If you are looking for links on the internet that will tell you the exact margins for any particular item, you will be looking for a long time. Margins vary from product to product and from day to day. I ran Best Buy stores for 8 years, and i can tell you exactly how unprofitable video games are. Like it has been mentioned, most of the margins on video games are very low (cost is $52-$56 on a retail price of $59 with some costs at the $48 that has been mentioned). The difference is that when the retailers sell it for $35, they have an agreement with the supplier/video game company to lower their cost of the item to the new price point only for the # of units sold that particular period of the sale. the retailer gets a credit or cash back depending on the deal. Most every item in the weekly ads have been deals "paid for" by the company that makes the product to ensure that their product is featured in the ad at the price that they want it at. There are certain companies that will only agree to help pay for the advertising(called co-op) if they get to choose the price in the advertisement.
Regardless, video games generally do have extremely small margins 5-20%. The games themselves generally are money losers after you factor in the cost of labor/shipping/other overhead costs. The real money in the video game category comes from the add ons. They are mostly items like accessories(chargers,controllers, storage devices) or memberships(netflix,xbox live). Just so we are sure that everybody understands how margin is calculated let's show an example. Item A costs the retailer $50, and he sells it for $60. The margin is $10 or 20% of the original price to purchase it. So, the retailer gets a 20% margin if they sell it at $60. Margin has nothing to do with other variables such as overhead(electricity, cost of retail space, insurance, labor, etc...), it is simply the percent of profit from the original cost of a particular item. If you want to average out all of the items sold in a store and figure out the profit margin for the whole store, it works the same. But, if you want to discuss the bottom line profitability of the store, then you take all of your margin dollars and subtract the overhead costs to get the overall profit of the store. Most Best Buys have an overhead cost between 13-16%, and their overall margin is about 18-22%. If you had any idea on how little it takes to make any retail location unprofitable, you would be very surprised. Why do you think that they push warranties and accessories(these two items usually have 30-50% margins) at you every chance they get??







