An IWC or Patek doesn't cost a few hundred dollars to produce, although I'm sure the real spread is horrific. Most luxury watches don't cost $35,000, either --- mid-4-figures is a more realistic estimate for the "BMW 3 Series" tier of watches.
I saw a article a few months ago about how the $5000 watch market is toast, and how the manufacturers' new strategy was to focus on the ultra high end ($100K+) market.
That is, people have stopped buying 3 series, so lets make up the difference by selling more Bugattis. Great idea guys.
I am reminded of Joel Spolsky's observation (http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...) that there's no software priced between about $1,000 and $75,000, because anything that costs above $1,000 has to be approved by multiple layers of corporate bureaucracy, which means you need a salesman to schmooze potential customers into giving up that loot, and it's going to cost you $50,000 just to make each sale.
(Joel wrote that five years ago, so I assume the numbers have shifted around a little, and he doesn't really talk about SAAS pricing models. But the general idea is sound.)
