Apple Watch Pricing: US vs. Europe

A tweet today made me look at the prices of the Apple Watch in the US and compare them to prices in Europe. Traditionally, Apple’s prices in Europe have been much higher than a simple currency conversion, plus VAT. (In Europe, VAT is included in prices advertised; in the US, sales tax is added to the price advertised, since it varies by state.)

If you look at the Apple Watch, the difference isn’t as big as it might have been. I compare two models:

  • Apple Watch Sport, 38mm, $349
  • Apple Watch Stainless Steel, 42mm with Sport Band: $549

In the UK, these two models cost:

  • Apple Watch Sport, 38mm, £299
  • Apple Watch Stainless Steel, 42mm with Sport Band: £519

If you convert the US price to Pounds Sterling at today’s rate, you would get £231 and £364. Add VAT, and a straight conversion for the two models would be £277 for the Sport, and £437 for the Stainless Steel.

The Apple Watch Sport is therefore a very good price, only £22 more than the US model (including VAT). But the Apple Watch Stainless Steel is £73 more than its US counterpart. In other words, the markup on the Sport is 9.5%, but on the Steel model, it’s 20%.

In the French Apple Store, the prices are as follows:

  • Apple Watch Sport, 38mm, €399
  • Apple Watch Stainless Steel, 42mm with Sport Band: €699

Straight conversions of USD to EUR would be €324 and €510, respectively. Add VAT at 20%, and you’d get €389 and €612. The markup on the Sport is a mere 2.5%, but, on the Stainless Steel model, it’s just over 14%.

So Apple is clearly using the Sport model as a loss leader, not trying to gouge the market at all. The company has probably determined that this is the price at which people can be tempted by this new device. For other models, the prices are more in line with what the company has generally practiced. Heck, even the base model Apple Watch Edition, at $10,000, is reasonably priced. In the UK, it’s £8,000, compared to £7,957 if you did a straight conversion and added VAT.

It’s worth noting that the dollar has been very strong lately, and it’s on an upward trend, so as the months go buy, Apple may actually end up selling the Sport model, and the Edition, cheaper in Europe than in the US.

7 thoughts on “Apple Watch Pricing: US vs. Europe

  1. “So Apple is clearly using the Sport model as a loss leader”

    The definition of ‘loss leader’ is an item which sells at below market cost.

    There is no way Apple is selling the Sport below cost.

  2. :) I don’t know – $380 (watch plus NYC tax) to start for an unproven, 1st-gen watch-doohickey seems pretty standard Apple-priced to me.

    What interests me today is that both Ming-Chi Kuo of KGI Securities (who’s gotten early product details right for a number of Macs and iPhone models months in advance) and Timothy Arcuri of Cowen & Co have come out in the last day or so to predict new watch models in the 3rd quarter of this year. Arcuri speculates about a standalone watch (which I think exceedingly unlikely), but Kuo is talking about 1-3 new case material designs by Christmas – which I think is intriguing.

    Can’t you imagine Apple selling 10 million or more stainless/aluminum watches by the end of summer to early adopters only for them to come up with a bulkier, cheaper ‘unabashedly plastic’ waterproof model for $249 just in time for the holidays?

    • I think that if Apple sells enough of the watches in the first month – whatever “enough” may mean – they won’t bother releasing a cheaper model. They could come up with some sort of “plastic that’s twice as hard as plastic,” or some other type of case, but I can’t see that costing $100 less no matter what.

      It is interesting to hear of new cases; I could think of platinum, ceramic, etc, mostly aimed at the high end.

      I think that, for now, everything depends on whether the device gets adopted as a mainstream device or remains “just a hobby.”

  3. Apple’s first iPod was $399 and the successive generation dropped to $299, then Apple precisely targeted the growing (but unprofitable) low-end mp3 player market with the increasingly cheaper Mini/Nano/Shuffle.

    The original underpowered and compromised Macbook Air was $1799 in 2008, and Apple iterated the model with more power, better features and (sometimes) lower prices every successive year, squeezing out the competition on price and features, ultimately taking the majority of ‘ultrabook’ sales (at least in the US) for at least the last two years, despite costing more than most competitors. http://bit.ly/1C8HCJq

    I see this as a template for iterative improvements and competitive pricing for the Apple Watch. Apple has already staked ground in the high end of the market, so I can certainly see it wanting to pivot to the mass market in time for Christmas after selling a few million to the “shut up and take my money” crowd now. If a more compellingly-priced Apple watch offers more/better features than Android, it begins to offer more reasons to switch to iPhone. (Lower margins on the watch driving sales of higher-margin phones.) So yes, I do see the possibility of a cheaper watch this Xmas, though I see it as being much more plausible if not probably by next Xmas.

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