XB360 premium launch version was actually priced $400, while the core version, while cheaper, was too poorly equipped, anybody wanting to add a HDD, necessary for downloaded games and proprietary, so a lot more expensive than standard HDD, would have ended up spending more than buyin a premium.
PS3 "cheap" model wasn't cheap at all at $500, so people preferred the better equipped one, but sales for PS3 really took off when the revised model, decently equipped and at $400, was launched.
$400 is good, but while nobody will ask for a princely equipment at that price, most will ask at least for a decent one.

You failed to mention the main problem: explosion of cost in developing games. In 1990 Monkey Island was made by ten people. In 2018 God of War was developed by 270 people over four years. The costs are just incomparable, and number of gamers didn't grow in the same way as the costs. That is the core of the problem.

I honestly am fine with $500... or more honestly. I don’t really care that much about the price of the console actually... what really matters are the games that are available. Games are what matters the most.

OK, this is ridiculous. While I think ignoring inflation is wrong, you can't compare bread with a luxury item like video game consoles. People need to buy bread, even if they can't afford luxury. In fact increasing prices on basic items like food might cut short expenses for luxury.

Also looking at inflation alone is outright wrong. If inflation grows slower than incomes, then people have more moeny to put on luxury items. If it is the other way around, the people stop  buying luxury stuff.

The comparison with past consoles is also faulty, because most of them were bought by a small amount of people. Exactly as you would expect of expensive items. As I said before, intensive gamer like us pay pretty much everything for our hobby, but other people prioritize it lower. Each higher pricepoint leads to lost sales. How much is hard to gauge. But this fight about bread and inflation and stuff does really not help to answer this question.

Didn't you see the smiley? It was a joke and a reaction to "Well, guess what, people don't give a bread about how consoles cost 20 years ago." and "Who the hell gives a bread about the inflation when they go shopping ?"

No, I'm comparing consoles not to food or other life necessary things, but to other luxory/entertainment price developments over the last decades. 

OK, sorry I unloaded my rant on you.

Specs aside, history has proven time and again that a base SKU cannot exceed $399 and achieve widespread adoption. I suppose if both Sony and MS launched at $499, it would be interesting to see how that played out. But, if one of them is at $399, and the other at $499, I suspect the $399 will win handily. We've seen it over and over again.

And, yes, inflation..... But, inflation in video games has not been a thing.

I think the community is ready to accept a more expensive console, but I dont think its ready to accept a higher price of games. Specially with the GaS trend.

Knowing that the PS5 will be BWC i'm down to pay $500 for it :)

Profits have been ever-increasing as costs have been increasing... And the entire gaming market has been growing at around 2-5% a year.

So whilst people claim that "increasing costs" are responsible for "higher game prices" - They need to keep everything in perspective, there is simply more money to be made.