What the PS5 could REALISTICALLY cost.

Feb 20, 2020
4 min read

"The PS5 will cost $600"! "No, It will cost $800"! "Nah man, I heard it will cost $1000".

Wait, wait, WAIT! I think we need to have a sit down conversation about Realism in Console Pricing!

Recently, It was revealed that the PS5 costs around $450 to produce/manufacture. In reality, that leaves 3 pricing scenarios Sony could realistically price the system at. It is no stranger that systems over history have been sold at losses. The PS3 20gb "Phat" model (with backwards compatibility with the PS2) cost Sony $806 per unit to produce and manufacture. The system sold for $499.99, meaning Sony had to eat the loss of $307 per system sold. And even in that time, the PS3 was considered highly expensive to buy and very difficult to produce games on compared to the lower costing Xbox 360.

On February 20, 2013, the PS4 was finally announced to the world. Under the code name "Orbis", the main goal for the PS4 was to make the system easier to develop for, while keeping the cost of the system low. The PS4 launched at a price of $399.99, while the original system cost to produce was $381. $188 of that cost went to system memory and the processor. Sony made a small $18 profit per system. In today's gaming world, Sony & Microsoft's Xbox division has found other ways to make profit from their systems, due to the fact the systems don't make that much money. On digital games alone, Sony pulled in $9.9 Billion in Digital sales revenue, $1.72 Billion in Physical Game sales, and made over $3 billion in network services (meaning every time you subscribe to Playstation Now or Playstation Plus). Sony is banking MORE money on the Digital items and Services you subscribe to and buy everyday than the profits they make on each system sold. This is the purpose of current systems: Create an access point in the living room of someone's home to generate revenue from.

Which brings me to the point of this article.

I mentioned earlier that Sony has 3 different pricing options they can follow for the PS5, and I am gonna break them down into 3 parts:

1. Sell the system at $499.99. I see this as the worse case scenario for a big reason. The Xbox Series X pricing. Analysts claim the Xbox Series X costs around $470 to manufacture. It would seem realistic for Microsoft to price the console at $499.99. Xbox would make a profit of $30 per system sold. The reason I don't see Sony going this route is simply because of recent reports pointing that Sony is struggling to price the PS5 and they are waiting for Xbox to release pricing information, so they can sell their console for a price lower than the Xbox Series X, similar to what the PS4 sold for vs the Xbox One. This brings us to the other two scenarios that are more realistic.

2. Sell the system at $449.99. This option seems a bit more realistic. Sony would sell the console for $50 less than the Xbox Series X, and they would not take a loss on the system or make a profit on the system. They would sell the system at the cost it takes to manufacture the system. And that leads us to our third, and very realistic pricing approach.

3. Sell the system at $399.99. When the PS4 released, it sold for $399.99. When the PS4 Pro released, it sold at $399.99. Consistency could be the sales approach that Sony could take for next generation. A powerful system at an affordable price. The original PS4 sold like this. While the Xbox One (original system) sold at the price of $499.99, it was well known that it's price was boosted because of selling the system along with the dying Kinect, NOT because of its power. Many developers went on record to say that games ran better on PS4, and ran higher resolutions. While the PS5 and Xbox Series X will be neck-to-neck in terms of power, selling the PS5 at a price $100 lower than the Xbox Series X would bolster sales for the system, and keep the motto going "A powerful system for $100 less". This won't come without consequence though. Sony will lose $50 per console due the cost to make the console coming in at $450. But this gives Sony the advantage to double down on their services, and make the money back on the loss.

This article was a long journey, and honestly, we will not know anything about the prices for the PS5 or Xbox Series X until the systems are announced. However, these 3 key pricing structures seem the most realistic for Sony to choose from, with the second and third one being more realistic. Regardless, I am ready to preorder mine. AND HURRY UP SONY & MICROSOFT! WE WANNA GET THESE SYSTEMS! Also, lets put the "The systems will cost $600 to $1000" argument to rest. There is no realistic way these systems will cost that much, unless Sony wants Part 2 of the PS3 sales loss situation at a larger scale.

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