Apple Watch sport pink band back

IHS, a technology research firm, has found that Apple is making huge markups on the bands, with an entry-level 38mm fluroelastomer Sport band which retails for $49 costing an estimated $2.05 to make.

It should be noted the figure excludes other related costs such as packaging, shipping, marketing, cost of sale and so forth and “may not capture the full cost of the material Apple uses to make the band,” IHS analyst Kevin Keller told Reuters.

In a separate analysis, Slice Intelligence, an opt-in service that scans email receipts from a panel of 2 million people representative of online shoppers in the United States, more than 20,000 of whom bought an Apple Watch, has determined that nearly one out of five Apple Watch buyers bought a spare band.

The $49 black Sport band was the #1 choice as both the band bundled with the device and as an extra purchased by consumers, followed by the pricier $149 Milanese loop.

Slice estimated Apple sold 2.79 million Apple Watch units as of mid-June, though that figure is likely higher as Slice’s analysts doesn’t look into non-US markets.

“People are trying to get two watches in one” by pairing a practical sport band with a more luxurious option, said Kanishka Agarwal, Slice’s chief data officer.

I couldn’t agree more.

I bought an entry-level Apple Watch Sport with a white band and am already thinking about getting a $449 stainless steel link bracelet so I can swap out the bands between my workout sessions and business meetings.

Apple has set the stage for a potentially very lucrative market by providing an official way for third-parties to create own ‘Made for Apple Watch’ bands. The company will not share in the revenue from sales of those bands, a person with knowledge of the matter told Reuters.

Which band did you get for your watch?

Source: Reuters

  • This X apple product costs Y amount is getting a bit ridiculous and wildly misleading!

    bare materials are not the cost of a product! Research, design, development, packaging, shipping, marketing, etc etc is the real cost and not raw materials!

    • TechLove

      And manufacturing! Which itself includes labour costs, electricity, several types of taxes, the profits of manufacturers! Damnit! These people give out half baked information and call themselves “analysts”.

      • Kaptivator

        Hush…No one wants to read about entry level accounting and some of the judgement used in calculating the price of a product to keep departments, manufacturers and utilities paid (just the obvious). People just want to blindly complain about profit margins and think that Apple is $46.95 per unit sold. How dare you!!

      • mrgerbik

        so you’re sayig Apple dosent have high profit margins?

      • Of course he’s not. We all know Apple makes ridiculous profit margins. They didn’t get to be one of the richest (the richest?) business in the world by not being good at business now, did they? He’s just saying, perhaps with a hint of sarcasm, that analysts have it in for Apple and want to misappropriate information.

      • mrgerbik

        Misappropriate information?
        Apple’s overpriced *ehem* OVERVALUED products are being misappropriated because analysts don’t want to see Apple succeed?

        Oh boy.

        The OP is clearly making a point that it costs money to make products – implying that the price Apple puts on its products (a rubber band in this case), is fair and the information about the cost of the product is disingenuous.

        I mean, everybody knows it must cost $30-$40 in marketing/R&D/manufacture to rpoduce a rubber band right??

        I am trying to point out to the iKiddies in here that Apple isn’t a ‘sugar and spice and everything nice’ company – but a cutthroat I-would-eat-your-mom-for-profit corporation, JUST LIKE SAMSUNG.

        Your apologies for Apple overpricing products would be laughable, if it wasn’t so sad.

      • I completely agree with you I wasn’t trying to sound apologetic. Sorry if you got the wrong end of the stick of the message I was trying to convey.

      • Kaptivator

        No, that’s not what I was saying. We all know that Apple has high profit margins. What business is in business not to make the most money possible? It was more so sarcasm. If 2.05 is the total cost of goods (materials, labor etc), then hats off to Apple. I’m now really jealous of those holding shares and kicking myself in the ass for not buying when the stock split. However, I seriously doubt that apple can pull off 2.05 and the difference of the sales price being profit.

      • mrgerbik

        Your sarcasm was lost on me

      • Kaptivator

        Bro.. If the consumer is paying the asking price, as a business, why not keep it set at that price? In any market the business solicits a price but at the end of the day, with buyer demand, the consumer makes the price. See what happens if people stop buying it at that sales price…Ill tell you what will happen; The sales price will drop. But as long as Apple offers a price that people are willing to pay, its the consumers fault, not Apple. However, do you honestly think that the total COG is 2.05 and that the article and media are misleading readers? That is the real question. Also, this is not a situation where “price gouging” is relevant. Therefore, your question is moot.

        But do this for me…Give me 2, “for profit”, business that are not in the market to make a profit with good margins?

      • mrgerbik

        I’m not arguing that business isn’t in business to make as much money as possible – that goes without saying.

        I don’t like being overcharged for something that could be easily priced at a much lower (but still make a healthy profit).

        It’s the reason most people always look for the lowest price … a no-brainer.

        You’re okay with high Apple prices and that’s fine – but it seems really contentious to argue me or others for pointing it out.

      • Kaptivator

        Naah…No argument at all. One of the reasons that I have not pulled the trigger on the watch is because its overpriced…to me. However, that is my opinion based on my view of what that Apple Watch value to me is. On the flip side, many people may bash me because I would much more opt to put that money towards a Tag Heuer or some other Swiss made timepiece.

        No one likes to be overcharged or made to feel that they have overpaid for anything. All I was doing was answering your questions that were posed to me, previously.

        Now…Does Apple overcharge? Is a question that can only be answered by the person making the decision to make the purchase. To me…Yes.

        Should a company be scrutinized for their margins? Where it be Apple, Samsung, etc…No, I don’t think so. Why? Because we the consumer have the choice to either buy or not buy.

        Yes, I am OK with the outrageous price of the iPhone and my Mac Book Pro. However, the Apple Watch and its bands…They can keep that until the price comes down to what I am willing to pay based on its worth for ME.

        No hard feelings, bro. Just convo on a blog

      • mrgerbik

        really? a RUBBER BAND? You talk as thou Apple invented rubber! its a RUBBER BAND.

        There’s a reason why Apple has BILLIONS of cash reserves and naive apologists like yourself can’t seem to grasp the fact that Apple is a corporation FIRST and a ‘good samaritan’ last (or close to last).

      • Kr00

        So prey tell us, which tech god do you donate your dollars to? Clearly not Apple so it has to be one of the other price gouging, data tracking, IP copying companies, no?

    • mrgerbik

      can you venture a guess as to manufacture/design/marketing costs? I say $10 per band – and thats being liberal.

    • Mr.Coolfreak

      Still, it’s no secret that Apple has the highest profit margins in tech

    • Brandon

      tbh, there is minimal R&D for Apple Watch bands. Marc Newson just re-purposed his Ikepod watch bands lol

    • Fanboy 

      You DID read the article…. didn’t you? I’m assuming not because you’re just repeating the article. It clearly states that figure excludes other costs such as shipping, marketing, etc.

    • It’s not misleading if you clearly explain the limits of that estimate, which we did in paragraph 2.

      • Byron C Mayes

        Yes, but only after the click-baity headline and first paragraph which do use the misleading phrase “$2.05 to make.”

        $2.05 in materials — which is what IHS is referring to — is decidedly not the same as $2.05 to make. Choice of words rests with iDB.

      • From Reuters article: “Although the entry-level sports band retails for $49, it costs only about $2.05 to make, according to an analysis of the 38-millimeter size by IHS”

        Emphasis on “to make.”

        You can argue all you want about verbiage. It’s all the same in the end if you actually read the whole post rather than stop after the headline you read on Twitter.

      • Kr00

        Then do us the favour and do your job and find out how much the REAL cost is, instead of parroting the material cost reported by someone else. Did you call Apple marketing at all to find out? Clearly stories like these are pure click bait. Be objective and do your homework, it would be a refreshing change. We do deserve more than click bait, don’t we?

      • i am sure thats what you guys tell yourself with every title that is meant to purely act as a link bait. We cover our ass later on in the article so we are fine. The only short term gain here a few more click thoughts to a cheesy story! But the long term loss is less respect from your readers which no longer consider you as reliable news source!

    • Yeah, whole lotta research, design and development on a watch wrist strap…

      This personally disgusts me, as Apple is ripping off it’s customers, on a fad gadget. I wouldn’t be surprised if the expensive Watch only costs $1,000 to make. I’m sure most of you would still defend Apple for gauging it’s customers on a $18,000 makeup though…

  • What’s funny is that I NEVER hear how much a band from Samsung or LG costs to make, or how much the sum of the parts for their watches cost.

    • Kr00

      Doesn’t make for click bait.

  • iBanks

    Here comes all the whining. I wonder how much people will cry about knowing how much the toilet paper costs to make to wipe their asses but yet spend about the same in cost difference from the markup.

  • samyg

    iDB team, there’s a number of third party bands available on eBay which are a fraction of the cost of the official ones. It’d be great if we could have a few reviews on such stuff. For example, I dunno whether to get the $49 official sport band or a $9 sport band from eBay. This article makes it even more confusing, because while Apple has huge costs to recover, making their bands costly, the third party chinese sellers do not, and it makes me wonder whether the quality will be comparable.

    • Dhoklastellar Fafda®™

      Buy 5 bands for the price of one. You’ll find that at least 3 of them would make the cut. Personally I find ebay bands atrocious, but thats just me.

  • mrgerbik

    From Apples own site
    Apple is providing the following guidance for its fiscal 2015 third quarter:

    revenue between $46 billion and $48 billion
    gross margin between 38.5 percent and 39.5 percent
    operating expenses between $5.65 billion and $5.75 billion
    other income/(expense) of $350 million
    tax rate of 26.3 percent

  • Byron C Mayes

    It should be noted the figure excludes other related costs such as packaging, shipping, marketing, cost of sale and so forth and “may not capture the full cost of the material Apple uses to make the band,”

    …but that won’t stop us from click-baity headlines!

  • socrates

    I’m waiting for the Space Grey/Black Link Bracelet. It’ll probably cost another outrageous price, but I’m an Apple customer, and I get what I pay for.

    • Jason Baroni

      Well thought, Socrates.

  • TheDude

    “And we sold over a million of them.”

    *drops mic*

  • WaterTrooper

    I’m getting so sick of companies profits margins. When the watch is $150 then I will buy.

    • Gerardo Castro

      Looks like you’re never getting an Apple Watch lol

    • Kr00

      Ha ha, then which company doesn’t rip off its customers on price? Samescum? They colluded for years to inflate the prices of LCD displays, HDD, components to suppliers, or Google who only see customers as sheep to spam adverts to. Get real.

  • Kr00

    How about your responsibility to provide more than someone else’s story as news? Why not go a step further and find out the real cost, or is that too hard to copy and paste? Credibility ZERO, and dropping!

  • Kr00

    Tell us smart one, how much they cost with everything factored in? Or isn’t that part of your trolling contract?

  • Mr_Coldharbour

    Just to put all the unnecessary debating to rest, no company in the world is in it to make modest profit margins or modest gains. If markups are not at least north of 50% (which is very modest depending on the size of the enterprise), then it’s simply not worth the effort (i.e. not very profitable).

  • drewjbx

    apple.. no, thats a shocker