VanillaThunder said:
Really sucks that there's no excuse for that pricing, huh?
Forgive the helter skelter nature of what follows, but this post make me think a bit...
I remember reading somewhere, way back when right before the Gamecube was about to drop, that Nintendo decided to eschew their prior business model of turning a profit on consoles and decided to do what Sony and Microsoft do and price it below it's production cost. Given that the N64 sales wern't doing so hot and Nintendo's mindset was probably something like "we can make more money on software + discounted hardware than selling less hardware at a higher price," they priced it in line with how they viewed the market.
Fast foward to 2004-5-6-ish.
While I can't speak on production costs of the DS, I did find
this link regarding the production cost of the Gameboy Micro, which retailed for 100. At the time, it cost them 44 dollars to actually build thing, with the margin in between for packaging costs and marketing. I'm guessing that Nintendo made a lot off of this. I'd wager it's probably the same setup for the DS and DS Lite.
Now, factor in that the DS sales are more than great. You're Nintendo. Your company is riding huge profits on (presumably both hardware and) software sales, and you've got not only whatever slice of gaming media on their ears, but also parts of the mainstream media praising your "blue oceans" market strategy. You believe you've got a cart blance; license to do whatever you want and still come out on top.
And with that in mind, you take a system that costs, let's say, no more than 130-ish dollars to make, toss in a controller at a cost of 15 give or take, as well as a game you developed and packaged internally for the cost of around 10 dollars. 155 is your production cost.
Singularly, the pricing could go like this:
Tack on 20 to the cost of the system, putting it at 150.
The controller could be priced wholesale at 25 dollars; a 10 dollar markup.
The game will probably sale for around 42 bucks, because Nintendo is it's own publisher/developer/game vending machine operation.
The bundle, that costs 155 to produce, now costs 217. When margins needed for marketing, packaging and profit are added, that will probably jump -and this is par for the course for wholesale vending- to around 245 for places like EB and the big department stores, and 247-8 for the smaller Mom and Pop places.
And there you have your 250 dollar price tag. Nintendo comes out on top.