The Increasing Price of the Apple Watch

WatchThe Apple Watch has gone from an affordable accessory to an expensive device, rivaling the cost of a smartphone. This year’s price increases are stunning. During the presentation of the new models, there was no mention of price, as there was for the iPhone.

Let’s look at the history of the Apple Watch’s pricing through the aluminum models, which are the basic, and most popular models. The first model – called Apple Watch (1st generation), but generally called “Series 0,” debuted at $349 and $399. (I’ll give pairs of prices, for the two sizes, 38mm and 42mm, and, for this year’s model, 40mm and 44mm.) The following model, Series 1, had a base price of $269 and $299. Apple had realized that the device was popular, and could lower the price.

The Series 2 added GPS, and the price increased a lot: this model cost $369 and $399. And the Series 3, with GPS only, dropped that price to $329 and $359. If you wanted cellular access on your watch, that cost $399 and $429, or $70 extra.

This year, Apple has greatly increased the prices of the device. Yes, the watch is a bit larger, but given the economies of scale, with a popular device, they should have tried to maintain the same price point as last year. With GPS only, it costs $399 and $429, and with GPS and cellular, the price is $499 and $529. That’s a $100 premium on last year’s models.

Initially, you could see the Apple Watch as a mid-price accessory for your iPhone; now it’s almost as expensive as a cheap iPhone. (Yes, I’m not comparing it to the price of the new iPhone XS Max, but to the price of, say, an iPhone 7 or 8.) But look at the prices of the stainless steel models, which cost $200 more. The stainless steel Apple Watch – which only offers GPS + cellular options – costs $749, the same price as the new iPhone XR.

It’s not common for prices to increase this much for a device. Yes, there are more features, but until the iPhone X, that device only had small price increases, and was most often the same price as the previous year’s model. (Not counting the additional cost for the larger display versions.) We’ve seen the Apple Watch nearly double in price between the Series 1 and Series 4, making it much more of an investment, and less of an impulse purchase.

One reason for this is that the device is now mature, and Apple is charging what it can. Early on, the lower prices got people to try out the device, and now that there is a solid user base willing to upgrade every year or two, Apple is betting that people will be amenable to paying more. This could be a winning strategy for their bottom line, or it could fail, as many people see it as simply too expensive to upgrade.

It’s worth noting that Apple Care for the Apple Watch has also increased, from $49 to $89, making the total cost of a watch with protection even more expensive.

4 thoughts on “The Increasing Price of the Apple Watch

  1. Very simply, look at the competition. Garmin pushed through a huge price increase on the Fenix series, terminating what had previously looked like a clearance sale on the Fenix 5 and bumping the price back up to its previous MSRP and leaving it in the lineup for now, and at the same time introducing the Fenix 5 plus with its payment support and music and more standardized API support at $150 more than the 5. And judging by the lack of movement since they seem to have gotten away with it. If Garmin can push smartwatches with a bit of panache but no cell connection at $700 to $1150 a pop, this can’t have been lost on Apple for whom the Watch 4 would be a direct Fenix competitor if it were not dependent on touch sensitivity.

  2. Series 3 at $279 is a great price for a great watch that’s arguably still better than most smart watches out there. This seems typical of Apple’s recent pricing strategy, of having a compelling low priced product and an increasingly higher priced, high end product. There’s less room in the middle for the Apple Watch right now.

  3. Always smugly happy to see you writing, Kirk, the same thoughts I had in my head during the Event. And I’m right there with you on the 38 vs 42 thing; if they moved to make the display larger because obviously customers like the bigger screen, why not make the 42mm $299 and only advertise that. (Then just not publicly mention a $269 38mm, opposite what they’re doing now?)
    ¯_(ツ)_/¯

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