Pricing Prediction

[Julien]

I completely agree. The Apple Watch is likely to be the first thing to bridge the techie/fashion gap.

Get one on LeBron, Rory McIlroy, Serena Williams and a couple of actors and actresses with some Rolex/Omega style adds, and it'll make a huge difference.

I wouldn't be surprised if we are WAY underestimating the prices of the Watch (wish Apple would give it a name like Premium) and Edition.

The 38mm Sport will start at $350 but I bet the Watch is going to be a BIG jump up from the Sport. It could be in the >$750 range. Also bet the Edition will be north of $2000 to boot.

The Watch is to compete/comparable to Rolex/Omega style and the Edition is Tag/Cartier style. Apple will not settle being called the 'cheapest' watch of the group.

The Sport will be the bread & butter (and probably 75% to 90% of the sales) with the Watch as a nice premium model to a select few. The Edition will be near exclusive.

 

[douglasf13]

I wouldn't be surprised if we are WAY underestimating the prices of the Watch (wish Apple would give it a name like Premium) and Edition.

The 38mm Sport will start at $350 but I bet the Watch is going to be a BIG jump up from the Sport. It could be in the >$750 range. Also bet the Edition will be north of $2000 to boot.

The Watch is to compete/comparable to Rolex/Omega style and the Edition is Tag/Cartier style. Apple will not settle being called the 'cheapest' watch of the group.

The Sport will be the bread & butter with the Watch as a nice premium model to a select few. The Edition will be near exclusive.

I'm not sure where the regular Watch will be priced, but we're not talking Omega/Rolex prices. That starts at the $6K-$8K range. Small, 18K Cartier Tank solos are $5K, retail.

For the "plain" Watch, I think we're looking more at the Hamilton/Tissot market, in the $500'ish range.

 

[Julien]

I'm not sure where the regular Watch will be priced, but we're not talking Omega/Rolex prices. That starts at the $6K-$8K range. Small, 18K Cartier Tank solos are $5K, retail.

For the "plain" Watch, I think we're looking more at the Hamilton/Tissot market, in the $500'ish range.

Clearly I should have spent a little time on research and clearly I'm a Sport type person. However my price point predictions could be right. This is not an iPad or iMac. This is fashion and Apple has gone full in for the fashion element and quality. The Watch and Edition are TRUE fashion statements. Fashion is always at a premium price point, so fashion + Apple = $$$$$$$

 

[douglasf13]

Clearly I should have spent a little time on research and clearly I'm a Sport type person. However my price point predictions could be right. This is not an iPad or iMac. This is fashion and Apple has gone full in for the fashion element and quality. The Watch and Edition are TRUE fashion statements. Fashion is always at a premium price point, so fashion + Apple = $$$$$$$

Assuming the same rubber "starter" band, I'm just not sure that the move to Sapphire and Steel from Ion-X and Aluminum would double the price of the Sport watch, which is why I could see the regular Watch model starting at $500, but going up from there with the various band options.

 

[Julien]

Assuming the same rubber "starter" band, I'm just not sure that the move to Sapphire and Steel from Ion-X and Aluminum would double the price of the Sport watch, which is why I could see the regular Watch model starting at $500, but going up from there with the various band options.

Just to expand on my theory, what if the Sport line is far more extensive and something like below?

8GB 38mm $350, 42mm $450, Space Gray $400/$500
16GB 38mm $450, 42mm $550, Space Gray $500/$600

Now the Watch and Edition are smaller lines with 16GB only. Then the Watch could plausibly start at $750.

All in wild speculation.

 

[rengb6]

Coming from someone who owns several Cartier and Van Cleef and Arpels pieces, no one is going to spend 5K on a watch that will be outdated in a year or two. Part of Cartier's appeal is the fact that their pieces can be passed on to future generations. Apple doesn't have that staying power therefore they can not charge those prices. For 5-6K I can buy myself another Cartier Love Bracelet or a used gold and stainless steel Tank watch.

I predict the edition version of the watch will not exceed 2.5K. They don't have the reputation or history needed to charge more than that.

 

[robinp]

I think there might not be a price different between the two sizes

 

[Julien]

I think there might not be a price different between the two sizes

You mean like the iPhone 6/iPhone 6 Plus and iPad mini/iPad Air?

 

[TallManNY]

You don't get it

Guys, you don't get it. You don't make a solid gold version and then price it at an affordable level. The idea behind luxury goods is that most people can't afford it. That is the point. This isn't gold color or plating which is all that is necessary to achieve a desired look. The solid gold aspect gives Apple and the wearer the excuse to play the game that they really want to play. That game is "Look at me having something that shows off how rich I am." You don't get to play that game with a $1,000 device.

The Apple Watch will be impressive enough on one level since it will be a $400 luxury good (because you don't really need it). But to play in the Luxury level and impress millionaires, it needs a product that gives them all pause before they pick it up. So that Gold one might be $5,000. It should be a device that sells with margins that are higher than Beats headphones. Think about 300% margins or even more. This is like when Coach sells a Handbag for $5,000. It isn't just that it is a nice handbag, the point is that when you use it, your peers and strangers are fully aware that it is a $5,000 handbag. The higher price actually helps create some of the value.

 

[StoneJack]

I wouldn't be surprised if we are WAY underestimating the prices of the Watch (wish Apple would give it a name like Premium) and Edition.

The 38mm Sport will start at $350 but I bet the Watch is going to be a BIG jump up from the Sport. It could be in the >$750 range. Also bet the Edition will be north of $2000 to boot.

The Watch is to compete/comparable to Rolex/Omega style and the Edition is Tag/Cartier style. Apple will not settle being called the 'cheapest' watch of the group.

The Sport will be the bread & butter (and probably 75% to 90% of the sales) with the Watch as a nice premium model to a select few. The Edition will be near exclusive.

There is no way it can be that expensive. Gold covered watches can be had for 300 dollars and AppleWatch is not at all Cartier crap oriented. Its a smart watch, an electronic device. Edition one probably will max at 499 dollars.

 

[Julien]

There is no way it can be that expensive. Gold covered watches can be had for 300 dollars and AppleWatch is not at all Cartier crap oriented. Its a smart watch, an electronic device. Edition one probably will max at 499 dollars.

It's 18K sold gold and not cheesy electroplated. Jewelry experts have estimated that the case will cost Apple about $600 to produce.

 

[StoneJack]

It's 18K sold gold and not cheesy electroplated. Jewelry experts have estimated that the case will cost Apple about $600 to produce.

Ok, then Edition will cost 799 dollars.

 

[ditzy]

Ok, then Edition will cost 799 dollars.

The gold in the case will be at least $600, then you have to add the price of the electronics, and the price of the sapphire. I'm guessing that's another $150. Then Apple have to make a profit, and they make more on their high end products. No way this is less than $1000 if we're lucky.

 

[rengb6]

Guys, you don't get it. You don't make a solid gold version and then price it at an affordable level. The idea behind luxury goods is that most people can't afford it. That is the point. This isn't gold color or plating which is all that is necessary to achieve a desired look. The solid gold aspect gives Apple and the wearer the excuse to play the game that they really want to play. That game is "Look at me having something that shows off how rich I am." You don't get to play that game with a $1,000 device.

The Apple Watch will be impressive enough on one level since it will be a $400 luxury good (because you don't really need it). But to play in the Luxury level and impress millionaires, it needs a product that gives them all pause before they pick it up. So that Gold one might be $5,000. It should be a device that sells with margins that are higher than Beats headphones. Think about 300% margins or even more. This is like when Coach sells a Handbag for $5,000. It isn't just that it is a nice handbag, the point is that when you use it, your peers and strangers are fully aware that it is a $5,000 handbag. The higher price actually helps create some of the value.

The only thing I agree with you on is your use of Coach in your metaphor, because you are correct, Apple (when it comes to jewelry) is like Coach- which is to say that they don't have the reputation (in the world of jewelry/handbags) to charge outrageous prices. Coach doesn't sell 5K handbags and if they did, no one would buy them for the same reason that no one would buy a 5K gold Apple watch; there are simply to many other options from more prestigious brands. I just don't see many people buying a 5K Apple watch that will be outdated in 2 years when they could buy a Cartier or even preowned JLC for the same price!

Everyone comparing the Apple watch to Cartier, Rolex, or other big watch/ jewelry brands amaze me. These brands have the reputation to charge outrageous prices. Apple doesn't. If they price the gold edition at more than 2.5K, they are making a huge mistake.

 

[Julien]

Ok, then Edition will cost 799 dollars.

You are confusing commodity products (like the iPad) with high end fashion. Mark Zuckerberg, LeBron James and George Clooney aren't interested in the cost. If anything the more it cost the more likely they are to buy it and wear it. Apple uses the Edition to sell the Sport to 'normal' people like us. The Edition will be an ULTRA low volume line compared to the Sport.

The least expensive 18K gold watches go for about $5000. Doesn't seem very Apple like to be the cheapest product made.

Apple didn't hire all these high end fashion people to price it's high end fashion jewelry statement at a lower price than an iPad.

 

[TallManNY]

The only thing I agree with you on is your use of Coach in your metaphor, because you are correct, Apple (when it comes to jewelry) is like Coach- which is to say that they don't have the reputation (in the world of jewelry/handbags) to charge outrageous prices. Coach doesn't sell 5K handbags and if they did, no one would buy them for the same reason that no one would buy a 5K gold Apple watch; there are simply to many other options from more prestigious brands. I just don't see many people buying a 5K Apple watch that will be outdated in 2 years when they could buy a Cartier or even preowned JLC for the same price!

Everyone comparing the Apple watch to Cartier, Rolex, or other big watch/ jewelry brands amaze me. These brands have the reputation to charge outrageous prices. Apple doesn't. If they price the gold edition at more than 2.5K, they are making a huge mistake.

Maybe bad example using Coach. But there are lots of $5,000 handbags out there and they are coveted. It has nothing to do with quality and functionality of the handbag. In that case this is a bit different from automatic watches which are actually quite difficult to build and it is an impressive mechanical feat to add the various complications. For the handbags the price is the product. The price is a promise from the manufacture to the consumer that once the consumer pays the $5,000 the manufacture will not let anyone else into the club easily and for less than $5,000. I think Apple is going to make an Edition version of the watch that middle class Americans cannot hope to buy. It will be an exclusive item. And it will have a price point that won't be lowered from year to year.

This is because I think Apple wants to have some products that are legitimate luxury items. And I don't think they will ever get the "reputation" as a luxury good provider unless they come out of the gate charging a luxury price for their gold watch. Again because the price is part of the product, the product doesn't exist without the price. You can talk about Cartier and Rolex having a great name, and that is true. But part of that reputation is the gating aspect of the high price. But if Apple wants to disrupt that world and take market share from them, then they have to charge a high and exclusive price for the gold watches.

 

[StoneJack]

You are confusing commodity products (like the iPad) with high end fashion. Mark Zuckerberg, LeBron James and George Clooney aren't interested in the cost. If anything the more it cost the more likely they are to buy it and wear it. Apple uses the Edition to sell the Sport to 'normal' people like us. The Edition will be an ULTRA low volume line compared to the Sport.

The least expensive 18K gold watches go for about $5000. Doesn't seem very Apple like to be the cheapest product made.

Apple didn't hire all these high end fashion people to price it's high end fashion jewelry statement at a lower price than an iPad.

Any electronic device is a commodity thing. There is no such thing as fashion PC

 

[cube]

Gold (not gold-plate) watches cost thousands.

They are real watches, not mass market gadgets.

So the Edition could go for about $349 + 2x cost of gold.

 

[ditzy]

Any electronic device is a commodity thing. There is no such thing as fashion PC

IDK I kind of think macbook airs are.

 

[Julien]

Any electronic device is a commodity thing. There is no such thing as fashion PC

Look here. You are thinking like a pragmatic normal person. The Edition is not for us.

 

[cube]

IDK I kind of think macbook airs are.

All current Macs are fashion computers except the 13" MBP.

 

[rengb6]

Maybe bad example using Coach. But there are lots of $5,000 handbags out there and they are coveted. It has nothing to do with quality and functionality of the handbag. In that case this is a bit different from automatic watches which are actually quite difficult to build and it is an impressive mechanical feat to add the various complications. For the handbags the price is the product. The price is a promise from the manufacture to the consumer that once the consumer pays the $5,000 the manufacture will not let anyone else into the club easily and for less than $5,000. I think Apple is going to make an Edition version of the watch that middle class Americans cannot hope to buy. It will be an exclusive item. And it will have a price point that won't be lowered from year to year.

This is because I think Apple wants to have some products that are legitimate luxury items. And I don't think they will ever get the "reputation" as a luxury good provider unless they come out of the gate charging a luxury price for their gold watch. Again because the price is part of the product, the product doesn't exist without the price. You can talk about Cartier and Rolex having a great name, and that is true. But part of that reputation is the gating aspect of the high price. But if Apple wants to disrupt that world and take market share from them, then they have to charge a high and exclusive price for the gold watches.

I understand where you are coming from, and I agree that Apple will attempt to make the Edition version exclusive, but I just can't see Apple having the balls to charge 5K. I think 2.5K would be high enough to keep the masses away. We are all attempting to compare Apple to luxury houses but the Apple watch lacks one important element that all luxury jewelry posses- the inevitability that the item will appreciate in value. Yearly price increases give these things their value. The original price is not what makes the product valuable and desirable.

As an example, the Love bracelet is an iconic Cartier piece. It has the history, build quality, and price tag, to keep it exclusive AND it appreciates in value. In 2008 an 18kt solid white gold version of the bracelet cost 4.2K. Currently, the same bracelet is 7.2K and the price will go up in April. The bracelet increases in value, and that is why people buy them. They are an investment as well as a status symbol. Apple may be able to market their watch as a status symbol but no one is going to believe it is an investment. Why would someone buy this watch at 5K when they can buy a Cartier Love bracelet that costs 7.2K today and 10K tomorrow?

 

[NewbieCanada]

I guess I'm just being naive, but I have a hard time grasping the logic behind Apple going after that small piece of the market where people will drop a few grand on a wearable smart device with a shelf-life of no more than 5 years. Maybe they truly are targeting the elite, but that just doesn't seem like Apple's typical approach.

It's not the only model and they're betting that the mere existence of the gold WATCH will drive sales of the other versions much higher than they'd be otherwise. It expands the market from people who want/need a smart watch to those who wear them as jewelry.

Plus there are clearly people who will pay insane prices for Apple products.

 

[kmj2318]

A watch in the several thousands is a good move for Apple. Apple mostly targets the middle class, which are shrinking. Catering to the super-wealthy will become more and more profitable over time because they rich continue to get richer.

 

[TallManNY]

I understand where you are coming from, and I agree that Apple will attempt to make the Edition version exclusive, but I just can't see Apple having the balls to charge 5K. I think 2.5K would be high enough to keep the masses away. We are all attempting to compare the Apple watch to luxury houses but the Apple watch lacks one important element that all luxury jewelry posses- the inevitability that the item will appreciate in value. Yearly price increases give these things their value. The original price is not what makes the product valuable and desirable.

As an example, the Love bracelet is an iconic Cartier piece. It has the history, build quality, and price tag, to keep it exclusive AND it appreciates in value. In 2008 an 18kt solid white gold version of the bracelet cost 4.2K. Currently, the same bracelet is 7.2K and the price will go up in April. The bracelet increases in value, and that is why people buy them. They are an investment as well as a status symbol. Apple may be able to market their watch as a status symbol but no one is going to believe it is an investment. Why would someone buy this watch at 5K when they can buy a Cartier Love bracelet that costs 7.2K today and 10K tomorrow?

I suspect some people will buy both.
No investment is guaranteed to go up forever. Though I like the odds of luxury goods increasing in value. (Side note, there is clearly, to me at least, an interesting inflation effect happening that is impacting the rich. Everything that the very rich want to buy (i.e., Art, Housing, Luxury Goods (your watches and bracelets)) seems to be increasing in price at vastly faster rates than the reported 2% inflation. Something is going on here and I don't think folks have clued in on it. But it is very nice for the rich if they can regularly buy expensive things and find that they appreciate in value dramatically during only short periods of ownership. On the other hand, buying something truly exclusive is getting harder and harder.) Agreed these watches as an electronic items probably won't appreciate in value in the way of an automatic watch that will not fall apart might. But I think that is the fact that stops Apple from charging $20,000 for the edition and "just" brings it down to $5,000 range.

As you are well aware, there are many folks out there that make $5 million or more per year. So when they get their bi-weekly $200,000 paycheck, they've got money to spend. I think Apple drops the ball if they don't grab a huge chunk of money from their most exclusive product. And even if this product doesn't sell in high numbers it sets the floor and it will make the next generation $5,000 watch not seem as shocking.