I'd like to point out that Apple doesn't have a return policy that is in any way out of the ordinary. You have to have a return policy to compete nowadays. In fact, Apple's policy of 14 days for the watch is more in line with phone return policies rather than other electronics.
I can buy a Pebble on Amazon, or at Target, WalMart, or Best Buy and return it with no questions asked in 30 days rather than 14. At Target I have 60 days because I've sold them my privacy by getting a Red Card debit card.
Apple's policy isn't generous, it is just the cost of doing business now. I work with a company that deals in impulse buys and has a 90 day return policy during the holidays. A 15% return rate is seen as great for them with many products approaching 25%. Reviews often proclaim "I ordered one in each color and will return the 4 I don't like" etc. The returns are absolutely worked into the price. Manufacturing of the goods I work with is about $2.50 per unit. They are sold wholesale to the retailer for $9 and sold to customers for $18. The wholesaler eats all returns, of which most go into trash/recycling. The retailer gets to have an amazing return policy because they don't foot the bill. We wholesale for $9 because it is triple manufacturing cost. Even though the true cost is $2.50, that goes up to $3 because of returns. Without returns, we could wholesale for $7.50, making the retail $15 instead of $18. So that is the true cost of returns.
Wholesale is triple manufacturing to deal with R&D, royalties, and overhead. In general, our products don't break even until the 30,000th unit is sold. Some products only ever sell 10,000 and some sell 60,000 or more, making up for the less popular products.
