Smartwatches are a new and exciting device, but they can be quite expensive. The average smartwatch costs $200 to $300 dollars for a quality one, which is more than the price of a smartphone. Why are they so expensive? Smartwatches have various components including: a touch screen, an accelerometer, Wi-Fi, Bluetooth, and GPS. These components cost money to manufacture.
Plus, you also need hardware like a processor and memory that are necessary for processing data on the watch. All of which makes up the bulk of the cost of the smartwatch. Some savvy shoppers might be able to find deals on refurbished watches or older models in order to save some money. But with prices constantly rising, it may not be worth waiting around to find those deals because there likely won’t be any left! Read on to learn more about why smartwatches are so expensive.
What Is a Smartwatch?
A smartwatch is a wearable electronic device that includes a computer, a mobile phone, and sensors. Google defines it as “a watch with a cell phone that can make calls and send texts.”
How Do Smartwatches Work?
Smartwatches are usually made up of a phone, fitness tracker, and computer. The “smart” part refers to features that make the watch interactive with other devices, such as phones and computers. These smart features include voice recognition, sensors, and cameras.
The company often makes it possible for users to control their phone from the watch just by tapping a button on the device itself or by speaking a command. This is done with Bluetooth connectivity. Additionally, some watches can display notifications and send messages straight to the user’s wrist.
Some models have GPS capabilities which allow them to monitor workouts and track runs, walks, rides, or anything else you might do outdoors. Some watches also have heart rate monitors which can keep tabs on your heart rate while you’re exercising.
Who Are the Major Players in The Industry?
The current state of the watch industry is mainly divided into three segments. The first segment includes traditional luxury brands such as Rolex, Cartier, and Patek Philippe. The other two segments are mostly comprised of smaller, more affordable brands with less brand awareness and larger market share. In order to get a better understanding of the industry, we have categorized these players based on their size and market share.
- Luxury Watch Brands:
Rolex, Cartier, Patek Philippe
- Mid-Tier Watches:
Chronoswiss, Movado, Armani Exchange
- Low-Tier Watches:
Fossil Sportswatches, Nixon Group, TAG Heuer
Why Are These Devices So Expensive?
There are a few possible factors that contribute to the high price of smartwatches. First, it is likely that these devices are expensive because they are new and have not yet been used by consumers. A lot of research and development goes into these devices and their production, which makes the cost quite high.
Secondly, the market for luxury watches includes brands like Rolex, Cartier, and Patek Philippe. These companies charge high prices because they’ve been in business for many years with a strong brand recognition.
The third probable reason is that these watches are digital-enabled and require much more advanced technology than traditional watches. It’s hard to know exactly why these devices are so expensive without an in-depth analysis of the industry but it’s clear that there will soon be a new player in the market with even greater potential to disrupt the industry – smartwatches.
The Cost of Production
One reason that smartwatches are so expensive is because they require a lot of processes to produce them. For example, the production process can take as long as six months and include 3D complex modeling, 2D industrial design, electrical engineering, and software development. And these devices aren’t cheap to produce. For example, high-end smartwatches like the Apple Watch cost an average of $349 in manufacturing costs.
The production process also includes factors that are hard to pinpoint but could play a significant role in the cost of producing these devices. For example, there’s a need for specialized equipment that can only be found in expensive factories such as those run by Samsung.
This equipment creates even more expenses for companies because it has to be constantly upgraded and replaced as new technologies emerge. Additionally, some manufacturers have legal fees associated with patent protection which adds additional expenses to the production process that increases the overall price.
The Costs of Research and Development
One of the largest costs of developing a smartwatch is research and development. The amount of money invested in R&D can vary depending on the company but it’s generally considered to be in the tens of millions. The other cost comes from production, which can range anywhere from a few thousand dollars to hundreds of thousands.
The next largest cost is design, which includes both hardware and software design. This cost can vary significantly based on the size and functionality of the product, but it’s generally considered to be around $2 million for a new watch.
Finally, manufacturing is one of the largest costs for most smartwatches because they are typically time-consuming products that need to be made in high volumes. The manufacturing expense ranges anywhere from several hundred thousand dollars to more than a million dollars depending on the company.
Selling Price Vs Pricing Strategy
One strategy that allows companies to charge higher prices for their products is by adding new features, functionality, and aesthetic appeal. The Apple Watch was released in 2015 with a starting price of $350 and quickly became the most popular smartwatch on the market.
This product allowed Apple to charge a premium price for consumers who wanted more than just a basic device and fit within the company’s design strategy. However, it’s unclear what strategies companies use to decide what prices they should charge for their products.
A 2016 study revealed that the average cost of production per watch ranges from $30-200. This suggests that companies need to sell at least 500 watches in order to break even, which could be too expensive for people who are looking for a lower-cost option. Prices also vary depending on where a watch is sold – in stores or online (e-commerce).
Companies have different pricing strategies based on those options as well. One interesting strategy is when brands sell their products on Amazon where they can set their own prices, which could account for why some brands sell smartwatches cheaper on Amazon than other luxury retailers like Nordstrom or Neiman Marcus.
What Makes a Good Smartwatch?
A good smartwatch is a device that provides many features and functions. These include fitness tracking, notifications, weather information, and third-party app integration. It also should be functional as a standalone device – meaning it should not require an iPhone or Android to function properly.
A good smartwatch should be able to connect to the internet and have a long battery life. It should also offer a variety of options for customization, such as interchangeable watch straps, cases and bands. A good smartwatch should also be customizable with apps that enhance its features and functions. The device should also look aesthetically pleasing and feel comfortable on the wrist.
A study conducted in 2016 by Deloitte found that 60% of consumers who own wearable devices are unsatisfied with the battery life on their device, which is one of the most important features of a smartwatch.
However, another study conducted by Strategy Analytics found that battery life is not as big of a deal for consumers as previously thought – just 20% said that they were bothered by their watch’s battery life when participating in daily activities like work or exercise.
The best way to ensure that you have a good smartwatch is to research reviews online before purchasing one. This will give you an idea on whether or not a certain model is worth your hard-earned cash.
Design and Display
While the design of a smartwatch is not as important as other features, it is still an important feature to consider. A good smartwatch should have a sleek, futuristic design that will appeal to the masses. It should also be comfortable to wear for long periods of time and feel light on your wrist.
The display should be easy to read and have a high resolution for better visibility. It should also be scratch resistant so that you can avoid having unsightly scratches on the screen after using it for an extended period of time. Other factors you should consider include water resistance capabilities and whether or not it comes with additional features like a camera or heart rate monitor.
Fitness and Additional Features
The fitness features of a smartwatch are important to consider. If a smartwatch does not have the ability to track fitness related data, it is not worth it. Aside from fitness tracking, you should also consider whether or not your smartwatch can be used for other purposes such as making phone calls or sending texts, getting directions and more.
Other features that you should look for are GPS tracking capabilities and compatibility with third party apps as well as social media platforms. The best way to ensure that you have a good smartwatch is to research reviews online before purchasing one. This will give you an idea on whether or not a certain model is worth your hard-earned cash.
Battery Life
The battery life of any device is very important when it comes to buying one. A good smartwatch should have long battery life so that you do not have to worry about having it charged all the time, especially if you plan on using the device for extended periods of time.
Price & Value
The price of a smartwatch will vary from one manufacturer to another. They are not all that expensive; however, you should be aware that certain models have better features than others. It is important to make sure that you choose a smartwatch that is worth your money so that you do not end up wasting your hard-earned cash on something that does not meet your needs.
Conclusion
A smartwatch is an amazing piece of technology that enhances our lives in many ways, and it also allows us to take advantage of all the technology that is available today. Equally, choosing a good smartwatch is not an easy task because there are so many different models that are available on the market. It is important to know what features you need from your smartwatch and how much you can afford to spend before making a purchase.