8 Things You Probably Didn't Know About Video Game Retail
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8. First party accessories have a very small profit margin
When you buy a new controller or a battery charger for it, it makes sense that you'd want to buy a Wii remote made from Nintendo or a Xbox 360 controller manufactured by Microsoft. Video game companies know this, and that's why they sell them to stores for a rather hefty sum. Whether or not they actually cost a whole lot to actually manufacture is unknown, but retailers buy them for around $37-39 and sell them for $50. That's roughly a 30% markup. While that might sound like a lot, that's really peanuts compared to...
7. Third party accessories, on the other hand, are huge profit makers
...the insane markup that stores slap on third-party accessories made by companies like Mad Catz or React. In general, third-party accessories sell for a little less than first-party accessories, but the price disparity, while noticeable, isn't usually exceptional. The mark up, however, is. Because third-party accessories have less expensive development costs on account of using cheaper materials and not having to pay licensing fees, they sell their accessories to stores for usually 45-60% less than what stores actually retail them for. If the brand is in-house, like the Gamestop brand controllers, expect a similar mark up. So that Mad Catz “Call of Duty: Black Ops” controller that sells for $50? The store you're buying it from didn't pay nearly as much.
Admittedly, not every third-party accessory is marked up that high. For example, Logitech products are normally only marked up around 20-30% depending if its a pair of speakers, a mouse and keyboard or a video game controller.
When it comes to cables, do yourself a favor and never, ever buy them from a brick and mortar store. Unless you're a pretentious snob who thrives on having everything in your home being name brand (in which case you deserve exactly what's coming to you), you can usually find the equivalent of what need on Ebay for as much as 10% of what you'd pay for in stores. USB cables, Ethernet cables, HDMI cables, etc. have prices that are so bloated that it's practically criminal. It's not at all unusual to see some stores selling cables for two to ten times what they actually purchased it from the manufacture for. So the next time you consider dropping $50 for that super fancy, gold plated USB cable, know that the store probably paid $5 for it and you can find it for that price on Ebay.
6. Stores make almost nothing on video game console sales
Buying a new console certainly puts a hurting on the wallet, but at least you find solace in the fact that most of your money is going directly to Sony, Nintendo or Microsoft. Why? Because stores make virtually nothing on the sale of a video game console. While I wasn't able to lock down a firm number, a few retail store managers I spoke with speculated that the mark up was as little as 5-10%. That means for every PlayStation 3 console they sell, they're only making $30, which isn't a whole lot considering how much space they take up on store shelves and delivery trucks. Stores offset this small profit margin by pressuring their employees to attach high-profit margin accessories (more on that later) or, better yet, service plans which end up being pure profit for the company. So the next time you walk into Best Buy and pick up a Xbox 360 without so much as buying a game or a controller, now you know why the department supervisor is glaring at you like you just choked out a puppy.
So why don't companies just reduce the price of the console (for instance, slashing the price of a PlayStation 3 from $300 to $270) in order to entice more customers into buying the product at their store?
Two reasons. First, profit on consoles comes from accessory attachments, and there's really no guarantee that this will happen. Especially during the holiday season, it's not unusual at all for customers to just grab a console as a Christmas gift and refuse to add anything else to the purchase. The other is, according to my sources, the price of new consoles are allegedly regulated by the government to prevent unfair competition. In a way, this makes sense. Corporate chains like Gamestop and Best Buy have the resources to take a loss on one product if it means gaining profit on another –independent stores, however, wouldn't be able to compete and would undoubtedly lose money as a result.
If this sounds a bit iffy, take this into consideration. Why is is that the price of a new Xbox 360 or PlayStation 3 never changes until the manufacture decides? Even during Black Friday, stores never slash the price of a new console (used consoles are exempt from this rule, evidently) but instead bundle games, accessories, store credit etc. in order to sweeten the deal and lure customers into the store. For instance, in 2009, Amazon.com offered a 120 GB PlayStation 3 for retail price. The catch? It came bundled with “Killzone 2”, “Infamous” and $10 in store credit.
5. The mark up on video game software is pretty insignificant
Brick and mortar stores like GameStop and Best Buy get their games from publishers for around $48 and sell them for $60. Truth be told, that's not that huge of a mark up considering that stores really don't have any guarantee that they'll be able to sell every single copy they ordered. While games like “Halo” are practically guaranteed to sell out sooner or later, there's always the occasional dud that will sit around, taking up room on the shelf, until the company is finally forced to send it back and lose money eight months later.
Used games on the other hand are normally marked up an astronomical amount at GameStop. You can trade in a new release for like $30 (before trade-in incentives), and then they'll turn around and sell it for $55.
When you buy a new controller or a battery charger for it, it makes sense that you'd want to buy a Wii remote made from Nintendo or a Xbox 360 controller manufactured by Microsoft. Video game companies know this, and that's why they sell them to stores for a rather hefty sum. Whether or not they actually cost a whole lot to actually manufacture is unknown, but retailers buy them for around $37-39 and sell them for $50. That's roughly a 30% markup. While that might sound like a lot, that's really peanuts compared to...
7. Third party accessories, on the other hand, are huge profit makers
...the insane markup that stores slap on third-party accessories made by companies like Mad Catz or React. In general, third-party accessories sell for a little less than first-party accessories, but the price disparity, while noticeable, isn't usually exceptional. The mark up, however, is. Because third-party accessories have less expensive development costs on account of using cheaper materials and not having to pay licensing fees, they sell their accessories to stores for usually 45-60% less than what stores actually retail them for. If the brand is in-house, like the Gamestop brand controllers, expect a similar mark up. So that Mad Catz “Call of Duty: Black Ops” controller that sells for $50? The store you're buying it from didn't pay nearly as much.
Admittedly, not every third-party accessory is marked up that high. For example, Logitech products are normally only marked up around 20-30% depending if its a pair of speakers, a mouse and keyboard or a video game controller.
When it comes to cables, do yourself a favor and never, ever buy them from a brick and mortar store. Unless you're a pretentious snob who thrives on having everything in your home being name brand (in which case you deserve exactly what's coming to you), you can usually find the equivalent of what need on Ebay for as much as 10% of what you'd pay for in stores. USB cables, Ethernet cables, HDMI cables, etc. have prices that are so bloated that it's practically criminal. It's not at all unusual to see some stores selling cables for two to ten times what they actually purchased it from the manufacture for. So the next time you consider dropping $50 for that super fancy, gold plated USB cable, know that the store probably paid $5 for it and you can find it for that price on Ebay.
6. Stores make almost nothing on video game console sales
Buying a new console certainly puts a hurting on the wallet, but at least you find solace in the fact that most of your money is going directly to Sony, Nintendo or Microsoft. Why? Because stores make virtually nothing on the sale of a video game console. While I wasn't able to lock down a firm number, a few retail store managers I spoke with speculated that the mark up was as little as 5-10%. That means for every PlayStation 3 console they sell, they're only making $30, which isn't a whole lot considering how much space they take up on store shelves and delivery trucks. Stores offset this small profit margin by pressuring their employees to attach high-profit margin accessories (more on that later) or, better yet, service plans which end up being pure profit for the company. So the next time you walk into Best Buy and pick up a Xbox 360 without so much as buying a game or a controller, now you know why the department supervisor is glaring at you like you just choked out a puppy.
So why don't companies just reduce the price of the console (for instance, slashing the price of a PlayStation 3 from $300 to $270) in order to entice more customers into buying the product at their store?
Two reasons. First, profit on consoles comes from accessory attachments, and there's really no guarantee that this will happen. Especially during the holiday season, it's not unusual at all for customers to just grab a console as a Christmas gift and refuse to add anything else to the purchase. The other is, according to my sources, the price of new consoles are allegedly regulated by the government to prevent unfair competition. In a way, this makes sense. Corporate chains like Gamestop and Best Buy have the resources to take a loss on one product if it means gaining profit on another –independent stores, however, wouldn't be able to compete and would undoubtedly lose money as a result.
If this sounds a bit iffy, take this into consideration. Why is is that the price of a new Xbox 360 or PlayStation 3 never changes until the manufacture decides? Even during Black Friday, stores never slash the price of a new console (used consoles are exempt from this rule, evidently) but instead bundle games, accessories, store credit etc. in order to sweeten the deal and lure customers into the store. For instance, in 2009, Amazon.com offered a 120 GB PlayStation 3 for retail price. The catch? It came bundled with “Killzone 2”, “Infamous” and $10 in store credit.
5. The mark up on video game software is pretty insignificant
Brick and mortar stores like GameStop and Best Buy get their games from publishers for around $48 and sell them for $60. Truth be told, that's not that huge of a mark up considering that stores really don't have any guarantee that they'll be able to sell every single copy they ordered. While games like “Halo” are practically guaranteed to sell out sooner or later, there's always the occasional dud that will sit around, taking up room on the shelf, until the company is finally forced to send it back and lose money eight months later.
Used games on the other hand are normally marked up an astronomical amount at GameStop. You can trade in a new release for like $30 (before trade-in incentives), and then they'll turn around and sell it for $55.
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4. Gamestop loans out your new games
Kotaku broke this story a while ago, but here it is again if you missed it. GameStop guts games and displays an empty case on store shelves for promotional purposes. The game and instruction manual goes inside a locked drawer behind the counter. However, since employees are allowed to borrow games from the store, they're allowed to take home the gutted new copy as long as they return it intact. What this means, though, is that the “new” copy you paid full price for, isn't actually “new” at all. If this sounds bogus as hell, it's because it is.
What isn't as commonly known, though, is that this practice has been going on for years and continues to persist to this day, despite the bad press its generated. According to a source at GameStop, some store managers are stricter than others and flat out refuse to check out “new” games and force their employees to wait until a used copy is traded in at the store. Others, though, are far more lenient and allow it as long as they have enough copies to cover reservations and normal sales. To date, the policy has not been modified to explicitly forbid the checking out of new games and still occasionally occurs.
3. Employees can give you discounts (most of the time)
While bargaining is quite common in some countries overseas (in Thailand, for instance, haggling is fairly normal), for some inexplicable reason most customers think the only way they're going to get a discount is if the item is on sale or they have a coupon. That isn't always the case, particularly when it comes to electronics that have a substantial markup on them. Stores have quotas to reach (both in revenue and profit), and it's not out of the ordinary for employees to make deals if it means making a sale and getting the store that much closer to reaching its monthly or even daily goals.
You probably won't have too much success bartering with an employee at GameStop, but at bigger retailers, like Best Buy, according to a report made in 2008, any employee who is capable of ringing up sales can usually apply a discount between 15-18% off without needing approval from a manager. That's not a substantial savings, granted, and it only works on certain occasions.
For instance, if you simply waltz into Best Buy and pick up one game, the employee working the gaming department probably won't feel too inclined to give you a discount. However, if you're purchasing an item you know for a fact the store makes bank on (the aforementioned third party accessories for example) that might be a different story.
Also, if you're purchasing a console, see if they'd be willing to toss you a discount on some controllers and games. While Best Buy employees do not work on commission, it always looks nice on their sales tracker (which they're required to maintain) if they have a sizable sale with loads of attachments. Offer to throw in a good word for them as well to their manager as well. Scratch their back and there's a good chance they'll scratch yours.
Naturally, the more time you get to talk to them, the better your chances are of striking some kind of deal. This won't work all the time, of course, but it's definitely worth keeping in mind. At the very least, the next time a Best Buy employee tells you that they're not allowed to hand out discounts without a manager's approval, you'll know they're probably lying.
Do note: employees can not apply discounts on everything. For instance, a video game console can not be discounted. Same thing goes with digital cameras, laptops, etc.
2. The odds of a highly anticipated, new release selling out is virtually nil
This probably goes without saying, but yeah, the odds of a highly anticipated, new release title selling on launch day (or even the first week) is virtually non-existent at most big retailers. If your local GameStop is small, there's always the possibility, but if you live in a big city, it's within the best interests of the company to ensure each and every one of their stores are well stocked. After all, if the game sells like hotcakes, both the video game publisher and retailer are screwed if there's no inventory to sell.
Depending on how anticipated a title is, it's not unusual for a store to receive their inventory well before launch date. For example, boxes upon boxes of “Halo 3” was reportedly sitting in stores' warehouses a good week before the game's release date. Obviously, this is to ensure the store has the item in stock well before it actually goes on sale.
So upcoming games like “Call of Duty: Black Ops”? Yeah, you shouldn't have any trouble finding a copy come launch day.
1. You can return everything except opened games
When it comes to video game merchandise, you can return anything (except for opened software) as long as its within the retailer's specified return policy. That means video game controllers, memory cards, and even video game consoles. If the item is returned in perfect condition, the store has to refund your purchase, even if you've already used it and there's nothing wrong with it. Accessories they'll need to tape back up and throw on shelves with an open box discount applied, and game consoles they actually have to ship back to the manufacture. Theoretically, this means you could “rent” a video game console for 30 days from Best Buy for free.
Video game software, on the other hand, can only be exchanged once it's been open. The official stance is because of piracy concerns, but I suspect it's because they don't want people buying games, playing them, and then returning them. Oddly, this is exactly what you can do at GameStop with used games, though employees tend to get pretty annoyed by that the fifth or sixth time you do it. I would know.
http://www.examiner.com/game-news-in-national/8-things-you-didn-t-know-about-video-game-retail-part-5 -
I knew about most of it, especially #4 they been doing that for a while, #2 is why I never preorder
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Thx for the best buy tip.
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#4, man ? that. No wonder my first copy of GoW 2 was ? .
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I knew about most of this. This that gets me is #4. I really think its a scam when they sell you an open game for full price. Main reason i don't buy alot of ? form gamestop.
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Yeah I quit buying from Gamestop when they sold me an opened copy of Uncharted 1. Only didn't say nothing cuz it was the last copy they had. But recently I went back cuz it's so close to my house and the last 3 times or so the games have been wrapped.
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when i bought mw2 it was open he pulled the disc out from the drawer im sittin there like wtf??
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Indy8503 HD wrote: »Yeah I quit buying from Gamestop when they sold me an opened copy of Uncharted 1. Only didn't say nothing cuz it was the last copy they had. But recently I went back cuz it's so close to my house and the last 3 times or so the games have been wrapped.
yea lately all the games iv bought have been wrapped also -
Man ? gamestop for that ? !
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i knew about the borrowing and discount thing, a dude at gamestop told me that. i thought they paid less than that for games though
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DaFifthElement wrote: »Thx for the best buy tip.
^^^^^^^^^^^^^^^^ -
#4 is some ? but when i buy a new game it's always wrapped cause when i get home i damn near have to take a butcher knife to unwrap the damn game from the tight ass shrink wrap.
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i dont know about #4 cuz if you ask for a new game they have it right there in its plastic and everything. i can see them playing the used games that are already open. if they are trying to sell you a brand new game that has been opend then you prolly shoulnt buy it.
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i request a wraped game.
when i bought madden dude tried to play me.
i said "can i get one still in the package"
he gave me the ugh face and said "well if it makes that much of a difference guy,,,jeez"
i had no idea they played the new games.i jus wanted one with the plastic on it because the ones marked "new" have that white sticker price tag which ruins the case. -
? Gamestop, i stopped going there a long time ago
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Chillin&Postin wrote: »i request a wraped game.
when i bought madden dude tried to play me.
i said "can i get one still in the package"
he gave me the ugh face and said "well if it makes that much of a difference guy,,,jeez"
i had no idea they played the new games.i jus wanted one with the plastic on it because the ones marked "new" have that white sticker price tag which ruins the case.
lol Ill smack the ? out of a gamestop employee -
i like it when they pressure you to pre-order a game cuz they think that its gonna sell out and they are the only ones that sell video games.like i was there a few days ago and dude was like" you sure you dont wanna pre-order Black Ops its gonna sell" i was like" Naw theres a Target across the parking lot, a ? as Walmart across the freeway and best buy 5 min down the freeway, im pretty sure i can find it avalible
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i been tellin you ? bout the Gamestop 7 day cash back rental service,,i give the gs workers the pre-used blues,, they see me err thursday and with there shyttee face and all know wats up,
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i like it when they pressure you to pre-order a game cuz they think that its gonna sell out and they are the only ones that sell video games.like i was there a few days ago and dude was like" you sure you dont wanna pre-order Black Ops its gonna sell" i was like" Naw theres a Target across the parking lot, a ? as Walmart across the freeway and best buy 5 min down the freeway, im pretty sure i can find it avalible
i pre order at midnight rreleases cuz i like to play the game that night and talk ? to other gamers who be in line waiting -
Terrorist_Jones wrote: »i been tellin you ? bout the Gamestop 7 day cash back rental service,,i give the gs workers the pre-used blues,, they see me err thursday and with there shyttee face and all know wats up,
what is this hassle you do???
are you sayin you can swamp out used games in a 7 day frame and/or get a full refund??? -
i dont know about #4 cuz if you ask for a new game they have it right there in its plastic and everything. i can see them playing the used games that are already open. if they are trying to sell you a brand new game that has been opend then you prolly shoulnt buy it.
Is it the hard plastic that you have to use your fingernails to dig under the corners and spend minutes trying to open? Or is it the soft shrink wrap plastic that you can see where it meets and binds? -
Is it the hard plastic that you have to use your fingernails to dig under the corners and spend minutes trying to open? Or is it the soft shrink wrap plastic that you can see where it meets and binds?
Yea they will re-seal a game after they open itChillin&Postin wrote: »what is this hassle you do???
are you sayin you can swamp out used games in a 7 day frame and/or get a full refund???
Yea GS has a 7 day used game refund policy, lol its kinda ghetto but I might start doing that ? myself -
ohhhhhh ? ,
so not only should we wait for patches before we purchase,
we should wait for used copies to come in so we can do the trade in "glitch"
okay,im headin to gamestop to try to find a "used" Fallout New Vegas -
Chillin&Postin wrote: »ohhhhhh ? ,
so not only should we wait for patches before we purchase,
we should wait for used copies to come in so we can do the trade in "glitch"
okay,im headin to gamestop to try to find a "used" Fallout New Vegas
lol cosign...........
