Originally posted by: MikeyLSU
They need to start with a pricing structure that allows for games to be priced differently.
We have a price structure that allows games to be priced different, it is just market driven. All new games start at a small range of prices ~$50. They then quickly get separated out by the market into crud that costs $10 in the bargain bin, decent games ~$20-$30, and primer games that stay at ~$50 for a year.
Originally posted by: JoshGuru7
The person who goes to a store specifically to buy Mass Effect is probably going to buy it whether it's $20, $30, or $50 - their demand is pretty inelastic. The person who browses past it online is an entirely different story and a lower price will make a bigger difference in sales volume.
We are talking about a luxury item, they are all very elastic. Quite a few people here wait for weeks or months to by the new games on the secondary market. If the prices were more reasonable you would catch a lot more of those people buying the game in from the primary market and the secondary market would suffer.
Originally posted by: Craig234
For one, higher sales at a lower price doesn't prove they're overpriced. 'This weekend, new Corvettes for $5,000. Hey a lot sold, proving autos are overpriced'.
Second, if the prices were slashed, sales wouldn't go up for all games the way they do for the weekend special on one game.
The real result of slashed prices would just be fewer, lower quality games.
Corvettes and other hard products have a high production cost per unit attached to them. Video games, and especially DD games, have a very low production cost per unit that easily makes volume sales more profitable. Basically if I sell 10 corvettes at $50,000 each, and each cost me $4,000 to make I have made $460,000. If I sell 100 corvettes at $5,000 each with the same cost to produce, I have only made $100,000. Software does not have that problem as the cost to produce each unit is nearly insignificant, so profit is nearly the same if I sell 10 copies at $10, or 100 copies at $1. In this case I want to sell as many copies as I can, so I want to lower my price until I saturate the market.
As for the 'sale effect' you are probably right you would not see the same upturn in sales, but you would see a upturn in sales. The correct price will probably be somewhere above the sale price, but below the current retail price, but even that might be wrong. Lower inital cost could drive a market shift that allows for many new sales. It is up to the marketing people to determine where the right price mark is, and to do that they will probably need to take some risks with some titles to see the effects.