Sony is Using The Price is Right’s Famous Tactic To Price The PS5
During the Q3 earnings call this week, it was announced that the PS4 had an all time lowest holiday sales period selling 6.1 million units during Christmas 2019, compared to the 8.1 million they sold Christmas 2018.
Chief Financial Officer, Hiroki Totoki was questioned on how Sony will have a “smooth transition” from PS4 to PS5 and also on which costs Sony can control.
Totoki said that Sony is able to control their labor costs for their workers and make sure they prepare the right volume for production and sales before launching. But.. this is where the pricing stand off will start. Totoki also said that he can’t control the price level of the next-gen console space and said that Sony will wait to see what the price of the Xbox Series X will be before slapping a price tag on the PS5.
“What is not very clear or visible is because we are competing in the space, so it’s very difficult to discuss anything about the price at this point of time, and depending upon the price level, we may have to determine the promotion that we are going to deploy and how much costs we are prepared to pay.”
Hiroki Totoki
Microsoft: We will price our Xbox Series X at $500
Sony: Great, we will price our PS5 at $499
Of course people are going to take their side depending on which console they play. But i’m going to attack this one from a business standpoint. These consoles, are going to be extremely advanced, but at the end of the day, a product is only worth what a consumer is willing the pay for it. Buyers dictate the market. Last thing you want is for your price to be substantially higher than your competitor. Doing all of this while also making sure you’re making the most money as possible. It’s a fine line that companies walk. In this case, it’s a good ol’ fashion game of chicken.
A belief in sales 101, for anyone that doesn’t work in the sales space, is He who speaks first, loses. Because you can use that info against them. PS5 and Xbox Sex (nice) are battling over that $500 price tag it seems. But with some strategic pricing, and cost cuts, I think someone could take a big hit on sales.
Maybe Sony will tell us more at E3. Oh wait.
