Ignoring the used market and whatever the whole “closeout” market for games, prices for new video games are almost perfectly uniform across the board - if a game’s $49.99 at EB Games, it’ll be $49.99 at Wal*Mart, Best Buy, Amazon, Target, etc. etc. etc. - you’ll never see a retailer selling it for $44.99 or any other variation until some sort of across-the-board price change comes through, at which point everyone starts selling it at $39.99 or whatever.
Why is this? Any other product I can think of sees a normal “market variation” from store to store and retailer to retailer.
“Intense competition in a fairly low-volume market” works for me. They know they aren’t gonna sell a whole lot of copies of Halo 3, at least in comparison to something like socks or gallons of milk, so they can’t afford to take a chance on allowing a competitor to undersell them and thus garner what little market share there is.
When a publisher negotiates a contract with a retailer it usually includes the maximum price the retailer is allowed to charge for the game. Basically this is protection for the publisher if the game is a surprise hit. The publisher wants the retailer to order MORE copies, not make all his money off jacking up the price of the copies he has.
But the wholesale price of a game usually isn’t that much lower than the publisher’s suggested retail price. The store may have bought the game for $45 from the publisher. If they put a retail price of $50 on it, that’s only 5% profit.
So, basically the retailers are in a position where they don’t have much pricing leeway. They agreed in advance to a cap that they can’t exceed. And they can’t drop the price very much without taking a loss on each sale. So almost everyone just charges the maximum and cuts prices when the publisher reduces the wholesale price.
Can you really call video games low volume? Didn’t the industry outstrip Hollywood in total revenue last year?
The even more interesting question for me, is why do all games have the same price even when produced by different production companies. Regardless of whether a new game is made by Interplay, EA, Id, etc, etc, they are all priced exacty the same?
While my private business doesn’t sell video games, we do sell things retail, and I’ve never seen any price restriction. That’s a form of collusion. The government frowns on things like that. The problem with retailers, especially brick and mortar ones, is that the MSRP is published and is common knowledge. Any store that would set their price above MSRP is going to have a lot of bad press, the damage from which is way more costly than the few bucks they’re going to make from video games.
Publishers, well good ones anyways, crunch a ton of financial data to determine the market price for something. Like retailers, they too can suffer from pricing their products too high.
Check your math. Most retailers have the same operating profit percentage overall, it’s just the nature of the industry. In order for them to do their forecasts, month to month, quarterly, yearly, etc. they have to set goals and profit percentages. The wholesale price in relation to the MSRP price allows the retailers to set their own prices and decide when a product isn’t selling and when to close-out a product when they’ve already made their profit margin.
I worked for The Game Keeper for a while. We did not get an employee discount on Video Games.
I was told more or less, that the prices we had, weren’t to far off from what we paid.
I would think that this, along with the fact that, as others have stated… the market has found the one ‘right’ price. No one (vid game company) can move from it, they don’t want to, and there is no need to.
Like I said, “low volume” in comparison to other consumer goods like socks or gallons of milk. My Wal-Mart has basically one-half an aisle devoted to video games (the ones locked up in the glass cabinets), whereas “socks” appear in many different parts of the store (Girls, Boys, Infants, Ladies, Mens), and “gallons of milk” require a semi-truck to refresh their stocks daily. However, no semis are needed to restock their video games on a daily basis. “Low volume” as in, “They don’t sell that many of them in comparison to other stuff.” Everybody wears socks and drinks milk, but not everybody has a Playstation.
I think our ideas of “low volume” must be considerably different
While I acknowledge that video games do not have the level of turnover of “daily essentials”, like milk, I still wouldn’t call video games a low volume item by any stretch of the imagination.
It’s quite common for places here to have different prices on computer games- to use Bioshock as a recent example, EB Games had it for $89, with a $20 discount if you pre-ordered (which I did- $69 Bioshock!), Kmart had the game for $89.95, and I saw a couple of places which had it for $84.95.
Of course, PC Games here are too expensive as it is, but that’s a topic for another thread…
Are there big ranges in what you pay for varying games, though? Australian Sims players report prices that are almost exactly what we pay, once you convert the currency. When the Sims 2 came out in 2004 we paid about $50USD and they were reporting 60-70AUD (which currently is $52-60USD). It’s a bit more, but people figured it was mostly due to shipping costs and/or tariffs.
The Sims 2 has always been slightly cheaper than most other games for some reason- AUD$89 is about the average price for a new release PC game here, cf USD$50 in the US, which is about AUD$65-$70 as far as I can tell. I see no reason why here should be $25 worth of shipping costs and tariffs on a PC game, which leads me to believe we’re getting shafted on the price.
Game manufacturers/publishers have found a way to squeeze more out of their game pricing. It is quite common now for a game to sell a “collector’s edition” that contains a few more goodies such as a figurine or special packaging or in the case of the recent World in Conflict a piece of the Berlin Wall.
Personally I find the extra fiddly bits a waste and never buy them but apparently many do.
“Low volume” as in, “They don’t sell that many of them in comparison to other stuff.” Everybody wears socks and drinks milk, but not everybody has a Playstation.
