When rumours of the Apple Watch being the most profitable product on Apple’s portfolio stated circling, people started searching for the manufacturing costs involved in the Apple Watch.
Turns out the Apple Watch Sport, currently retailing in the UK for £299, only costs £54 to manufacture. That is £245 profit Apple is turning on every unit, and we expect the numbers for the Watch and Watch Edition are even more insane.
It is not all profit though, considering Apple also needs to manufacture the strap, it needs to ship the units from China to America for assemble and then needs to handle distribution to Apple retail stores. It also pays for the delivery cost, so that’s something.
Interestingly, the manufacturing per unit costs £1.65, showing the poor wages in Chinese factories that is fueling Apple’s massive profit margins.
Add all that together and per unit Apple is still reaping at least £200 out of a £299 sale. Times that by 10 million - the expected sales for the Apple Watch Sport by the end of the year - and that is £400 million Apple is taking in profit from the lowest end smartwatch.
Apple has obviously spent years researching the materials, creating the design, crafting the perfect circuitry and all the other things that go into product development, but even still that is a massive take for the price of the smartwatch.
It becomes a lot clearer how other providers are able to offer smartwatches for £100 - £200 less than the Apple Watch Sport, when the price of manufacturing and buying each part is so low. It is even less expensive for Apple that is capable of running down prices per unit through massive orders.