If you’re in the market for a new smartwatch, you’ve probably already noticed the biggest challenge this purchase can pose – the cost.
Even budget smartwatches from brands such as Xiaomi and Huawei cost several hundred dollars.
So, why are smartwatches so expensive?
Smartwatches are expensive because they take a lot of money to design, develop, and manufacture. While the materials that go into a smartwatch aren’t very expensive, building a smartwatch is. Also, watches, in general, are fashion items, and owning an expensive smartwatch is seen as a status symbol.
This article will explain a few important factors that affect the price of a smartwatch.
You’ll better understand the price gap between regular watches and smartwatches.
You might also like: Are smartwatches actually better than normal watches?
1. Designing a Smartwatch Is Expensive
Everything from the beautiful casing to the curved glass and leather strap had to be designed.
And designers don’t create only one design per smartwatch model.
They create dozens of designs that take weeks or even months to conceive, then test them out to determine which option works best.
For this, they have to work with other teams in the company to ensure all the components they’ve designed can fit into one package.
Once the team has an idea of what the watch should look like, they have to source all the tiny components.
The sensors, GPS tracker, speaker, microphone, and everything else have to fit perfectly.
This part of the process is arguably the most expensive too.
Choosing the optimal components and enclosing them in a watertight casing is easier said than done.
2. Smartwatches Are Made of Expensive Components
If you’ve ever seen a smartwatch from the inside, you’ll know how complex smartwatches are.
If not, take a quick look at this YouTube video by JerryRigEverything:
In this video, Zack disassembles the TicWatch Pro 4G, which has a layered screen.
Not only is this difficult to design and bring to life, but it’s also expensive to manufacture.
The most expensive part of your smartwatch is the screen. The next in line is usually the processor.
Admittedly, these parts aren’t extremely expensive for the smartwatch company.
A good example is an Apple smartwatch, which ‘only’ costs around $80-$100 in parts.
Now, that’s pretty expensive. But it’s nowhere near the nearly $350 retail price of the Apple Watch Sport.
But wait before you get angry at the extreme price markup. Remember that. Apple had to design, manufacture, and advertise the product.
After all that, they also have to turn a profit large enough for the watch to be a feasible product for the company.
Read also: Are Cheap Smart Watches Worth It? 7 Options Compared
3. Smartwatches Are Difficult To Assemble
A minimalist smartwatch design doesn’t reveal much on the outside. You get a piece of glass, a screen, a casing, a few buttons, and a strap. That’s about it.
However, like many other things in life, it’s the inside that counts.
Here are a few components that almost every smartwatch has:
- Power management chip
- 6-axis gyroscope
The list goes on and on. It varies from smartwatch to smartwatch because not all have speakers and microphones (but most do nowadays).
The smartwatch manufacturer has to get all of these components from different suppliers.
If only one piece is out of stock, they can’t make a single smartwatch.
Additionally, once they have all the components, soldering all of them by hand takes a lot of time, patience, and practice.
It also requires tiny hands and great eyesight. In fact, these demands are why women are more likely to do this kind of job than men.
4. Developing the Software on a Smartwatch Is Expensive
The software on your smartwatch is usually the biggest expense after the components.
Apple has watchOS for their Apple Watch, while Google developed Wear OS for Android smartwatches.
Many smartwatch companies are further developing their own proprietary OS.
For example, my Amazfit GTR 2 uses the Amazfit OS. Developing a brand-new operating system for a handful of devices costs millions.
Admittedly, they could always use Wear OS.
However, companies want to compete rather than comply, and a unique operating system helps their watches stand out amongst the giants.
A Hailo app developer has explained that developing software for a smartwatch is especially challenging.
It’s hard to optimize software for the smaller battery and slower CPU.
In addition to the operating system, developers also have to create fully working apps.
Even basic things like music players, heart rate trackers, and NFC payment apps take time and effort.
5. Smartwatches Have Accurate Fitness and Sleep Tracking
I already mentioned that smartwatches have sensors and apps for tracking. But who guarantees that the readings will be accurate?
It takes hundreds of work hours to calibrate the sensors and apps. Then they have to test their smartwatch against medical-grade tracking devices.
Of course, a smartwatch can’t be as accurate as a heart rate monitor. But if it can even be within 5 BPM of your current heart rate, it’s good enough.
Tracking sleep is especially challenging. That’s why smartwatches aren’t very accurate at differentiating between light, deep, and REM sleep.
One study found that smartwatches have some promising health applications.
However, while people don’t mind wearing them, they’re not the most precise.
So, don’t rely on your smartwatch too much. It can only tell you a few handy estimates at a glance.
One of the most accurate smartwatches is the Garmin Venu Sq from Amazon.com.
If you’re in the market for a sports smartwatch, this is the one to get.
It has over 20 preloaded sports apps and tracks everything from your hydration and energy levels to your menstrual cycle and even more.
Check out: Should You Turn Off Your Smartwatch at Night? 5 Scenarios
6. Manufacturers Have To Pay for Marketing
A report from 2014 showed that Samsung spent $11.6M on ads, and Fitbit spent nearly double with $21.6M. That’s a lot of money.
However, those figures were for 2014, when first-generation smartwatches were coming out. These figures are probably two to three times higher today.
When it comes to tech, it’s all about marketing. If a company can communicate its product accurately to customers, it can turn a hefty profit.
That’s why you see banners and ads for smartwatches wherever you go.
Additionally, smartwatches tend to have higher profit margins than smartphones nowadays, which makes their sales more important for companies such as Apple.
And all that marketing is paying off – for example, Apple sold about 30.7 million Apple Watches only in 2019.
7. Smartwatches Are Stylish Luxury Items
Watches have always been an expensive commodity.
Smartwatches are a bit different from “regular” watches because they have an implied ‘best by’ date.
Take any smartwatch from 2013 or 2014, and you’ll know exactly what I’m talking about.
Older smartwatches look ugly and feel like they’re clunky and slow. Additionally, the display looks like it came off a phone from 2003.
This isn’t limited to old smartwatches either – while your current model may seem like the height of technology, come back to in 5 or 6 years, and you’ll feel similarly disenchanted with it.
Furthermore, the battery on smartwatches degrades as time goes by. You either have to replace it or put up with it.
More than that, if you do swap it out, you’ll lose any water resistance the watch had.
So, you’ll probably want to buy a new smartwatch every three to four years, just like a smartphone.
But unlike a phone, a smartwatch isn’t by any means essential. You can live without one.
That’s why companies often market smartwatches as a stylish piece of jewelry rather than merely as a must-have gadget.
Take a look at the gold Apple Watch Edition, which costs over $10,000.
That’s the price you have to pay for 18-karat or rose gold.
If you do buy this watch, you’re likely not buying it for the features – rather, you’re buying it because it is a status symbol and sets you apart from other smartwatch owners.
Even “lower-end” smartwatches, which “merely” cost you a couple hundred dollars, aren’t for everyone’s budget – and that’s exactly how the manufacturers like it.
After all, if a smartwatch is a status symbol, more people will want to buy it.
Smartwatches are very expensive to create from start to finish.
The components are costly, developing a proprietary operating system is expensive, and that’s without considering marketing costs.
In addition to all that, smartwatches must have accurate fitness tracking and heart monitoring.
Last but not least, smartwatches are a cross between a piece of expensive jewelry and a gadget.
You don’t buy it because you need it, but because it looks good.