(Reuters Business Report) – You likely bought extra bling when you bought your Apple Watch. What you didn’t know is just how much money Apple is making off of it. Reuters has learned that nearly a fifth of Apple Watch buyers wind up shelling out for spare bands. The top seller is the $49 black Sport Band made of synthetic rubber. Believe it or not, tech research firm IHS says that only costs Apple about $2 to make. While that doesn’t account for the packaging, shipping, and materials costs, that’s a whopping profit margin.
Experts say buyers are trying to get more versatility out of the Watch. Research firm Slice Intelligence analyzed only bands made and sold by Apple and found that about 17 percent of Watch buyers bought more than one band. Apple’s second best-selling band, the Milanese Loop made of woven stainless steel mesh costs $149. The stainless steel alloy Link Bracelet will set you back $449 – that’s $100 more than the entry-level Apple Watch itself.
Apple is doing what P&G does with Gillette razors – selling the product at a modest price but profiting on the sale of accessories that sport fat margins
Apple allows third-party developers to put out their own bands, too. That could dent sales of its own accessories if they succeed. But experts say it’s important to offer a wide array of bands to make the Apple Watch a must-have thing. Besides, that extra take from the bands gives Apple another slice of the pie.