4 ms·

if you are able to do a resale at a much higher price, the price from Sony or whatever should be higher. The bots are just discovering the real market price. No

by mjfl 4y ago

if you are able to do a resale at a much higher price, the price from Sony or whatever should be higher. The bots are just discovering the real market price. Not sure why they don't raise the price to whatever the bots are selling at.

30944836 4y ago
>Not sure why they don't raise the price to whatever the bots are selling at. Because if they do this, the response will be "Sony is greedy charging people all this money for something that only costs them $x to make." I am not accusing you of this, just linking this to statements and thoughts that often arise in this context. A very typical response to questions about why something costs what it does is, "It's just supply and demand. Econ 101." But it's not just Econ 101. Supply and Demand is covered in Econ 101, but economic activity is far more advanced than supply and demand. Brand perception, customer good will, supplier agreements, retailing agreements.. all of these are major factors in determine "what" the price of an item is when it appears on the shelf. This is the work of entire teams at companies as big as Sony.
- mjfl 4y ago
  > "Sony is greedy charging people all this money for something that only costs them $x to make." "then stop buying it" Sony will never actually say this. But this would be the 'cynical capitalist' response.
  - compiler-guy 4y ago
    Sony needs people to buy it, and if the scalpers do it and resell, then Sony doesn't pay the reputational cost.
    - 30944836 4y ago
      Yep. Even better, if they flood the market with additional units and sell them at the same price, it's the resellers (scalpers) take the hit, and not them. Sony is probably selling them at a loss and intending to make it up on the software (game) sales. This means doing anything to decrease the demand, even a little, reduces their ability to make money on the part of the business that is intended to make the money.
    - mjfl 4y ago
      the idea is that they won't stop buying it. If they would, then the price from the bots would be lower.
      - brewdad 4y ago
        As someone above pointed out, Sony is concerned about the entire 5 year cycle of the PS5, not just the current quarter or even first 18 months. There is also the need to maintain customer goodwill for the future PS6. There is already a fair degree of substituteability between a PS5 and Xbox. By the time the PS6 is out there will probably be a Steam Deck 2.0 and maybe something new with Nintendo. It's far better to let the scalpers take the reputational hit.
    - kzrdude 4y ago
      Sony is losing a lot - their customers are paying a huge "tax" on top of their product price and Sony gets nothing of that.
- MikeTheGreat 4y ago
  I think that you're right, and in addition: there's a perception that the price is going up because there's a shortage that's outside of Sony's control, so if Sony jacks up the price I think Sony would be accused of profiteering / taking advantage of the situation. "This company is price-gouging me due to temporary circumstances" definitely impacts brand perception, customer goodwill, etc
  - abofh 4y ago
    Typically the console makers make jack off of the console - often they lose money on the console. Profit is made off of licensing to game makers. Them jacking up console prices doesn't benefit them - they want as many consoles in as many hands as possible so that games can be sold to those users as possible. If they make 50$ extra on the console, but the buyer buys no games, or buys a bad one and decides not to buy more on the console, that's a net loss right out, and an opportunity lost because the console didn't go to someone who would buy two, one of which they loved and caused them to buy three more. It's the opposite of the iPhone situation - apple makes the majority of its money (on average) from the phone sale itself - people wait in line to give apple 30% off the top, even if they never buy an app or a song. So apple having a shortage slows down their profit this quarter, sony having a shortage slows down their loss this quarter and their profit 2023Q2. It's short-term vs long term value of a customer, and the console makers are arguably making a better decision given the lifespan of a console.
- bombcar 4y ago
  Sony also wants to keep selling ps5s for years -maybe a decade- and needs to not shoot their entire product schedule for some short profits. If they want to milk it the best is focus on higher cost bundles etc until manufacturing catches up. Every popular console has had issues like this, I remember the Wiifinders being a really big deal for two Christmases in a row.
Arrath 4y ago
If the goal is to extract maximum profit from the consumer for each console, sure. But what of consumer goodwill? What of lost downstream profit from games and services sales if people decide to forgo a console due to the MSRP? Some people may be willing to stomach the price from resellers, would they if it was Sony etc. pricing it at that level?
- runnerup 4y ago
  Sony can drop the price as demand wanes.
  - 30944836 4y ago
    The situation is so much more complex than this, and involves a mix of legal agreements, corporate philosophy, and consumer psychology. You might benefit from reading this article on Price Anchoring: https://www.priceintelligently.com/blog/bid/181199/price-anchoring-to-optimize-your-pricing-strategy https://www.priceintelligently.com/blog/bid/181199/price-anc...
    - deleted 4y ago
      [deleted]
- mjfl 4y ago
  PS5 has been completely sold out for 2 years now. There seems to be considerable slack for a price raise from Sony, and they have every right to claim the profit that currently the bots are taking.
  - 30944836 4y ago
    >they have every right to claim the profit that currently the bots are taking Consumers don't see it this way. They often latch on to completely "irrational" cues in forming opinions of a brand. See: "Apple Tax." Note: I put "irrational" in quotes to indicate that consumers exhibit un-intuitive behavior. It's not actually a value judgement about the behavior itself, only indicating that in a purely supply-and-demand driven market environment, these behaviors would not be exhibited.
Macha 4y ago
I can go to the store or the store's website right now and just get a new xbox series for MSRP (or €50 less than msrp, in the series X case). In fact, last month I did just that. If the PS5 equilibrium price is say... €800 (the buy it now price on ebay right now), and Sony raises prices to that level, some number of customers are going to throw in the towel and buy an xbox, with the loss of €120/yr PS plus revenue, 30% of their game purchases, etc. to MS. Is this number of people and their spend higher than Sony will gain from pocketing what scalpers currently are? Clearly at Sony HQ they either suspect it will be or are too scared to find out. Compare the GPU shortage where both major manufacturers were affected and hence retail prices did go up and per AIB card makers, at least part of that was nvidia and amd. Because their market didn't have an instock competitor to worry about, and a big chunk of their market (miners) were more economically focused on expected returns vs cost, while consumers for entertainment products may not look at it from such a calculating perspective.

by mjfl 4y ago

30944836 4y ago

>Not sure why they don't raise the price to whatever the bots are selling at. Because if they do this, the response will be "Sony is greedy charging people all this money for something that only costs them $x to make." I am not accusing you of this, just linking this to statements and thoughts that often arise in this context. A very typical response to questions about why something costs what it does is, "It's just supply and demand. Econ 101." But it's not just Econ 101. Supply and Demand is covered in Econ 101, but economic activity is far more advanced than supply and demand. Brand perception, customer good will, supplier agreements, retailing agreements.. all of these are major factors in determine "what" the price of an item is when it appears on the shelf. This is the work of entire teams at companies as big as Sony.

mjfl 4y ago
> "Sony is greedy charging people all this money for something that only costs them $x to make." "then stop buying it" Sony will never actually say this. But this would be the 'cynical capitalist' response.
- compiler-guy 4y ago
  Sony needs people to buy it, and if the scalpers do it and resell, then Sony doesn't pay the reputational cost.
  - 30944836 4y ago
    Yep. Even better, if they flood the market with additional units and sell them at the same price, it's the resellers (scalpers) take the hit, and not them. Sony is probably selling them at a loss and intending to make it up on the software (game) sales. This means doing anything to decrease the demand, even a little, reduces their ability to make money on the part of the business that is intended to make the money.
  - mjfl 4y ago
    the idea is that they won't stop buying it. If they would, then the price from the bots would be lower.
    - brewdad 4y ago
      As someone above pointed out, Sony is concerned about the entire 5 year cycle of the PS5, not just the current quarter or even first 18 months. There is also the need to maintain customer goodwill for the future PS6. There is already a fair degree of substituteability between a PS5 and Xbox. By the time the PS6 is out there will probably be a Steam Deck 2.0 and maybe something new with Nintendo. It's far better to let the scalpers take the reputational hit.
  - kzrdude 4y ago
    Sony is losing a lot - their customers are paying a huge "tax" on top of their product price and Sony gets nothing of that.
MikeTheGreat 4y ago
I think that you're right, and in addition: there's a perception that the price is going up because there's a shortage that's outside of Sony's control, so if Sony jacks up the price I think Sony would be accused of profiteering / taking advantage of the situation. "This company is price-gouging me due to temporary circumstances" definitely impacts brand perception, customer goodwill, etc
- abofh 4y ago
  Typically the console makers make jack off of the console - often they lose money on the console. Profit is made off of licensing to game makers. Them jacking up console prices doesn't benefit them - they want as many consoles in as many hands as possible so that games can be sold to those users as possible. If they make 50$ extra on the console, but the buyer buys no games, or buys a bad one and decides not to buy more on the console, that's a net loss right out, and an opportunity lost because the console didn't go to someone who would buy two, one of which they loved and caused them to buy three more. It's the opposite of the iPhone situation - apple makes the majority of its money (on average) from the phone sale itself - people wait in line to give apple 30% off the top, even if they never buy an app or a song. So apple having a shortage slows down their profit this quarter, sony having a shortage slows down their loss this quarter and their profit 2023Q2. It's short-term vs long term value of a customer, and the console makers are arguably making a better decision given the lifespan of a console.
bombcar 4y ago
Sony also wants to keep selling ps5s for years -maybe a decade- and needs to not shoot their entire product schedule for some short profits. If they want to milk it the best is focus on higher cost bundles etc until manufacturing catches up. Every popular console has had issues like this, I remember the Wiifinders being a really big deal for two Christmases in a row.

Arrath 4y ago

If the goal is to extract maximum profit from the consumer for each console, sure. But what of consumer goodwill? What of lost downstream profit from games and services sales if people decide to forgo a console due to the MSRP? Some people may be willing to stomach the price from resellers, would they if it was Sony etc. pricing it at that level?

runnerup 4y ago
Sony can drop the price as demand wanes.
- 30944836 4y ago
  The situation is so much more complex than this, and involves a mix of legal agreements, corporate philosophy, and consumer psychology. You might benefit from reading this article on Price Anchoring: https://www.priceintelligently.com/blog/bid/181199/price-anchoring-to-optimize-your-pricing-strategy https://www.priceintelligently.com/blog/bid/181199/price-anc...
  - deleted 4y ago
    [deleted]
mjfl 4y ago
PS5 has been completely sold out for 2 years now. There seems to be considerable slack for a price raise from Sony, and they have every right to claim the profit that currently the bots are taking.
- 30944836 4y ago
  >they have every right to claim the profit that currently the bots are taking Consumers don't see it this way. They often latch on to completely "irrational" cues in forming opinions of a brand. See: "Apple Tax." Note: I put "irrational" in quotes to indicate that consumers exhibit un-intuitive behavior. It's not actually a value judgement about the behavior itself, only indicating that in a purely supply-and-demand driven market environment, these behaviors would not be exhibited.

Macha 4y ago

I can go to the store or the store's website right now and just get a new xbox series for MSRP (or €50 less than msrp, in the series X case). In fact, last month I did just that. If the PS5 equilibrium price is say... €800 (the buy it now price on ebay right now), and Sony raises prices to that level, some number of customers are going to throw in the towel and buy an xbox, with the loss of €120/yr PS plus revenue, 30% of their game purchases, etc. to MS. Is this number of people and their spend higher than Sony will gain from pocketing what scalpers currently are? Clearly at Sony HQ they either suspect it will be or are too scared to find out. Compare the GPU shortage where both major manufacturers were affected and hence retail prices did go up and per AIB card makers, at least part of that was nvidia and amd. Because their market didn't have an instock competitor to worry about, and a big chunk of their market (miners) were more economically focused on expected returns vs cost, while consumers for entertainment products may not look at it from such a calculating perspective.