Pursuing pricecuts too aggressively too quickly will result in a more rapid degradation of perceived value. You'll hit your pricing floor faster, which will put you in the position of not being able to cut prices to keep up the momentum built mostly on bargain pricing. Look at Xbone. MS abused the fire sale strat so much early on that for the past couple years trying to sell the Xbone at MSRP was a lost cause. Sales soared when they did firesales...at first. But every bump got lower and lower. And after each and every one, sales cratered. The Xbone isn't worth what MS needs to actually be selling it at anymore, not in the eyes of the consumer.
Or to put it more simply, you always ere high because you would rather be a bit high and have to do a little trimming than too low. Because you can always lower the price, you can never raise it.
Theres a solution to that though..... dont raise the prices back up.
Perm price cut = constant effect.
The problem comes into play when you play around with prices and them have them soar back and forth.
Consumer realises you do this constantly.... they wait for the price cut times to buy.
Just dont try fooling the consumer?
Xbox did it alot, they basically relied on these firesales to show they where competeing.
Consumer caught on, and basically only bought when there was a firesale.
Nintendo wouldnt have to do such a thing for years to come, to sell their hardware.
The price cut effect will still wear off. There's an optimum time for cuts and a year already set to be highly lucrative and see very high sales isn't it. Microsoft is in a very bad spot, yes, as they have not only devalued the product but also trained people to think MSRP=overpriced in general. But the devaluation issue is still very real. The sooner you start cutting the price, thefaster you'll hit the floor. Ideally, you want to never hit the floor until the product has run its course. The Playstation 4 is a strong example of a product that has done just that. Only one full on price reduction, only a few years of aggressive deals offered at strategic times. System is still at $299 as the gen closes leaving them space to cut to 199 to mop up the last of the sales next year if they so desire.