These prices are not unreasonable. Go to Rogers and Hollands over the weekend and ask to see a nice mid-range watch with a steel link band. Look at the price tag. Apple doesn't make "cheap" devices. They make premium products. $750 for a nice leather strap and $1050 for a stainless steel link are quite reasonable. Plus there is the $650 version with the Milanese loop.
There is a major difference between those watches and the

Watch. Those watches will probably last at least a decade before the owner will consider replacing it.
Even if the owner does replace them, that older watch will probably continue to keep working and therefore that owner will keep that watch around and wear it from time to time.
If that watch breaks, it can easily be repaired. On every watch today, you can take the back off and fix the internals.
I still have my Bouliva Watch my parents got me for my high school graduation. I still wear it from time to time (a little over a decade ago).
By contrast, the

watch will last at most a single year. Next year, there will be an even better

Watch, with useful features the current generation watch does not have. The new

Watch will probably have things like better battery life and a facetime camera. So therefore, you will likely replace this generation watch in a year.
Furthermore, this watch, like every new Apple product being released, is barely serviceable. Even the battery cannot be replaced. If anything breaks, the watch has to be completely replaced. So the lifespan of this watch is very low.
Apple cannot justify these prices with the kind of product they are releasing. For starters, any watch which costs about 350 should have a leather strap or a chain band. Not this rubber strap Apple is pushing.