EDIT: THIS IS FOR US ONLY

(1) 11/11/06 - 07/07/07 - 1,610,118 - $599 60gb - $499 20gb
(2) 07/07/07 - 03/11/07 - 673,614 - $499 80gb - $399 40gb
(3) 03/11/07 - 27/09/08 - 3,748,395 - $499 80gb - $399 40gb

Assumed average price per PS3 sale in each time period:

(1) $599 & $499 | Assumed Average = $575
(2) $499 & $399 | Assumed Average = $475
(3) $499 & $399 | Assumed Average = $450

Total number of weeks in each time period:

(1) 11/11/06 - 07/07/07 | No. Weeks = 34
(2) 07/07/07 - 03/11/07 | No. Weeks = 17
(3) 03/11/07 - 27/09/08 | No. Weeks = 47

Average sales per week:

(1) 1,610,118/34 = 47,356
(2) 673,614/17 = 39,624
(3) 3,748,395/47 = 79,753

n.b - Period 2 seems exceptionally low but it is the only time period which doesn't include a Christmas, and period 1 contains the launch date.

Assumed average price * average sales = Assumed average revenue per week:

(1) $575 * 47,356 = $27,229,700
(2) $475 * 39,624 = $18,821,400
(3) $450 * 79,753 = $35,888,850

Calculating % assumed price drop:

(1)-(2) (100/575) * 100 = 17%
(2)-(3) (25/475) * 100 = 5%

Calculating % average weekly sales difference

(1)-(2) (-7,732/47,356) * 100 = -16%
(2)-(3) (40,129/39,624) * 100 = 101%

Putting results into table:

Price      %      Sales      %
$575     100    47,356   100
$475     83      39,624   84
$450     78      79,753   185

Calculating relationship between price and demand:

Total assumed price drop: $125 | -22%
Total demand increase: 32,397 | +85%

Everytime the price drops 22%, the demand increases 85%
Everytime the price drops 2.2%, the demand increases 8.5%
Everytime the price drops 0.22% the demand increases 0.85%
(Apply 4.54 multipler to roughly get 1% price drop)
Everytime the price drops 1% the demand increases 3.859%

Applying this information to our table:

Price       %       Sales      %
$575      100     47,356   100
$475      83       39,624    84
$450      78       79,753   185
              70                     215
              60                     253
              50                     291
              40                     329
              30                     367
              20                     405
              10                     443

Calculating relationship between price and percentage:

$575/100 = $5.75
1% = $5.75

Applying this information to our table:

Price      %      Sales           %
$575     100    47,356       100
$475     83      39,624       84
$450     78      79,753      185
$402     70                       215
$345     60                       253
$287     50                       291
$230     40                       329
$172     30                       367
$115     20                       405
$57       10                       443

Calculating relationship between deman and percentage:
47,356/100 = 473.56
1% = 474

Applying this informationg to our table:


Price      %      Sales           %
$575     100    47,356        100
$475     83      39,624        84
$450     78      79,753        185
$402     70      101,910      215
$345     60      119,922      253
$287     50      137,934      291
$230     40      155,946      329
$172     30      173,958      367
$115     20      191,970      405
$57       10      209,982      443

Applying total revenue to our table:

Price      %      Sales           %      Total revenue: 
$575     100    47,356        100    $27,229,700
$475     83      39,624        84      $18,821,400
$450     78      79,753        185    $35,888,850
$402     70      101,910      215    $40,967,820
$345     60      119,922      253    $41,373,090
$287     50      137,934      291    $39,587,058
$230     40      155,946      329    $35,869,580
$172     30      173,958      367    $29,920,776
$115     20      191,970      405    $22,076,550
$57       10      209,982      443    $11,968,974

This shows that with the current situation (competing and complimentary products prices staying the same, same advertising amount, same amount of competing/complimentary products, same quality of competing/complimentary products. Same everything!), Sony would want to sell the PS3 at $345 to achieve maximum possible revenue from hardware alone. This does not take profitability into account.

EDIT: THIS IS FOR US ONLY

That is an interesting analysis, but I do not agree with how you are coming up with the increase in demand percentages. It does show, however, that dropping the price too much will have a very adverse effect on revenue if the number of consoles does not increase dramatically. However, they may make the argument that software sales would make up for it in the long run.

 Yeah, I do realise that 1% drop = 3.859% increase is off, but it was the best system my feeble mind could come up with.

At least you used your brain for the thread, unlike most of the topics created now days.  Nice work.

we are assuming here that with good revenue they would make profit, i think its still to early to call that. i think one of the reasons we wont see a price drop till march is that is when the ps3 will be able to handle it wwith minor to no losses

 We're assumng no such thing, read the last line of my post. ;)

i retract my stupidity... should learn to finnish breakfast before posting in the morning.... dont know how i missed that

The slight issue is the whole christmas issue, so maybe the 2nd period should be ignored, but it is quite an interesting idea. Of course there is point when the mass market is reached, which would change those figures as the increase become more exponential as the price goes down.

however, the main question is still how much money would Sony lose if they did that

 Well, it's better than the work I should be doing... (Co-ordinate geometry... urgh).

 Although I didn't take this into account when working this out, when mass market price is reached, dropping the price further doesn't have as much of an effect, the main reason being that the mass market could already afford it... as it was already at mass market price.

Perhaps if I were to include a multiplier to the demand increase vs price decrease, but I really can't be arsed to try and work that out... there haven't been enough price drops, yet.