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Multiple reasons:

- Because they can. People are willing to pay this much for this product.

- It takes a lot of research and development costs, which have to be included

- You also buy a (lifetime?) service that tracks and stores your data

They also announced the UP Move which is $50 http://jawbone.com/store/buy/upmove

I ended up buying a pebble instead for this reason. Has a pedometer in addition to customisable watch faces and apps. Also, a great conversation starter :).