Why does the stainless steel case cost $300 more than the aluminum case?

The $399 Aluminum Apple Watch is GPS ONLY

The $699 Stainless Steel Apple Watch is GPS + Cellular

You are also paying for a cellular radio, in addition to a stainless steel body, and a stronger watch screen.

The cost of manufacturing and you also get a "harder" screen on the stainless. When you hold Stainless compared to an aluminum case you will also feel the difference in weight. The stainless models also ship with a much higher quality charger.

Another example that might help is, why is a Porsche 911 more expensive than a VW Beetle?