The Xbox One is selling for $499.99 this holiday season. The PlayStation 4 is selling for $399.99. The Wii U is selling for both $349.99 and $299.99. It doesn’t take an economist to understand the difference between those price points.
However, it does take an economist to accurately predict a marketplace’s reaction to the pricing of consumer goods.
Rafi Mohammed, economist and author of The Art of Pricing, was on a segment on Bloomberg TV to talk specifically about the Xbox One’s MSRP. Here’s a slice of what he offers.
“The goal of consoles is to use price to sell as many units as possible…You want to get that console in consumers’ hands, and where you really make money is on the games.
It was really surprising that they charged such a premium.”
How about how that price will affect the Xbox One at retail? Here’s Mohammed once more.
“This has the potential to really derail the Xbox One for the upcoming holiday season.”
Mohammed at one point suggests that Microsoft drops the price of the Xbox One by turning the Kinect into an accessory and selling it separately. Sound familiar?
Where do you folks stand on the Xbox One’s price. Obviously, we’re all in favor of cheaper goods, but do you think $499 was a misstep?