My offline job involves pricing for a very, very large company. Therefore, I have a different perspective on the subject of price reductions in the gaming industry that a lot of other people do. This subject comes up time and time again in the gaming industry, particularly on the console side where price comparisons are done much more easily than they are on the PC side of the fence. Just about any idiot can (and does) compare the price point of the PS3 vs. the 360 for example. The 360 fans argue that their console can play all the same games as the PS3 can at the same specs the PS3 can, has a better library of games, and is easier to code for. The PS3 fans always counter that they have wireless, Bluray, a bigger hard drive, etc. built right in by default, that their console doesn't get the Red Ring of Death if you fart on it, etc. Blah, blah, blah, yak, yak, yak. What often gets lost in these discussions on how the PS3 NEEDS to lower their price is the simple fact that Sony is losing money on each PS3 sold. I suspect the 360 is as well. In both cases, the idea for both companies is to sell the consoles at a loss and make up the difference on the games. They just differ a bit on their operating expenses and how much of a loss to take. This is fascinating to me because, while this is an abstract concept to many people, it is one that I deal with first hand every day. Today, for example, I get a pricing escalation sent to me that deals with the sales folks wanting to lower the price of a particular widget that the customer has already agreed to purchase at a particular price point because, since the time the customer signed a contract to purchase the aforementioned widget, the business I work for has decided to lower the price of the widget going forward. In other words, the customer already said that they were willing to buy the widget from us at price point X. Since that happened, we've agreed to lower the price of the widget to price point Y going forward for new customers. Sales wants to give their customer the benefit of price point Y, even though they already said they were fine with buying at price point X. Oh, by the way, the business loses money selling the widget at price point X. We lose even more money selling it at price point Y. Sales doesn't care of course, because a large part of their salary is commission based so they just want to sell more widgets. Does this sound familiar to anyone? It should. How many blogs and forum posts have you all read complaining about pricing in the gaming industry? How many people have said how absurd Sony's original price point of $600 for a PS3 was even though most independent analysts believed that the cost of making a PS3 at the time of release was around $900-$1000 dollars? Most people who come to this site view the arguments about the tradeoff around being price competitive vs making a profit as an interesting thing to debate about. For me, it is an actual real life Soloman style decision that I'm forced to make every day. Believe me, being price competitive and making money aren't necessarily one and the same thing. I see the actual difference between simply selling more widgets and making more money, and the decision isn't always as cut and dry as it appears on the surface. Lowering the price of your widget to sell more widgets isn't always a GOOD thing if it means you lose money on every widget sold! Sometimes, it is worth selling less widgets if you at least make a profit on smaller number of sold widgets. Just food for thought for everyone out there who immediately jumps to conclusions every time you see a price debate in the gaming industry. Author's Note: I do not work in the gaming industry. I do not represent any major game related company of any kind.