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Andreessen Horowitz analyst Benedict Evans states that the $10,000-$17,000 Apple Watch exists because it’s a form of marketing for Apple. It creates an air of luxury around the rest of the Apple Watch line, setting it apart from the others on the market. He says: “Apple retail is a self-funding marketing operation. So too, perhaps, is the gold watch. Apple might only sell a few tens of thousands, but what impression does it create around the $1,000 watch, or the $350 watch? After all, the luxury goods market is full of companies whose most visible products are extremely expensive, but whose revenue really comes from makeup, perfume and accessories.” Continue reading to see College Humor’s take.
“You sell the $50k (or more) couture dress (which may be worn once), but you also sell a lot of lipsticks with the brand halo (and if you think Apple’s margins are high, have a look at the gross margins on perfume),” adds Evans.