The Apple Watch Sport 38mm is priced at $349 in store, but all the components of the lowest-priced watch amount to only $84, with the most expensive component being the touchscreen at $20.50, according to the information company IHS. (Tweet This)
The $84 doesn't include costs associated with research, building and marketing.
"These are just a snapshot of the hardware cost—actual physical component cost," said IHS' Wayne Lam.
Lam added that the price tags for other models, including the stainless steel and gold ones, were more expensive.
The $265 difference between the market price and components cost is explained by the innovative design and features that the watch brings to the market.
"It shares more in common with implantable medical devices than it does with consumer devices," said Lam.
Lam referred to the Apple Watch as "a piece of fine jewelry" versus other smartwatches on the market, which "are really taking a smartphone design and shrinking it to your wrist."
The design of the Apple Watch hints at the kind of company Apple wants to be.
"It really shows that this is not a consumer electronic driven company" said Lam. "This is a company that is looking for a very unique position in the market."