Why don't more companies do this when they launch a new console?

[Nicholasp27]

u'll never make more money by releasing all that you have at regular price if that stock will sell out at that price...u are leaving money on the table by keeping it regular price

[econophile]

btw, the video game console market is far from perfectly competitive. there are 3 major firms, and each likely has significant market power (this means they can raise the price of their product above the perfectly competitive price and still make a profit).

the relationship between console price and video game sales also poses an interesting pricing problem. if people are hesitant to buy a console, but will buy many games once they have a console, it could be in a firms best interest to give the consoles away. while the firm would lose money with each console sold, the profits from video game sales could make up for it.

[fiskebent]

The easy way to handle this is obviously for the company to reserve 10,000 units and put them on eBay themselves. They'd make extra money and noone would know that they're dealing with the manufacturer, so no bad press.

[Dire]

Alot of people purchasing the PS3 early were doing so exclusively for clout - it was rare. When you increase the initial price to $2000 to immediately level out supply/demand, the console is no longer 'rare' - it's just overpriced. You can simply go walk into a store and buy one if you're a fool. See, for example, the history of the Neo Geo. [img]/images/graemlins/laugh.gif[/img]

[Nicholasp27]

no, it still sells out 'some number' at 2k price point

u don't make EVERY ps3 the same price...u offer a limited edition 'beefed-up' version for 2-3k the normal version and those sell out and u get the extra revenue...nobody is upset and ur rep isn't tarnished

[PITTM]

[ QUOTE ]
u'll never make more money by releasing all that you have at regular price if that stock will sell out at that price...u are leaving money on the table by keeping it regular price

[/ QUOTE ]

this is too shortsighted imo. i believe consumers "expect" a certain price for consoles. Although many would pay more for the systems, many loyalists may shy away from overpriced systems. i had a ps1 and 2 and i will not buy 3 for a few reasons, one being price. sony lost a loyal customer by having by far the most expensive console. im sure they lost many many more and this hurts them in the future. but i understand your argument wrt leaving money on the table by underselling. i remmeber in my advanced microeconomics class we talked about how bruce springstein sold a ton of tickets for like 20 bucks, those were turned around and sold for like 300ish by scalpers. bruce springstein pretty much just transferred a ton of money to scalpers. but i dont think selling tickets at a high price would hurt his image all that much.

rj

[Nicholasp27]

this is not shortsighted

again i am NOT saying to raise the price of the console

i am simply saying release a super duper beefed up limited edition for more money...this will NOT upset customers since the system is still a 500/600 console...it just allows those who care about 'status' and have the money to spend 1-2k on the 'exclusive' edition

this wouldn't hurt them since they are still catering to most of the customers at the 500/600 price point...they are just catering to those who want the 'limited edition' and can pay for it as well

[Thanir]

Having a 'limited' release with higher prices just doesn't make sense to me...you will be overselling to your most loyal customers...those who are willing to be first and buy a 1st generation system.

Personally I think the key for a successful launch follows in the Nintendo mold. You need to have a huge supply of units at launch. You will never be able to have enough units for every person, but if you have enough that ebayers don't find it worth buying up, and satisfy a majorty of your customers you are set. Any system that release with a short quantity (like the 360, and more recently the ps3) is just stupid, as you create the resellers market, and piss off your loyal fans

[Nicholasp27]

it's not a limited release

it's another version, like 20 vs 60

and it's not going to the most loyal, but to the most price insensitive customers...and those who care about the status of having the 'ultimate ps3'

[Nicholasp27]

also, pretty much EVERY product/service u buy follows these revenue management principles, but u aren't pissed off about them

u can go to a restaurant during 'happy hour' and pay less
u pay more to golf on saturday morning than the middle of the week
everyone on the airplane paid a different price for their seat
same in a hotel
when u buy a 'refurbed' electronic device, it's likely not even refurbed, but simply sold that way to capture some customers that were unwilling to pay full price for it
etc etc etc