Skip to main content

Apple Watch cost revealed – and it’s a big profit maker for Cupertino

The Apple Watch is following the usual tech gadget post-launch rigmarole, and following the teardowns of the device, we now have news on how much the smartwatch costs Cupertino to manufacture.

And the big revelation from analyst house IHS Technology is – and some may find this rather galling given the price some models of the smartwatch are pitched at – that the Apple Watch has the lowest ratio of hardware cost to retail price out of the company’s products that IHS has costed.

In other words, it’s the device Apple is making the biggest profit from, with the hardware costing just 24 per cent of the recommended retail price in the US.

The next lowest ratio IHS has found with Apple products is 29 per cent.

IHS ripped the Apple Watch Sport (38mm model) apart and came up with a total bill of materials of $81.20 (£53.08), which rose to $83.70 (£54.72) including the cost of production. That compares to an asking price of $349 in the US, and £299 in the UK, which makes the premium Apple is charging even greater over this side of the pond.

IHS does note that this doesn’t encompass all expenses for the watch, though, such as R&D, IP licensing, logistics and so forth.

Kevin Keller, Senior Principal Analyst, Teardowns, at IHS Technology, commented: “It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost. While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and other new Apple products, and could be of great benefit to Apple’s bottom line if sales match the interest the Apple Watch has generated.”

Darren Allan

Darran has over 25 years of experience in digital and magazine publishing as a writer and editor. He's also an author, having co-written a novel published by Little, Brown (Hachette UK). He currently writes news, features and buying guides for TechRadar, and occasionally other Future websites such as T3 or Creative Bloq and he's a copy editor for TechRadar Pro. Darrran has written for a large number of tech and gaming websites/magazines in the past, including Web User and ComputerActive. He has also worked at IDG Media, having been the Editor of PC Games Solutions and the Deputy Editor of PC Home.