IHS estimates cost to build Apple Watch is under $84
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The Apple Watch Sport is priced starting at $349. This is expensive, as far as smartwatches go, and the research firm IHS has estimated that the cost of buying all of the components and building the watch is only 24% of the retail price. At $83.70, this is the largest profit margin for any product Apple sells. The build costs for the company's other products all range from 29% to 98% of the suggested retail price. IHS also stated that such a high profit margin is to be expected from first generation products, and that over time the asking price for the wearable is expected to drop over the next few years.
The information firm also released the estimated prices for each of the components, and the screen is the most expensive part of the device, costing Apple $20.50 for each Sport model. This is understandable as the screen features Force Touch, a technology that Apple has only implemented into the watch and trackpads of the 2015 MacBook Pro 13" and Apple's newest laptop, the MacBook. The cheapest part for the tech company to include in the smartwatch is the battery pack at only $0.80.
Apple's new device could prove very profitable for the Cupertino company if enough are sold. The company is known to have large profit margins for its products, but none have come close to the Apple Watch. While it may not be selling as quickly as the other devices it sells, Apple is making a huge amount of profit from each one sold, so hopefully a lot of this money will go towards developing a second generation that improves upon the current model.