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And they used a bit of textbook marketing magic to do it.

Remember the Apple Watch Edition? The one with a gold case that cost 17 grand?

The point wasn't to sell it, although there's a stratum of customer who always get the most expensive version of whatever they're getting.

The point was to make the entry-level price look reasonable, and it worked.

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More than make the price reasonable, I would wager it was to anchor the Apple Watch in the "watch" category, rather than the "electronic gadget" category in people's mind. It's not some $XXX toy for notifications and whatever. Much like watches, it is as much about functionality as it about style. Much like watches, it both exists in a expensive, luxury form and in an everyday form. You're buying a Swatch, with Rolex available if you want - not a fitibit.

on top of that, they created their own gold alloy for it. One that allowed them to use less gold at the same karat weight! For that, you paid a premium. Genius.

The melt value of the gold was well under $3000, for a $17000 watch. Even it it had been solid 24k 99.9 fine (I believe it was 14k gold), it would have been a small fraction of the cost, and a low volume item to boot. I doubt the custom alloy contributed significantly to their margin.

IIRC most gold watches are 12-14k for durability.

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