What is up with the price of the Wii?

[scorza]

Sorry but you seem to be clueless.

Nintendo don't see any of the additional profits that retailers make when they mark something up higher than RRP. The retailers are already making a profit based on RRP (otherwise what incentive would they have to even stock it in the first place?) and you can be sure that the buy-price for retailers isn't the same as the RRP, it'll be less - maybe only tens of pounds per console but this will rise with the scale of the buy order, etc.

The RRP is simply a guide price advisory given by Nintendo. They get their money (including a profit on the manufacturing costs, etc) regardless of what the retailer sell it at. For one thing Nintendo can't assume anything about the running costs of a given retailer so it couldn't make a sweeping judgement about one pricing it higher than another.

If you think that Nintendo, or any company, have any involvement in shopfloor pricing outside of setting a RRP then you really are clueless.

If I'm so clueless (lol), then please explain to me why Valve (Steam) raised the price it sold CoD4 at to UK customers? Was Valve just profiteering from shortages of bandwidth in the UK lol? Or could it be, like I've been saying all along, that retailers have to sell at the price they are told to by manufacturers - in this case Activision, or they don't get to sell it at all

 

[wannabedamned]

If I'm so clueless (lol), then please explain to me why Valve (Steam) raised the price it sold CoD4 at to UK customers? Was Valve just profiteering from shortages of bandwidth in the UK lol? Or could it be, like I've been saying all along, that retailers have to sell at the price they are told to by manufacturers - in this case Activision, or they don't get to sell it at all

It happens. Prices do get raised.

But just because it happened at valve, Doesnt mean it's happened here with Nintendo.

If the prices had been raised at the source, the prices would have raised across the board. And they haven't.

 

[Durzel]

If I'm so clueless (lol), then please explain to me why Valve (Steam) raised the price it sold CoD4 at to UK customers? Was Valve just profiteering from shortages of bandwidth in the UK lol? Or could it be, like I've been saying all along, that retailers have to sell at the price they are told to by manufacturers - in this case Activision, or they don't get to sell it at all

Maybe because the price it sold it to UK customers was what their marketing department decided the market was willing to bear?

Why does anything cost more in this country compared to the US? Why do Porsches and Ferraris cost hundreds of thousands of pounds? Some of it is to do with build & part costs but you can bet a huge amount is simply down to what the market is willing to bear which will vary by region.

Steam/Valve would've had a buy price from Activision, and possibly even a guide price to sell it at, but what Valve decided to sell it at could be anything they liked. They may have incurred Activisions wrath somewhat if they chose to dump the product (i.e. sell it well below RRP) but so long as its justifiable (i.e. no media costs, etc) then Activision wouldn't have had an issue. They would've still got their pound of flesh from Valve per unit sold.

Don't forget Activision would benefit from the deal as well, and in any event you are grossly oversimplifying and speculating about a somewhat uniquely complicated (in retail terms) arrangement made behind closed doors, there's a huge difference between that and a retail product sold to retailers and sold on the high street.

 

[SC04]

Sorry but you seem to be clueless.

Nintendo don't see any of the additional profits that retailers make when they mark something up higher than RRP. The retailers are already making a profit based on RRP (otherwise what incentive would they have to even stock it in the first place?) and you can be sure that the buy-price for retailers isn't the same as the RRP, it'll be less - maybe only tens of pounds per console but this will rise with the scale of the buy order, etc.

The RRP is simply a guide price advisory given by Nintendo. They get their money (including a profit on the manufacturing costs, etc) regardless of what the retailer sell it at. For one thing Nintendo can't assume anything about the running costs of a given retailer so it couldn't make a sweeping judgement about one pricing it higher than another.

If you think that Nintendo, or any company, have any involvement in shopfloor pricing outside of setting a RRP then you really are clueless.

Bottom line if we assume two small retailers both buying 10 consoles from Nintendo at £150 a unit (and disregarding how much of the profit is eaten into by running costs):

Retailer A selling it at RRP of £175 is making £25 per console sold.
Retailer B selling it at £300.00 is making £150 (£25 + £125) per console sold.

Mate, there is a trade website somewhere that had an article about how UK retailers were unhappy about the price that Nintendo set. I think they make about £10 profit on the console and that is not enough to justify the work that goes into selling them, rents, overheads etc. So Nintendo set out the prices they will make on software and accessories to keep them happy.

The thing with overclockers upping the price is that they are unlikey to reap profits from some of the more novelty items like rucksacs, guns and tennis rackets etc. If you think you can run a shop premises and website on an allocation of 20 consoles at £10 profit each, think again.
I dont really agree with it, but its either that or not sell them at all, and the chances are that if OCUK listed them at retail a bunch of scallys will buy them all for ebay anyway, I guess they had the attitude is you cant beat them join them.

 

[SC04]

Why does anything cost more in this country compared to the US? Why do Porsches and Ferraris cost hundreds of thousands of pounds? Some of it is to do with build & part costs but you can bet a huge amount is simply down to what the market is willing to bear which will vary by region.

Some of that is true, but overheads are cheaper in the US, I think they pay about 3p per KW hour of electricity to out 10p ? cant be bothered to look it up. Small island, small ish population less competition, some small european countries are quite expensive, but I always find fairer in the long run.

 

[scorza]

It happens. Prices do get raised.

But just because it happened at valve, Doesnt mean it's happened here with Nintendo.

If the prices had been raised at the source, the prices would have raised across the board. And they haven't.

The point is the manufacturer dictates the price to the retailer. In my real world example I think Valve basically said as much - Activision forced them to raise the price so that they didn't compete with Activision UK's distribution network. Valve were quite happy to sell CoD4 to UK producers at the worldwide price but were unable to.

 

[Simon]

If I'm so clueless (lol), then please explain to me why Valve (Steam) raised the price it sold CoD4 at to UK customers? Was Valve just profiteering from shortages of bandwidth in the UK lol? Or could it be, like I've been saying all along, that retailers have to sell at the price they are told to by manufacturers - in this case Activision, or they don't get to sell it at all

Activision?

 

[Durzel]

Mate, there is a trade website somewhere that had an article about how UK retailers were unhappy about the price that Nintendo set. I think they make about £10 profit on the console and that is not enough to justify the work that goes into selling them, rents, overheads etc. So Nintendo set out the prices they will make on software and accessories to keep them happy.

I don't doubt that. There will be pressure on these smaller retailers to sell it at RRP when the bigger stores like Amazon, Argos etc work on economies of scale and have an infrastructure in place that lends itself better to selling things like this at no added cost to themselves (i.e. small shops might have to train up staff to know what the Wii is all about whereas Argos and co are just box-stackers, the staff only need to know about codes and product names they correspond to).

None of that alters the fact that any retailer selling them above RRP is making all of that additional money themselves, none of it goes to Nintendo.

The thing with overclockers upping the price is that they are unlikey to reap profits from some of the more novelty items like rucksacs, guns and tennis rackets etc. If you think you can run a shop premises and website on an allocation of 20 consoles at £10 profit each, think again.

I never said you could "run a shop" selling just 20 consoles at £10 profit each so I don't know why you're trying to put words in my mouth?

It is possible that a given retailer couldn't afford to sell them at RRP, in which case it could either decide not to sell them at all or price it higher accordingly (as some have done). I have strong doubts however that certain retailers need to be making over £100 profit per console to make ends meet, when they're already in the business of selling high margin, high value electronic goods like graphics cards, etc. Where do you think the money comes from to buy Porsches and M3s?

I dont really agree with it, but its either that or not sell them at all, and the chances are that if OCUK listed them at retail a bunch of scallys will buy them all for ebay anyway, I guess they had the attitude is you cant beat them join them.

Which is hardly commendable is it. I expect price gouging from eBay because people are mercenary, but I don't expect it from retailers.

 

[Kamakazie!]

The point is the manufacturer dictates the price to the retailer. In my real world example I think Valve basically said as much - Activision forced them to raise the price so that they didn't compete with Activision UK's distribution network. Valve were quite happy to sell CoD4 to UK producers at the worldwide price but were unable to.

I know i said i wouldn't say any more, but someone went a bought Steam up as a supposedly valid comparison..


So now you are saying that Steam is the same thing as a brick and mortar store?
Valve and Steam work on a completely different basis to a B&M store. Valve does not buy the game from Activision and sell it on taking whatever profit they can.

Valve signs a contract with Activision to distribute the game for the price that Activision wants them to and then Valve gets a certain amount of money per copy sold. This is NOT how the retail channel works.
The reason the UK price was higher than the US is because with steam it is the PUBLISHER that decides the price of the game, not Valve. Steam is only an alternate method of distribution.

The reason Activision set a higher price is because the retail channel told Activision that they would not stock CoD4 unless the Steam price was that of the RRP. If it was lower than the RRP them the retailer would have had to lower their price to compete and thus make less profit per game.

Seriously, Steam != Retail Store.
Stop comparing them.

 

[Bonjour]

I find it quite amusing that some people actually believe Nintendo are inflating the price of the Wii, and maybe even seeing some of the extra money.

Get a grip.

 

[scorza]

So now you are saying that Steam is the same thing as a brick and mortar store?

As far as the manufacturer is concerned, they are both retail channels - why would they be treated any different?

Valve and Steam work on a completely different basis to a B&M store. Valve does not buy the game from Activision and sell it on taking whatever profit they can.

Neither do retail shops. Do you have any idea of the cash-flow implications of operating a system such as the one you suggest? Retail would be impossible under such a system.

 

[Guru]

I just bought one from a GAME shop in town, it cost £289.99 and came with 1x Controller....1x Nunchuck and the following games... Sports pack, Mario 8, Mario Olympics, and Rampant Raging Vibro Rabbits 2 or summat.

Is this a good price? Could I have got it better elsewhere at the moment? (yes or no will do as obviously no competitor talk)

Cheers,

G

 

[The Mad Rapper]

When it launched, the Wii was speculated to be ~£150 and OK, everyone was disappointed when it debuted @ £179.

Who is responsible the now ludicrous prices? The retailers, or Nintendo?

Why are the Wii's that OCUK sell so bloody expensive? They are approaching double the usual price...why?!

 

[Kamakazie!]

As far as the manufacturer is concerned, they are both retail channels - why would they be treated any different?

Because they are different and they work differently.

Neither do retail shops. Do you have any idea of the cash-flow implications of operating a system such as the one you suggest? Retail would be impossible under such a system.

Are you being deliberately ignorant?
Retail shops buy a game at a certain price, they apply their markup and then they keep the difference. Agreed?
Whether they pay before or after makes no damn difference. They are still purchasing from the supplier at a set price.

In Steam, Activision goes to Valve and says "hey, we want to sell CoD4 over Steam and this price $$$"
Valve says, yeah fine, but we will take xx% or $xx of the total cost for ourselves.

Totally different ways of working.
For retail, it is the stores themselves that set the price. That is why in some stores games are cheaper than others. Like with online. Some stores are far cheaper.
On Steam, it is the publisher that sets the price.


It is quite simple, i really don't see the issue you have with this. You are going so far as to accuse Nintendo of conducting illegal practices within the UK... clearly you know more than Trading Standards about their price fixing and anti-competetive behaviour though.

 

[Bonjour]

Why are the Wii's that OCUK sell so bloody expensive? They are approaching double the usual price...why?!

They come with a free unicorn.

One that lays golden eggs.

 

[Baxtor]

A major high street store with an X in there name is now only selling Wii's in a bundle package with a 19" TV for £600.

 

[scorza]

Because they are different and they work differently.

Are you being deliberately ignorant?
Retail shops buy a game at a certain price, they apply their markup and then they keep the difference. Agreed?
Whether they pay before or after makes no damn difference. They are still purchasing from the supplier at a set price.

Err it makes quite a lot of difference to cash-flow actually. Remember, even profitable companies go out of business if they run out of cash. Running out of cash is the cardinal sin of business, so companies are kinda loathe to pay up front for things they are going to try to sell on. That way, if a product does not sell then the only cost to the retailer is the cost of stocking them in the first place - the actual units go back to the manufacturer, they are his problem. Remember that the manufacturer has done the marketing for his product, the retailer hasn't, so he needs some reassurance he isn't going to go bust if the product turns out to be a lemon - it's called risk mitigation.

The only difference between Steam and a B&M retailer is that Steam has an infinite number of units it can sell.

In Steam, Activision goes to Valve and says "hey, we want to sell CoD4 over Steam and this price $$$"
Valve says, yeah fine, but we will take xx% or $xx of the total cost for ourselves.

Totally different ways of working.
For retail, it is the stores themselves that set the price. That is why in some stores games are cheaper than others. Like with online. Some stores are far cheaper.
On Steam, it is the publisher that sets the price.

I'll admit that for some products it works that way (but I doubt games consoles and games are such products). This is the way it works for products such as Heinz Baked Beans, which is why places like Tesco's can sell them at whatever price they want, including as a loss leader. However this does not apply to "prestige products" like games consoles.

What typically happens when you bring a product to market is you tell the retailer how much it retails for and how much of that is yours. It's often the case that small discounts are allowed but they come out of the retailers end, hence why online places are slightly cheaper than on the high street. Nowhere is "far cheaper" than anywhere else for games consoles or new games. When the product reaches the end of its lifecycle, controlling the price becomes less important than maximising the return on the initial investment, hence why older games are often heavily discounted (even before they are re-released on a budget label). Hope that helps.

It is quite simple, i really don't see the issue you have with this. You are going so far as to accuse Nintendo of conducting illegal practices within the UK... clearly you know more than Trading Standards about their price fixing and anti-competetive behaviour though.

I've never said that Nintendo have done anything illegal. Setting the price of your own products is not price-fixing, it's marketing.

 

[Simon]

They are going for a decent price on Ebay, bit random though, some go for £210 ish then you get the odd ones.

Just watched on with 25 bids go for £340! Was a Euro one too!

 

[Kamakazie!]

snip

I've never said that Nintendo have done anything illegal. Setting the price of your own products is not price-fixing, it's marketing.

So much to take issue with that i won't bother. You still have not addressed the inherent differences between the way retail and Steam actually work.
The point at which payment is made does not matter to this, cash flow is not an issue in the discussion, it is the mechanism of distribution/sales that matter and was what i was talking about.


About the last point that is still there, you are still wrong.
http://www.businesslink.gov.uk/bdotg/action/detail?r.l1=1073861169&r.l3=1074014670&type=RESOURCES&itemId=1073792322&r.l2=1073858848&r.s=sc

You cannot:

impose minimum prices on different distributors such as shops

Among other points, enforcing sales at RRP is ILLEGAL.

 

[adam cool dude]

Hmmm this reminds me of taste the difference cheese.

This has happened for as long as i can remember and always will do for the next 100 years. Anyone remember buzz lightyears going for silly amounts of money? Thats just an example from over ten years. I remember when i was a kid getting TMNT toys for christmas was impossible and my parents ended up buying me some fakes. >_>. People will buy anything that seems to be the next big thing no matter how much it costs. In my honest opinion you need to be shot point plank in the head with a gun if your gonna pay £300+ for wii when you can get a xbox elite with several games for the same price. Thats the way this world works though. We will most proberly laugh at this in a few years time anyway

At least the wii has some decent apps to play this time round. When i got mine at the beginning of the year all i had was zelda. In the past month ive added RE:UC, Mario and Metroid.