MrStickball don't play Wale any mind he is trolling. Retailers make money off each game and console sold. There have been threads on this in the past. Here is what the Wii and its accessories cost retailers at launch.

http://www.engadget.com/2006/10/07/wii-retail-details-markup-and-endcaps/

All retailers make money on games.

 Costso (where I work) makes money off both games and consoles (even though they are known as the least expensive videogame retailer in America).

 I said make "profit". how much is the difference between "cost" and retail price at Costco where you work?

If you do not make profits you will go out of business. Retailers make 20% on new games and a lot more on traded games. BTW trading games in loses money for the developer it is a slap in the face. Only trade in crap games do not trade the good games away for some store to rip you off.

 hmmm, how did you go from "profit makes you stay in business" to "retailers make 20%"??

Of course retailers make money, they make it from other products, just not from games (not enough to cover their operating cost) and frankly, almost nothing at all from consoles

The profit margins are not large. However they do not have to be. Retailers aren't so much buying the products as they are renting out their retail space to manufacturers. For every game or console they sell. They take a percentage of the sale. They take no real risk beyond shrinkage. Which is entirely within the retailers control. This is the reason for glass casing the merchandise.

Basically its a safe sales practice. The retailer cannot take a loss unless they decide to take a loss, or do not protect their inventory properly. This is why retailers are able to sell games and consoles in the first place. When they do not sell the manufacturer reduces the price or the unsold merchandise is returned. That leaves it up to the retailer to control distribution and floor sales as expenses.

The reality is that the retailer does have to meet a quota of sales to cover these expenses labor, insurance, transportation, location upkeep. That said they do generate profit from the allocated space which is minimal in locations. Since all they allocate to the sales is usually a single aisle, and that aisle brings in customers that make additional purchases.

The reason smaller retailers work the trade in system is that the profit margins aren't high enough for them. Not only because the margins are relatively small, but because it is hard to move games in the kind of bulk required. Your local game boutique will generate a profit from the sales, but not necessarily offset their expenses. For instance if you generate a thousand dollars of profit in a day. Then have to pay employees wages, insurance, rental fees, and corporate kick back. Well that is a small margin of error to live within. Basically a bigger retailer actually has lower costs compared to the smaller player.

I don't necessarily blame these little retailers for their trade in policy. Any more then I blame car dealerships for their trade in policies. The reality is that this is one of the advantages of being a small retailer. They have the ability to enact such systems, because they can afford to be more hands on. While the system would be impractical for a large retailer.

It's really hard to take what you just said seriously, considering you offered absolutely no insight to the topic or suggested any other meaningful argument.

Profit margin is a hard number, you either get it or you don't. Maybe go into the field and ask your local employee to find out yourself?

From what I know from working at a distribution center. A new game has a markup ranging from 9-15%, the kicker is that older game say a best sellers title will have anywhere from a 25-70% markup on it. Accessories can have huge markups on them even exceding 100%. Game systems are pretty well a break even or a couple %.

LOL :)