Retailers, help! Video Game MSRPs

Gork

Employees of Best Buy, Gamestop, or any other retail establishment that sells video games, I have a question.

Who sets your MSRPs? Is it the publishers or is it the console manufacturers?

Thanks.

McCly

Ehhh I misunderstood.

eternalbl

MSRP

I mean, its Manufacturer's suggested retail price. Its the price recommended by the manufacturer.

Do I just not understand the question?

Tomanta

I think the question is, does Microsoft (for example) set the price for all 360 games or the publisher?

I can't imagine it being anything other than the publisher, with probably some guidelines from Microsoft (or Sony, or Nintendo...).

theclam

Prices are set by the retailer. Generally they start out at MSRP and go down over time, depending on how fast the game sells. Publishers will drop MSRP, as well as the price they charge retailers, over time. Sometimes a publisher will sponsor a sale. Often there is a deal where the retailers can return unsold games after a given amount of time has passed.

blakfeld

theclam wrote: »

... Often there is a deal where the retailers can return unsold games after a given amount of time has passed.

Typically for pennies on the dollar

Gork

theclam wrote: »

Prices are set by the retailer. Generally they start out at MSRP and go down over time, depending on how fast the game sells. Publishers will drop MSRP, as well as the price they charge retailers, over time. Sometimes a publisher will sponsor a sale. Often there is a deal where the retailers can return unsold games after a given amount of time has passed.

So Publishers can set a different MSRP, correct? It's just the retailers final decision whether or not to follow them?

Follow-up: Generally speaking, what is the margin Publishers charge to Retailers?

theclam

Gork wrote: »

theclam wrote: »

Prices are set by the retailer. Generally they start out at MSRP and go down over time, depending on how fast the game sells. Publishers will drop MSRP, as well as the price they charge retailers, over time. Sometimes a publisher will sponsor a sale. Often there is a deal where the retailers can return unsold games after a given amount of time has passed.

So Publishers can set a different MSRP, correct? It's just the retailers final decision whether or not to follow them?

Follow-up: Generally speaking, what is the margin Publishers charge to Retailers?

Yes. The margin depends greatly on the product. Console games are generally about $10-15 margin for the retailer. Less for EA Sports games and big releases, more for PC games. Accessories and Strategy Guides have much higher margins, sometimes more than half their price.

That's why used games are so attractive for a retailer. They can get up to $30 margin on a newer game and it attracts more people to their stores.

Gork

theclam wrote: »

Gork wrote: »

theclam wrote: »

Prices are set by the retailer. Generally they start out at MSRP and go down over time, depending on how fast the game sells. Publishers will drop MSRP, as well as the price they charge retailers, over time. Sometimes a publisher will sponsor a sale. Often there is a deal where the retailers can return unsold games after a given amount of time has passed.

So Publishers can set a different MSRP, correct? It's just the retailers final decision whether or not to follow them?

Follow-up: Generally speaking, what is the margin Publishers charge to Retailers?

Yes. The margin depends greatly on the product. Console games are generally about $10-15 margin for the retailer. Less for EA Sports games and big releases, more for PC games. Accessories and Strategy Guides have much higher margins, sometimes more than half their price.

That's why used games are so attractive for a retailer. They can get up to $30 margin on a newer game and it attracts more people to their stores.

Sorry if I wasn't clear, I was asking about the margin Publishers make on Retailers.

supabeast

In most countries the manufacturers are flat-out prohibited from setting prices. These laws are rarely enforced in the US, but Nintendo lost a very famous case so the games industry is very wary of crossing the line.

Willeth

supabeast wrote: »

In most countries the manufacturers are flat-out prohibited from setting prices. These laws are rarely enforced in the US, but Nintendo lost a very famous case so the games industry is very wary of crossing the line.

That's why it's a recommended price as opposed to a mandated price.

SatanIsMyMotor

It's the publishers who set the price even before going into development. They decide which level a game will be at (AAA, A, value) and from there set aside a budget for the title.

Having said that, the process is generally standardized with retailers. If it is a AAA title, a next gen game will retail at 59.99-69.99. An A title will be around 49.99 whereas a value title will retail at 29.99 - 39.99.

Hope that helps.

MrMonroe

It was my impression that MS, Nintendo, et. all require companies to agree to a pricing scheme as part of the dev kit contract.

theclam

Gork wrote: »

Sorry if I wasn't clear, I was asking about the margin Publishers make on Retailers.

There's not a good way to calculate that. The fixed costs for making a game are very high (8 figures for a AAA title), whereas the variable costs are very low (probably less than $5). You could say that EA makes about $35-40 on each new $60 game, but that's not reflective of the total costs.

Gork

Okay, not profit or contribution margin, specifically how much they charge Retailers for each physical game.

Thanks.

SatanIsMyMotor

MrMonroe wrote: »

It was my impression that MS, Nintendo, et. all require companies to agree to a pricing scheme as part of the dev kit contract.

Not really. Besides, it's developers who generally need dev kits and they have virtually no say in what a publisher decides for their game.