The author of “The Art of Pricing” says the price of the Xbox One is too high.
Back in the previous round of the console wars, Xbox 360 pretty much cleaned the mat as the PlayStation 3 launched at a ridiculous $600, nearly double that of Microsoft’s machine. Gamers on a budget sprung for the Xbox 360 and Nintendo’s Wii as the PS3 mostly sat on the shelf, waiting for someone with a higher income or loyalty to Sony to come along and grab it.
This round, Sony has the upper hand, not only because of the bonehead things Microsoft had insisted on until just last week, but because the PlayStation 4 is launching at a bill less than Xbox One. That’s just how it goes if you’re trying to sell a console to a public that for all intents and purposes isn’t taking sides for any reason other than a lower price tag. Rafi Mohammed, author of “The Art of Pricing,” understands this.
Rafi Mohammed states:
“You want to get that console in consumers’ hands, and then where you really make the money is off of the games. So it was really surprising that they charged such a premium, especially when they had a lot of negatives … like the very restrictive DRM, which they did retract from. One of the key things is that they really listened to their consumers and they did backtrack and they reduced the price, but I still think the price is too high. So it’s still a $100 premium.”
What the author of “The Art of Pricing” is saying can be related to the shaving razor industry. You sell the handles for cheap or give them away in the mail as part of a promotion, and then you make all of the money on the disposable razors you clip onto the handle.
Even though the Xbox One finally started doing what the consumer wanted, the price just isn’t competitive enough.
Imagine you’re in the store, and you don’t know anything about either console. The PlayStation 4 is $400, and the Xbox One is $500. Chances are, you’ll take the PS4 with an extra game or accessory. You’re still spending five bills, but you’re technically getting more.
What do you think of the author of “The Art of Pricing” saying that the Xbox One is too expensive? Is the higher price tag enough to deter you from buying Microsoft’s next generation console?