Forums - Sales Discussion - What is the cost to manufacture a PS4 these days? And should Sony cut?

Should they have/will they?

Yes and they should have in 2018 6 22.22%
 
Yes and they should have in 2019 7 25.93%
 
Yes and they should now 7 25.93%
 
No they should keep it $299 4 14.81%
 
They should do a $50 cut 2 7.41%
 
THEY SHOULD INCREASE PRICE! 1 3.70%
 
Total:27

I've thought for awhile that Sony is being short sighted in taking the immediate profit of a $299 over the long term locking in of customers they could get by cutting such a popular system to $199.  They never got PS3 there because the Cell kept manufacturing high.  One of the things they said about PS4 was that the less custom parts would cause price drops to be easier and it would get manufacturing costs down lower and faster.  Yet we have only seen one price drop and yes I realize that's because of how popular the system still is.  But could they still make some profit on a $199 PS4 and, with BC and Plus, lock people into their ecosystem while making a mad amount of profit from people that are more budget gamers? 

I know they've had $199 bundles with multiple games in holidays past so I have to think they would still make profit on the system and with Xbox now having a $299 next gen system I feel they would be far better served getting the cheaper gamer and then when PS5 becomes cheaper down the road (and when it's no longer taking a loss) that person will be FAR more likely to upgrade if they already are subbed to an online service with PS and have a bunch of Digital or physical PS4 games they want to play on a new PS5 slim.  I don't get the point of eeking out a few more bucks when they could have driven this thing into PS2 levels of userbase with far more profits these days than the PS2 days and more of ecosystem to lock that person into.  Personally I think this cut is long overdue and they could even cut out the disc drive and sell it like PS5 where it's $199 digital PS4 and $299 slim. 

Either they are going to cut the pro out entirely or cut price on everything because they can't have their next gen digital version selling at the SAME price as the much less powerful Pro.



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Both PS4/ Pro and X1 need price drops prior to the launch of their next gen consoles.



They will drop the prices, but my guess is by no more than $50 for each SKU.

And they aren't being "short-sighted" it's rather the opposite. They have already ole over 110M consoles, the userbase they have to secure are already in that 110M. Right now, the PS4/PS4pro probably cost them no more than $180 and $230 respectively to make. So they are making a lot of money from the sale of that hardware, money that would help offset what they would be losing on the PS5.



Intrinsic said:
They will drop the prices, but my guess is by no more than $50 for each SKU.

And they aren't being "short-sighted" it's rather the opposite. They have already ole over 110M consoles, the userbase they have to secure are already in that 110M. Right now, the PS4/PS4pro probably cost them no more than $180 and $230 respectively to make. So they are making a lot of money from the sale of that hardware, money that would help offset what they would be losing on the PS5.

I don't think $50 would be worth it.  That's not as psychologically as big a deal as getting under $200 and into that more impulse buy territory.  Hell cut out the disc drive on the PS4 and get it under $200 for slightly better profit than simply putting the current slim there.  That would cut a few bucks off production.  And you said it's not short sighted then cite something that's in the moment.  Cutting the transition period costs.  I'm talking long term.  The people who buy PS4 now will buy PS5 later in the gen if they can get a cheap PS4.



I am Iron Man

Imagine a $200 PS4 and $300 series S next to a $300 Switch. Nintendo needs to cut the price as well.



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1) I think they need to discontinue the Pro.  The whole point of getting a Pro is to get the best Playstation hardware possible and that is going to be the PS5 pretty soon.

2) I think they should have cut the price in 2019.  They didn't need to in 2018, because they had a really good year for games: God of War, Spider-Man, Monster Hunter World, Red Dead 2, etc....  2019 was not nearly that good of a year and by that point PS4 really was due for a price cut.

So, obviously they didn't cut the price in 2019, but I still think they need to do it.  There really are people out there who won't buy a system for $300, but they will for $200 (especially as a holiday bundle with some games).  These people are very different from those who would want a PS5 at launch.  Cutting the price of PS4 won't eat into PS5 sales, but it will boost PS4 sales by a good amount at this point.

It's also late enough that it will actually help their hardware profits (not to mention software profits).  There is a risk in cutting the price too early that you give a $100 discount to people who would otherwise have paid $300.  I don't think there is much room for that to happen anymore.  At this point if they cut the price to $200 (or even $250) I only see upside.  I don't really think there is a downside.



Robert_Downey_Jr. said:
Intrinsic said:
They will drop the prices, but my guess is by no more than $50 for each SKU.

And they aren't being "short-sighted" it's rather the opposite. They have already ole over 110M consoles, the userbase they have to secure are already in that 110M. Right now, the PS4/PS4pro probably cost them no more than $180 and $230 respectively to make. So they are making a lot of money from the sale of that hardware, money that would help offset what they would be losing on the PS5.

I don't think $50 would be worth it.  That's not as psychologically as big a deal as getting under $200 and into that more impulse buy territory.  Hell cut out the disc drive on the PS4 and get it under $200 for slightly better profit than simply putting the current slim there.  That would cut a few bucks off production.  And you said it's not short sighted then cite something that's in the moment.  Cutting the transition period costs.  I'm talking long term.  The people who buy PS4 now will buy PS5 later in the gen if they can get a cheap PS4.

It would be worth it for sony because they care more about what they get from that to offset the cost of the PS5 than those people buying a PS4 when the PS5 is already out. Those people likely also wouldn't be interested in buying a PS5 till its around $200 too. The audience and market they need to appeal to and address are the ones that would e picking up a console in its first 3 years.

In 4+ years when thPS5 is around $250 - $300? then they can start making a case for those that buy at those kinda prices.



I think they should've already. I mean the PS2 Slim was only $129.99 when the PS3 launched. It might be best to just get rid of the Pro altogether. It has not been overly popular, and it would be tough to get it down to $299.99 or under and still make a profit.
PS4 Slim could go down to $249.99 or $199.99. If Sony really wants to try something, they can make a PS4 Super Slim without the drive. Charge $149.99-$199.99 for it. It could be the smallest and cheapest PS4 yet, good for budget gamers or those wanting to jump into PlayStation without worrying about a PS5.



Lifetime Sales Predictions 

PS4: 130 mil (was 100 million) Xbox One: 55 mil (was 50 mil) Switch: 110 million (was 73, then 96 million)

3DS: 75.5 mil (was 73, then 77 million)

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Intrinsic said:
Robert_Downey_Jr. said:

I don't think $50 would be worth it.  That's not as psychologically as big a deal as getting under $200 and into that more impulse buy territory.  Hell cut out the disc drive on the PS4 and get it under $200 for slightly better profit than simply putting the current slim there.  That would cut a few bucks off production.  And you said it's not short sighted then cite something that's in the moment.  Cutting the transition period costs.  I'm talking long term.  The people who buy PS4 now will buy PS5 later in the gen if they can get a cheap PS4.

It would be worth it for sony because they care more about what they get from that to offset the cost of the PS5 than those people buying a PS4 when the PS5 is already out. Those people likely also wouldn't be interested in buying a PS5 till its around $200 too. The audience and market they need to appeal to and address are the ones that would e picking up a console in its first 3 years.

In 4+ years when thPS5 is around $250 - $300? then they can start making a case for those that buy at those kinda prices.

they can sell to the $400 consumer with the digital PS5 and the $200 one (maybe they'll get a PS5 when it's $300 if they're in a better financial position when that happens) at the same time if they cut the PS4 price.



I am Iron Man

Robert_Downey_Jr. said

I don't think $50 would be worth it.  That's not as psychologically as big a deal as getting under $200 and into that more impulse buy territory. 

All these numbers are "clean" figures that are normal marketing targets, but this is in US dollars, and fair to consider that a large portion of potential market for these lastgen consoles at this point will not be in US itself, but in poorer countries whose local currency will not convert "cleanly". Further, the relative buying power there is such that even these lower priced lastgen consoles are not necessarily in "impulse buy territory" for vast majority of consumers there (even if that is how it might be perceived in US). I agree dropping the prices (as Sony originally publicized it's aim to) would further strengthen the platform. Customers picking these up now probably will not yield as much total profits as those ready to jump into nextgen, but that isn't to say PS4 can't still provide online service revenue. Probably just as important strategically, is not just the direct profit per customer (as long as that is neutral or positive), but them growing the community so their friends will tend to have one more reason to engage with platform.

A serious price drop would be accompanied by re-engineering for lower costs, but I here I question if they would or should continue both SKUs (base and Pro), seems too complicated and perhaps not justifying the doubled engineering/logistics effort for what probably isn't going to be huge revenue. Dropping Pro in favor of maximally low price base PS4 would target that lowest price point best, but I think the other way around has stuff in it's favor too. If it's slightly more expensive, well those customers interested in it will tend to spend more too. It would tend to make a better comparison VS MS' 1080p model, in fact even allowing (semi) 4K +HDR output that makes comparison a mixed bag in ways. I'm not slagging on Series S, but that seems reasonable low-engagement consumer perception... "OK it's technically lastgen but can do 4K HDR and is the Pro model" makes them feel they aren't getting bad product. If they went ahead with discless/all-digital Pro Slim that would cut out more costs (including power supply for drive) and they should be able to have competitive offer VS Series S. Digital distro also faciliates agile price targetting that can maximize sales per country/region (as many media have lower prices in poorer regions). There is argument to keep discs for the "presence" physical distribution entails, but realistically that is not the way the wind is blowing.

Last edited by mutantsushi - on 20 September 2020