he still be in business?
Should Apple charge the bill of materials cost of $2? Would they still be in business?
Make your own d#mn wrist strap if it's out of reach of your income. See how far you get!
We pay builders to build. We pay designer builders an extra premium. Deal with it and GROW UP, MACRUMORS.
Should he have charged me $100? Would he still be in business?
Should Apple charge the bill of materials cost of $2? Would they still be in business?
Make your own d#mn wrist strap if it's out of reach of your income. See how far you get!
We pay builders to build. We pay designer builders an extra premium. Deal with it and GROW UP, MACRUMORS.
“It’s you — Picasso, the great artist! Oh, you must sketch my portrait! I insist.”
So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.
“It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”
“Five thousand dollars,” the artist replied.
“B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”
To which Picasso responded, “Madame, it took me my entire life.”
Point of the story. Who cares what the costs are in the materials versus the margin of profit. There was much more that went into this simple little band than the cost of materials.
So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.
“It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”
“Five thousand dollars,” the artist replied.
“B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”
To which Picasso responded, “Madame, it took me my entire life.”
Point of the story. Who cares what the costs are in the materials versus the margin of profit. There was much more that went into this simple little band than the cost of materials.
Your argument is invalid because you bought their useless product. They have your money ... nobody cares how you "feel" .... Apple certainly doesn't.
You're both over on how much they charge and under on how much it costs. They change $0.99 and the syrup is worth $0.15. Further, the employees will cost another ~$0.15, even at $7.25/hour, for their time spent taking your order, filling your cup, and handing it to you. The cup costs another few cents.
Let's say it cost them $350,000 for ALL of the R/D, including design overhead and tooling. And let's assume COGs, including packaging/shipping, and any other variable costs, is $15. Apple would only need to sell 10,000 bands to break even on sunk costs.
They sold an estimated 2,800,000 WATCHES already. I have a feeling they broke even within a day of the bands going on sale.
Not sure any of this is surprising.. we know that Apple run high profit margins. It's one of the several reasons they have been so successful. Their sales strategy has always been about increasing the gross margins on the incremental purchases, whether that is the higher markup on idevices with greater amounts of RAM, or on the accessories (everything from cables, to watch bands).
One of the benefits of high profit margins (about from the revenue, obviously) is increasing the brand perception of 'luxury', which are almost always associated with a high margin. Like it or not!
The net profit is more of an unknown, as we have nothing other than guesses as to the fixed and variable costs. But it is clearly still high, as they have a healthy bank balance, report positively to the shareholders and continue to invest in smaller companies.
Overall, it's a working strategy for Apple. Clearly.
But it would be a very risky strategy for a company without the track record, pedigree, and let's face it.. the exemplary design and implementation.. of Apple.
One of the benefits of high profit margins (about from the revenue, obviously) is increasing the brand perception of 'luxury', which are almost always associated with a high margin. Like it or not!
The net profit is more of an unknown, as we have nothing other than guesses as to the fixed and variable costs. But it is clearly still high, as they have a healthy bank balance, report positively to the shareholders and continue to invest in smaller companies.
Overall, it's a working strategy for Apple. Clearly.
But it would be a very risky strategy for a company without the track record, pedigree, and let's face it.. the exemplary design and implementation.. of Apple.
Apple charges $49 for a $2 band, totally justified. Monster charges $49 for a $5 cable, highway robbery.
Put down the bag of Cheetos, step away from the keyboard, and then get a job. Stat...
Most of that has been done in part already. I’d suggest the cost is a lot less than you think. The cost of R&D for Apple as a whole may be high but for this one item, no.
Hole spacing, really?
When Ford design a new car, they already know how an engine works, how many wheels it needs and how many people have to get in it. They know all this from back in 1908. They component share, platform share and tool share. They don’t throw out all teh production gear when they stop making it, it actually gets cheaper and easier assuming they didn’t balls it up the first time around.
Companies tell you rubbish like that so they can rape your wallet.
It's funny you use this analogy because I recently worked on a project with Accenture where I had to recreate the checkout wheel for them. It was mind boggling. DON'T YOU DO THIS FOR A LIVING?!