Green LED's provide more accurate heart rate monitoring.
The watch already has infrared LED's and IR sensors in addition to green; the "extra $0.45 per watch" is baked in.
Every engineer has to make a decision about where the point of diminishing returns lies for their design.
For every additional LED and sensor they use, more power is consumed. Does it make sense to shorten battery life by x hours for everyone just so it functions better for y% more users?