Why does everyone HAVE to sell PS3 at RRP??

[AndyPee!!]

Always wondered about this, are retailers bound by terms to sell items like PS3 for set RRP's?? Couldnt big volume retailers like Supermarkets knock them out at little over trade price and shift lorry loads of them??
Can a retailer, who has paid the agreedtrade price for an item, retail that product at whatever price seems reasonable/feasable for them in the spirit of competition??
The games vary hugely with some release titles as low as 24.99, where others charge as much as 44.99?? just wondered why consoles never do...
No knocks, just wondered...

 

[dcfcviper]

Well alot of places are selling consoles or packages for £399 now anyway, but I understand what you mean, especially about the games.

 

[themanwithapc]

Retailers don't have to sell at RRP (which stands for RECOMMENDED retail price). In fact, price fixing is illegal. It's up to the retailers to sell at whatever price they see fit.

You have seen variations with some deals as of late, but for a supermarket, selling the PS3 won't be their main line of income, so no incentive to shift bucket loads. Also, it could end up starting a price war (everyone trying to undercut the other).

 

[FrancescoNoir]

Retailers don't have much choice but to sell the PS3 quite close to RRP as they buy them in from Sony at pretty much RRP.

It has been speculated that retailers make around £25 markup on each hardware unit. The retailer has to pay Sony upfront for however many units they want, say 10,000, and then the idea is that each unit gets sold a little further down the line to a customer, hopefully with some accessories and games - this is where the retailers make a much greater margin as they can make anything up to thirty or forty percent on games. This greater margin on software is also one reason why games can be discounted more heavily sometimes, whereas hardware cannot.

Retailers in the UK have never been very happy with carrying such a low margin on hardware (it's never more than 10&#37 but they put up with it to keep the manufacturers happy. This is why you see so many forced bundles when hardware is short.

Whatever some people say, the PS3 has definitely not quite matched up sales expectations. Retailing depends on cashflow; sales to give income to buy more products to sell and then the process repeats. There are an awful lot of retailers now that have a huge amount tied up in PS3 consoles that they have bought from Sony at great expense. The fact that retailers are now selling PS3 consoles for pretty much what they bought them for (after costs, at a loss of course) is indicating that they overstimated demand and bought too many. They deserately need to free up the cash to buy more of other products to then sell in their stores.

 

[Jonstone]

If reports are to be believed the profit on games console for retailers is very very low so any scope for them to reduce prices in order to sell more is very limited.

The current price drops from retailers to £399 is more about them trying to remove excess levels of a high price low return stock item rather than have it sitting in their warehouses for a couple of months.

By all accounts the £399 price point was where Sony wanted it in the first place but retailers complained at the profit margin to them at that price hence it launched at £425

Reducing the pricepoint to £399 has probably more than halved the profit they make on each console.

 

[russd1978]

DVD.co.uk are selling for £395 factor in quidco and its £375

 

[bonnie_barko]

Consoles aren't a major profit source for the manufacturers. All the profits come from licensing titles to the console, (and now we have a new disc war to add to the equation) The profit margin to the retailers consequentially is low, and price wars difficult to propegate, (particularly with sony's penchant for sky high cost prices on their goods to non-sony exclusive retailers )