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

[Assani Fisher]

Clearly people are willing to pay huge premiums for the first few weeks/months that a new system comes out, especially if the launch titles are good. However, most companies can't really take advantage of this because if they come out with a huge retail price tag early on, everyone will bash them for it.

But imagine if a company announced that they were coming out on Februrary 1st with their new console and that it would cost $400 for the basic model or $500 for the new model. Then maybe 3 days before Thanksgiving they come out saying that the day after Thanksgiving they are actually going to release some special early systems but that they'll cost $2500 until the normal release date of February 1st.

Some people would definitely pay for that as evidenced by the Ebay auctions, and since they're "doing us a favor" by releasing them early I don't think anyone could complain about the huge price tag.

Seems like a great business plan to me. Thoughts?

[Dynasty]

The idea is too transparent.

Besides, the extra money made may not be significant for big coporations like MicroSoft or Sony. But, the negative reaction to the price gouging may create seriious long term damange.

[splashpot]

If they're ready for release at Thanksgiving, wouldn't they make more money by just releasing all that they have at regular price?

[xCptMorganx]

Actually they lose money with every system they sell, as it costs more to produce than the retail price. So they might make a little more by doing this but certainly not a significant amount. And the bad press the higher prices generate would most likely make it -ev in the long run.

[zomg]

they could say they are releasing say 500k consoles on thanksgiving for 400/500 then a few weeks before say that orders wont be filled only x will be shipped then sell the rest for $$.

Though as dynasty said "the extra money made may not be significant for big coporations like MicroSoft or Sony"

Or maybe say that a boat was hijacked with 100k systems on it then leak them a month early for massive profit [img]/images/graemlins/cool.gif[/img]

[snagglepuss]

a sicker rollout would be telling everyone your badass system is coming out in feb for 500 bucks.

then on thanksgiving announce that its being released next week for a limited time price of like 250. ship a ton and instant market saturation if the thing rules and has good word of mouth.

[Nicholasp27]

something along the lines of the OP would be smart and follow good revenue management practices

they could release a 'limited edition' system that had a 200gb hard drive and was a different color, etc etc...

they could release some early for a premium

there are lots of things they could do to capture more revenue from the price insensitive consumers...they really should be taking advantage of launch characteristics and segmenting the market


Nintendo coulda released a limited edition wii+zelda package with gold wiimote/nunchuk, gold disc and gold wii for $500...

PS3 coulda released a limited edition package with 200+ gb hard drive and some other features or add-ons

there are MANY ways they could get creative and charge more to those willing to pay it without looking bad to consumers


airlines/hotels/restaurants/etc etc all use revenue management practices to increase their revenue (and thus profits, as adding to revenue has a much larger effect on profit than reducing cost)

[danzasmack]

Isn't the majority of revenue from console systems in the games and not the consoles themselves? So if I sold my systems cheaper I would grab more of the market.

Making them dirt cheap doesn't make sense because then for many it would just be a 2nd system.

[Nicholasp27]

at launch, they will sell out of their entire stock, thus making them cheaper only lowers their revenue and doesn't increase their market share

when you are selling out of a product, you should raise the price to capture more money from the price insensitive consumers

they were selling 400k wiis no matter what in US at launch; they coulda made 100k of them gold zelda combos at $500 and that woulda made them $16million more (500-250-50-40=160 extra each * 100k)

they woulda still sold out launch day and consumers woulda been HAPPY that they had a shot at that instead of thinking NES was price gouging

[econophile]

[ QUOTE ]
If they're ready for release at Thanksgiving, wouldn't they make more money by just releasing all that they have at regular price?

[/ QUOTE ]

not necessarily