Pricing Prediction

[rengb6]

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.

Luxury houses will only charge what the market will bear. They may have their eye on the super wealthy but they also keep their items just in reach of the upper middle class. In my opinion, two types of people buy these items, the super wealthy and those who make good money but have to do a little saving to afford them. If Apple wants to make a name for themselves in the luxury market they would be wise to copy Cartier, Van Cleef and Arpels, Rolex, JLC, etc. and price their items to appeal to both types of people. The super wealthy, as you pointed out, will probably buy the watch no matter what it costs. But Apple needs to make it attainable to not just the top .0005% but the top 2% (upper middle class making 300K yearly), if they want it to be as successful as the Cartier Love bracelet, for example.

At any rate, it will be interesting to see how highly Apple values itself, in relation to real luxury brands, in the pricing of this product.

 

[StoneJack]

Think of AppleWatch as a better nano and you get idea what it is.
Even made of pure gold, 5K thing (improved nano) it isn't.

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IDK I kind of think macbook airs are.

They don't cost 5K.
They cost like a bit of expensive computers, which they are (good quality parts).

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

It is not made by Apple.
You have to think of AppleWatch in terms of millions units sold, not few thousand to make a contribution to the company's margin.
5k things do not sell that much. But 800 or so devices do (ipad, iphone higher versions).
Ergo, it is expensive but not in that category of Rolex and Pato.
It is just an electronic device with fashionable design.
I don't know if that confusion was meant to be from the start, but if clever people like you think its worth thousands of dollars, they did it well.

 

[lapril]

What some people are failing to realize is that apple watch is drawing in customers who are not interested in traditional watches.
For example, I would never pay more than $50 for a traditional time piece(I'd never buy one period). But I would, however, pay over 2k for a smart watch that has a variety of features and abilities. People aren't scratching their chins saying , "Hmmm should I get a cartier, or an apple watch?". This is a new market Apple is opening up. If you love traditional watches then this isn't going to be a fit for you.
Apple is targeting millennials who typically don't wear traditional watches, who currently utilize fit bits, jawbone up24, or other lifestyle bands, and who also own a variety of apple devices that the apple watch can communicate with (iPhones,iPads,MacBooks, iMacs etc). These millennials also need to have the disposable income to afford the watch. Honestly, forking over 2k for an apple device isn't ridiculous especially for tech junkies like myself

 

[Julien]

It is not made by Apple.
You have to think of AppleWatch in terms of millions units sold, not few thousand to make a contribution to the company's margin.
5k things do not sell that much. But 800 or so devices do (iPad, iphone higher versions)....

While not made by Apple the point is there are lots of people willing to pay fashion/jewelry prices for electronic commodities.

Apple is not looking to sell millions of the Edition style. The Edition is Apple FIRST fashion/jewelry statement that will only sell in low number. However the Edition will stir more demand for the Sport which will sell in the millions.

The Edition is a lot like an Acura NSX. Acura won't sell many NSX's and most can't afford it. However it's a marque will drive showroom traffic and increase sales of other models.

 

[TallManNY]

Luxury houses will only charge what the market will bear. They may have their eye on the super wealthy but they also keep their items just in reach of the upper middle class. In my opinion, two types of people buy these items, the super wealthy and those who make good money but have to do a little saving to afford them. If Apple wants to make a name for themselves in the luxury market they would be wise to copy Cartier, Van Cleef and Arpels, Rolex, JLC, etc. and price their items to appeal to both types of people. The super wealthy, as you pointed out, will probably buy the watch no matter what it costs. But Apple needs to make it attainable to not just the top .0005% but the top 2% (upper middle class making 300K yearly), if they want it to be as successful as the Cartier Love bracelet, for example.

At any rate, it will be interesting to see how highly Apple values itself, in relation to real luxury brands, in the pricing of this product.

I think $5000 will still be about in that price point. But you are somewhat convincing me that I might be a bit too high. Also there is the issue of popular backlash. The public doesn't like to be reminded how little they make compared to the rich. Apple might not want that scrutiny even though they really want those customers.
I wonder if Apple will offer some sort of free tech upgrade for he edition version so that they replace the internals and battery while you keep your investment in the gold body. That wouldn't be an apple thing to do. But this is the apple of beats. And a gold phone is new ground as well. Very new ground I think.

 

[rengb6]

I think $5000 will still be about in that price point. But you are somewhat convincing me that I might be a bit too high. Also there is the issue of popular backlash. The public doesn't like to be reminded how little they make compared to the rich. Apple might not want that scrutiny even though they really want those customers.
I wonder if Apple will offer some sort of free tech upgrade for he edition version so that they replace the internals and battery while you keep your investment in the gold body. That wouldn't be an apple thing to do. But this is the apple of beats. And a gold phone is new ground as well. Very new ground I think.

You bring up a great point. If Apple is willing to provide an upgrade program for the edition version of the watch I think they can charge 5k and "normal" people will buy into it. An upgrade program feels very un-Apple though, but we can hope!

 

[kdarling]

Apple is targeting millennials who typically don't wear traditional watches, who currently utilize fit bits, jawbone up24, or other lifestyle bands, and who also own a variety of apple devices that th

Yet Apple pointedly called it their "Watch" and even included a big crown.

Seems a bit counterproductive to call it, and make it look like, something that the younger generation claims never to wear.

Just saying.

I think $5000 will still be about in that price point. But you are somewhat convincing me that I might be a bit too high. Also there is the issue of popular backlash. The public doesn't like to be reminded how little they make compared to the rich. Apple might not want that scrutiny even though they really want those customers.

Even though it might not sell in huge numbers, a high price on the Edition model would jack up the overall average profit margin to make stockholders happy.

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If Google was smart, this might be an opportunity to get some traditional watch (or just jewelry) makers to produce limited edition Wear devices.

E.g. I wonder if/when Vertu is going to release their first smartwatch

 

[TallManNY]

You bring up a great point. If Apple is willing to provide an upgrade program for the edition version of the watch I think they can charge 5k and "normal" people will buy into it. An upgrade program feels very un-Apple though, but we can hope!

Very unapple. But very luxury. And I'm suggesting that Apple is doing something luxury here and not exactly technical.

Just an idea though.

 

[i0Nic]

Small Sport $349
Large Sport $399

Small regular $449
Large regular $499

Small edition $999
Large edition $1199

*Watch only, no bands to be included.

Band Prices
Sport style bands - $49 each
regular bands - $99 each
edition bands - from $199

 

[gadgetguy11]

Here are my pricing speculations:

Small Sport $349
Large Sport $399

Small regular $699
Large regular $779

Small edition $4,799
Large edition $4,999

Extra Band Prices
Sport style bands - $49 each
regular bands - $199 each
edition bands - Varies Widely from $299 each

 

[gochi]

time to get a new watch heheh

watch out rolex

 

[i0Nic]

Small edition $4,799
Large edition $4,999

Bold.

 

[Tanegashima]

I bet the small one will be the same price of the large one, because it's the rules.

With rubber bands:

Sports: 349
Steel: 449
Edition: 899

Upgrade to leather when new: +50
Upgrade to metal when new: +100

Extra bracelets

Metal and modern buckle: 200
Leather: 100
Classic buckle: 60
Rubber: 40

 

[shanson27]

My prediction:

So what do you think:

Apple Watch Sport:
38mm 4GB $349
42mm 4GB $379
38mm 8GB $399
42mm 8GB $449

Apple Watch:
38mm 4GB $379
42mm 4GB $399
38mm 8GB $449
42mm 8GB $499

Apple Watch Gold:
38mm 4GB $999
42mm 4GB $1199

 

[Julien]

My prediction:

So what do you think:

Apple Watch Sport:
38mm 4GB $349
42mm 4GB $379
38mm 8GB $399
42mm 8GB $449

Apple Watch:
38mm 4GB $379
42mm 4GB $399
38mm 8GB $449
42mm 8GB $499

Apple Watch Gold:
38mm 4GB $999
42mm 4GB $1199

You may want to look here (while seated). You (like me) seem more like a Sport person so you probably don't want to see the likely prices of the Watch and Edition. Hint your are not even in the ballpark.

 

[shanson27]

You may want to look here (while seated). You (like me) seem more like a Sport person so you probably don't want to see the likely prices of the Watch and Edition. Hint your are not even in the ballpark.

So Gruber wagers that the stainless steel Apple watch will start at around $999. The Edition, however, he places at $4,999.

Crazy price
stainless steel Apple watch for $999

 

[Julien]

Very crazy price

Still one of the least expensive 18K gold watches on the market.

 

[xyion1]

Please decouple the raw cost of materials from the final price of the product.

First, the raw material cost does not include any of the non-recurring costs required to get the first production unit off the assembly line. This includes, but is not limited to, hardware & software design, test equipment, manufacturing process & fixturing design, and supporting labor from other non-technical organization such as: supply chain, quality, finance, safety, legal, contracts, marketing and other direct costs from engineers traveling overseas to oversee everything. That money has to come from somewhere, especially with Apple trending towards free software updates to iOS, OS X, and associated software (iWork, iLife). Also, all of Apples new device R&D has to be paid for - these capital expenses have to be funded somehow, even if the products never see the light of day.

Second, Gold is currently $1243/troy oz. 1 troy oz = about 31 grams, so price per gram is about $40. As an example, a Rolex President needs about 23g of 24k gold (or 31g of 18k gold) not including the bracelet. Which puts the material for the Apple watch case itself at about $920. Not including any electronics. Not including any sapphire or a bracelet. Lets conservatively say this adds another $80 raw cost to the watch for the sake of round numbers. We're looking at $1000 for raw materials.

Factor on a 40% margin for labor/development ($400/watch) & 30% profit margin on that total ($420) you're up to $1820/watch minimum. These are variable based on the price of the watch of course (and in reality, the labor is fixed but just ballpark it per device).

Unless Apple is really trying to shake things up, I wouldn't expect the Apple Watch Edition for less than $1999 for the cheapest bracelet, and would not be surprised it started at $2999+ depending on the features. They could go $4999 if they wanted to target the elite (because the Apple Watch has a much shorter lifespan than traditional mechanical watch).

 

[SHNXX]

I think at least $1500 for the Edition.
I would guess $1500 to $5000, most likely around $2000.

I have watches ranging from $50 to $30,000 and regularly talk watches with people who buy many $100K+ watches.
I seriously cannot imagine that the Gold edition will be a huge hit except as a novelty piece among the young and wealthy.

 

[Piggie]

Please decouple the raw cost of materials from the final price of the product.

First, the raw material cost does not include any of the non-recurring costs required to get the first production unit off the assembly line. This includes, but is not limited to, hardware & software design, test equipment, manufacturing process & fixturing design, and supporting labor from other non-technical organization such as: supply chain, quality, finance, safety, legal, contracts, marketing and other direct costs from engineers traveling overseas to oversee everything. That money has to come from somewhere, especially with Apple trending towards free software updates to iOS, OS X, and associated software (iWork, iLife). Also, all of Apples new device R&D has to be paid for - these capital expenses have to be funded somehow, even if the products never see the light of day.

Second, Gold is currently $1243/troy oz. 1 troy oz = about 31 grams, so price per gram is about $40. As an example, a Rolex President needs about 23g of 24k gold (or 31g of 18k gold) not including the bracelet. Which puts the material for the Apple watch case itself at about $920. Not including any electronics. Not including any sapphire or a bracelet. Lets conservatively say this adds another $80 raw cost to the watch for the sake of round numbers. We're looking at $1000 for raw materials.

Factor on a 40% margin for labor/development ($400/watch) & 30% profit margin on that total ($420) you're up to $1820/watch minimum. These are variable based on the price of the watch of course (and in reality, the labor is fixed but just ballpark it per device).

Unless Apple is really trying to shake things up, I wouldn't expect the Apple Watch Edition for less than $1999 for the cheapest bracelet, and would not be surprised it started at $2999+ depending on the features. They could go $4999 if they wanted to target the elite (because the Apple Watch has a much shorter lifespan than traditional mechanical watch).

You set up a CNC to mill out a block of Stainless Steel, Titanium, Aluminium, Gold etc, other than feeds and speeds, and clearance of the cutting tools, and as long as the clamping system is fine, there is minimal cost difference between an Aluminium and a Gold case.

The are both soft, so easy to cut, both will need nice surface finishing steps.
So forget that aspect of it, it's just pretty much raw material costs.
And of course mark up, as it's easier to load on artificial markups on gold simply because people expect gold to be a lot more.

Again, and I know I keep saying this. bear in mind what a normal mechanical watch case physically is, and what Apple are calling a case on their product.

 

[UKPoliticsGuy]

How often do you think they'll update the watch itself? If it's every year they add an odd feature, I'll be miffed that I corked out all that money for an obsolete device.

 

[SHNXX]

How often do you think they'll update the watch itself? If it's every year they add an odd feature, I'll be miffed that I corked out all that money for an obsolete device.

well i hope it won't be like samsung and release 5 devices in 12 months.

 

[Julien]

How often do you think they'll update the watch itself? If it's every year they add an odd feature, I'll be miffed that I corked out all that money for an obsolete device.

No different than buying an iPhone, Mac, PC or almost any electronic based device. Hell your car is 'obsolete' even if you buy it this year with CarPlay and Android Auto coming in a year or so. Then next will be diving aids (like lane assist) on the road to self driving cars.

 

[Piggie]

I do think there is an inherent problem with the Apple Watch trying to pretend it's an up market device.

Perhaps Americans see this different from the British, so I'll explain anyway.

There is NO difference between the models, just the case material.

When you buy a quality watch, gold watch from top makers, you are getting superb craftsmanship, highly jeweled movements, perhaps a diamond or more on the dial, perhaps an open / partially open mechanism exposing the very precise mechanics inside the device. Depending on the style of course.

But you know you are not just buying something made from perhaps the finest materials, you are buying something made to a standard and quality that goes alongside the price.

Sorry, but circuit boards ain't the same!

You don't take a 50 dollar watch, put it in a gold case and charge 5000, simply because you have changed the case. It's still a cheap watch in a gold case.

Apple's watch has that problem. And again why I think this super high price scenario is wrong.

To buy the exact same device in a say 100 dollar aluminium case or a, as some are thinking 2000+ dollar gold case does not make the device any higher quality, or improve the workmanship.

If Apple were to spec if differently so there was other things that made it better then that would be an additional reason to hike the price.

I just don't see it. A fancy box with the exact same internals does not made quality if that's the only difference.

I don't see one person feeling better about themselves and their possessions, which is the whole reason for getting a gold one, when people all around them have the EXACT same item, same quality, same functionality, just a different color.

That's not what a high end watch offers. It's offers a totally different item.

 

[SHNXX]

I do think there is an inherent problem with the Apple Watch trying to pretend it's an up market device.

Perhaps Americans see this different from the British, so I'll explain anyway.

There is NO difference between the models, just the case material.

When you buy a quality watch, gold watch from top makers, you are getting superb craftsmanship, highly jeweled movements, perhaps a diamond or more on the dial, perhaps an open / partially open mechanism exposing the very precise mechanics inside the device. Depending on the style of course.

But you know you are not just buying something made from perhaps the finest materials, you are buying something made to a standard and quality that goes alongside the price.

Sorry, but circuit boards ain't the same!

You don't take a 50 dollar watch, put it in a gold case and charge 5000, simply because you have changed the case. It's still a cheap watch in a gold case.

Apple's watch has that problem. And again why I think this super high price scenario is wrong.

To buy the exact same device in a say 100 dollar aluminium case or a, as some are thinking 2000+ dollar gold case does not make the device any higher quality, or improve the workmanship.

If Apple were to spec if differently so there was other things that made it better then that would be an additional reason to hike the price.

I just don't see it. A fancy box with the exact same internals does not made quality if that's the only difference.

I don't see one person feeling better about themselves and their possessions, which is the whole reason for getting a gold one, when people all around them have the EXACT same item, same quality, same functionality, just a different color.

That's not what a high end watch offers. It's offers a totally different item.

Ss version vs gold version of same watches usually have 2-2.5x price difference so i think 1000 vs 2000 could be okay.
This would not be possible on a normal watch but it could be possible with thinner casing found on the apple Watch.