| Scisca said:
I think at this point they should go $299->$229->$199 or $179. The Wii U has been on the market for so long and is struggling so much that $50 won't change much. And $229 looks much better than $249, it's way closer to the impulse purchase territory and on the other hand, it's still $30 over the $199 price. |
How would you know the bolded? Real-world demand curves tend to be non-linear. A $50 price drop could very well mean a large increase in sales or a small increase in sales, depending on the shape of the demand curve and the elasticity of demand of the consumers. There is no way we can predict this very easily. The same can be said for a $100 drop, by the way. Also recall that in a lot of countries a $50 price cut isn't just that. For example, here in Pennsylvania there is a sales tax of $20 on a Wii U priced at $299. So if I were to purchase a Wii U it would really be $319. $249 would translate to $266.43. Now the difference here is how people percieve the price change. Going from $3XX to $2XX has shown to create larger effects in the minds of consumers than going from say $3XX to $3XX or $2XX to $2XX. Now you might say, well the same can be said for the $100 price-cut, but then the actual price would be $319 vs. $213. In the end you only get the effect of going from $3XX to $2XX, the same thing that happened when you only had a $50 price-cut. This is especially true for consumers who don't keep track of prices. They might think that $2XX is reasonable, but $3XX is not, but wouldn't really care if it is upper $2XX or lower $2XX. That is just how weirdly people think, and it is also why we always get the .99/.96 prices.
So then why should Nintendo choose $249 > $229? Profits. Nintendo is a company that likes to maximize profits. If they sell at a large loss, then selling many more consoles will LOSE them money, not make them money. And then they have to do a cost-risk-benfit analysis to figure whether or not having more consoles in homes at such a large cost is worth it. In the end, I don't think Nintendo will say it is, as they are transitioning to their new unified platform. They'd probably rather take a profit-maximizing route and decrease the price only when the costs aren't so large through increments.
