Pricing method of Playstation 5

Presentation by:
Abraham Tukai , Alcina Bahebe, Nyota Bwana, Eleanor Matai
THE END
 Pricing strategy used by PS5
 Sony uses the Price skimming strategy on the ps5. This
is is the strategy of charging a relatively high price
during the launch of a new product and then lowering
the price over time as demand declines. Skimming is a
useful pricing strategy for businesses in innovative
spaces where demand is extremely high for early-
adoption.
 For example: Apple selling new phones at higher prices
then dropping prices when the demand for them drops.
 Advantages of price skimming

 It Helps Create and Maintain Your Brand Image

Price skimming can also create the perception that a product is a high
quality “must have” for those early adopters who can’t live without
the latest tech products. Customers will know that the PS5 is of high
quality
 Higher return on investment

Charging the highest initial price during the launch of an innovative

product, particularly in high tech industries, can help your company
recoup research and development costs as well as promotional
expenses. Profits made from the PS5 can help Sony recoup.
Disadvantages of price skimming
 Skimming Attracts Competitors
Your product may be ground breaking enough that it will create a
new market, as shown by the introduction of the first PlayStation
console in the 90s. Microsoft began to lurk just around the corner.
The success of high prices in the beginning of a new product’s life
cycle will intrigue competitors.
 Discourages customers

The high price of a newly released product may discourage potential

customers.
 Not a Great Strategy in a Crowded Market

Price skimming is not a viable strategy in an already busy market, so

unless your product includes amazing new features no one can match,
it might be a good idea to avoid skimming if you want to maintain a
competitive advantage. This means it wouldn’t benefit the PS5 in a
busy market.
 Other Pricing Strategies Used by The PS5
 It shouldn’t be a surprise to know that Sony would use more than
just one pricing the strategy for the PS5. Sony uses
psychological pricing where they set prices just under the
currency unit, such as $399 rather than $400. This is because it
appears to be offered at the lowest possible cost rather than
being priced to the nearest full currency unit.
 It has also been noticed recently that Sony has implemented the
use of loss leader pricing. This is because some components of
the PS5 are pricy. For example, the PS5s GDDR6 is a really
pricy component. This is because memory prices are rising.

 NOTE: THESE PRICING STRATEGIES ARE

INCOORPORATED PASSIVELY. Meaning that they aren't
used to their fullest.
 What pricing strategy we suggest?
 Loss leader pricing strategy. This involves selling
a product or service at a price that is not
profitable but is sold to attract new customers or
to sell additional products and services to those
customers.
 For example: Raising the cost of hot dogs or
burgers during the summer months and
discounting the buns. This forces customers to
buy more.
Advantages of Loss Leader Pricing
 Increase in sales
 By increasing the footfall in your store loss
leader prices boost overall sales, which then
cover the loss from lower priced items.
Attract new customers

Window promotions displaying your discounted

offers may entice new customers to come into
your store and word of mouth about the low
prices could also bring in local customers.  
 Disadvantages of Loss Leader
Pricing
 Risk in making a loss
A big disadvantage of this pricing would be if the store
does not attract new customers or stimulate sales of
full-priced items. This will result in a reduced margin. 
 Perception on quality

A customer’s perception of the quality of an item may

be influenced by the price. If the price is too low, it
may raise the concern of low quality, out-of-date, or
damaged goods.
 Why we suggest this Price
Strategy
  We suggest this strategy because if Sony was to in
cooperate this pricing strategy for the PS5 they would
also get profit from selling games. There would be no
point in buying the PS5 if you have no games to play.
 Sony could also make profit from the PlayStation
Plus deals. These are memberships that let you play
online games with friends. Playing video games
without friends wouldn’t be enjoyable. This is where
PlayStation Plus comes into play. PlayStation Plus
also provides with small benefits such as discounts.