November 24, 2013 | In: Technology

How Much Do Retailers Make Off the PS4?

The Playstation 4 has been released last week (well, technically, 2 weeks ago, if you think of Sunday as the beginning of a new week), and all retailers have now zero PS4’s in stock. One would think that retailers have made a fortune off selling PS4’s, but this couldn’t be far from the truth.

I know management people working at FutureShop, BestBuy, and Target here in Montreal and all of them confirmed that they’re only making just $5 on each PS4 sold – so, if you’re taking into account all the marketing that they are doing and the logistics to handle the PS4’s, they are technically losing money. But still, the raw profit on each PS4 is $5. Now, since each PS4 is selling for $400 here in Canada, then this means that Sony is selling the PS4 to retailers at the very reasonable price of $395 (by the way, have you seen the PS4? It is a very beautiful piece of hardware and it is definitely underpriced). And I’m talking Canadian Dollars here…

Now, according to a report on AllThingsDigital, the PS4 costs $381 to make (or $402 CAD), and that is just the hardware’s costs, we’re not taking into consideration marketing and logistics, which means, that Sony is losing money on the PS4, not much, but I think it’s something about $50 a piece – which is reflecting on Sony’s stock price (NYSE:SNE), which has lost nearly 2% since the PS4’s launch.

By the way, I think we Canadians are lucky at the moment, large companies are treating the US Dollar as equivalent to the Canadian Dollar, which is no longer the case. Our luck will run out once the CAD falls below the 90 cents level, which might be sometime next year. Until then, let’s just enjoy this favorable exchange rate.

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