Apple is known for premium devices with equally premium price tags, but even by their standards, the new Apple Vision Pro headset comes at an eye-watering cost. The $3,499 virtual and augmented reality headset promising high-resolution displays and powerful processors for immersive experiences.

Yet behind that ambitious product lies an equally ambitious price to produce. As analysts at Omdia have broken down, Apple is estimated to spend around $1,542 on components alone per headset – representing 44% of the total $3,499 retail price. That bill of materials alone exceeds the sales price of competitive devices like Meta’s $1,000 Quest Pro (original launch price is $1,500).

The key driver behind the high production cost lies in the displays. Each Apple Vision Pro relies on two cutting-edge Sony-produced micro OLED displays packing 3,380 pixels per inch. At $228 per display, the visuals represent the single most expensive component. Comparatively, the headset’s custom Apple silicon – the M2 chip and R1 sensor manager – seems inexpensive.

The component cost explains why Apple likely won’t earn much per-headset profit, if any at all. But it also represents an investment into the future. With additional iterations and economies of scale, Apple can refine production and lower costs. The first generation lays the groundwork for the next, when the company can better leverage these technologies at scale.

For now, the Vision Pro earns the “Pro” label not just for consumers but also for Apple’s balance sheets. But the company is betting that luxury early adopters will pay premium dollars today for the privilege of shaping tomorrow’s metaverse. Apple built an ecosystem and walled garden by selling aspirational technology grounded in best-in-class user experiences. Even with the Reality Pro, the company sees our reality through the same lens.