The Wii U will be sold at a loss

[Play4Fun]

Chark said:

Play4Fun said:

The gamepad doesn't use any cutting edge parts. There are tablets out there with more components and better screens in them than the gamepad that cost less than a $100 to manufacture.

That's why i don't think it adds $100 or more to the console.

The gamepad's $150 price isn't really an indication of a production cost of around $100. That's what I'm arguing. Back in 2006, for example, we got a report that Xbox 360 controllers cost $11 to manufacture, yet they are sold for $50/$40 even today.

WiiU gamepad cost more to make than an average controller, so it will be sold for more than an average controller at launch, but I am as certain that it still has a high profit margin as i am certain that it costs less than $100 (i'm thinking around $50) to make.

So is Nintendo's gamepad pricing just exploitation? I don't think it costs $100. I'd say $50 though. That cost tacked on to what the parts in the Wii U cost makes a difference.

I understand that you can have high profit margins on a controller, but there is most likely a point where the returns have to diminish in order to maintain not only sales, but profitability. I suppose with the gamepad, the majority of purchases might be for replacements, in which case they are charging a lot for them because their most likely customer needs it rather than wants it in order to continue playing....well with asynchronous. If that is the case then they are just trying to make money off of people who break their controller instead of people who want multiple ones. If not, they would still be making a decent sum of money at a cheaper price.

For instance, if they made the same net profit as a 360 controller, around $40. If they price the gamepad to make that $40 mark than they should price it about $40 over the production cost. Now at $150 that stands at $110, or at $100 that's $60. That is one expensive controller.

The other concept it to match the profit margin, or profit percentage, so at a $150 price with a profit margin of 450% like the 360 controller has, that's $33 or at $100 price is $22. So the controller, reasonably is between $22 and $60 or $33 and $110 in price to produce, quite the range and that's using 360's controller profit set up. Now I doubt it is $22, looking at the device itself but it isn't incredible expensive. Still that is one crazy retail price if it is $150. I don't see much justification in it unless they are banking on no one buying them outside of replacements.

1. Like I said before, gamepads will only be sold seperately in Japan at for the moment. Nintendo believe  Japan will be willing to swallow the high price, the west will not, hence why it will not be sold seperately here for a while until it can be done so at a cheaper price.

 

2. Final example. kinect cost $50 to manufacture when it was released, yet was sold for $150 seperately. When bundled with the console it didn't add $150/$100 to the price.