Xbox One pricing "too high" says business author

"The Art of Pricing" author Rafi Mohammed says $500 point price for next-gen console has potential to "derail" the system this holiday.

The Art of Pricing author Rafi Mohammed believes Microsoft fumbled an "simple issue" and has priced the Xbox One "too high."

In a new Bloomberg TV segment, Mohammed--who has spent 21 years working on pricing issues--praised Microsoft for reversing its controversial policies, but ultimately said he believes the Xbox One's premium price could "derail" the system this holiday.

"You want to get that console in consumers' hands, and then where you really make the money is off of the games," Mohammed said. "So it was really surprising that they charged such a premium, especially when they had a lot of negatives…like the very restrictive DRM, which they did retract on."

"One of the key things is that they really listened to their consumers and they did backtrack and they reduced the price, but I still think the price is too high," he added. "So it's still a $100 premium."

The PlayStation 4 launches this holiday at $400.

Mohammed said every Xbox One coming bundled with a Kinect 2.0 sensor is a benefit over the PS4, where users must pay $60 for the peripheral. Still, he said he believes Microsoft can decrease the Xbox One's price by making Kinect an accessory, similar to the scenario for Xbox 360 users.

This is unlikely to happen, according to past comments from Microsoft designers, who have positioned the device as an integral component of the Xbox One. Microsoft has also said that it has no plans to revisit Xbox One pricing.

Xbox boss Don Mattrick defended the Xbox One pricing point during E3 this month, saying Microsoft is "over-delivering value" and that $500 is not "ridiculous" based on other technology options consumers have today.

Mohammed is an economics graduate of Boston University, the London School of Economics & Political Science, and Cornell University (Ph. D.) He is the founder of Culture of Profit LLC in Cambridge, Mass.

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2748 comments
2leetchisgod2
2leetchisgod2

I never thought i'd read so much crap about a $100 difference. Most of you probably are holding iphones or some samsung 4g $300+ phone with a $60/month bill. Have at least 1 console, a PC, tablet and laptop probably.. But $100 premium for xbox spread over most likely 7-8 years of the consoles life is just way too much. Don't understand this logic.

hordaak
hordaak

WOW...Alot of the sony fans are saying the ps4 is just a better value, but when it comes to games, the xb1 wins out. Featurewise, everything else the xb1 is ahead. So...I guess you are saving money by getting a ps4. But go ahead and read most of the comments from here on down...and you'll see the argument is about money, and not the system itself or the games. OH I'M WRONG? so..the sony fans keep talking about games and features...and online..and not mostly about money. got it. xb1 for a better system. ps4 to save money. thanks

clarkydm
clarkydm

Its the damn $100 plus the kinects that bugs me, i had one for my 360, sold it all it did was collect dust. I am really close to following all the other sheep strait to sony.

MaskRisen
MaskRisen

I bought the 600$ PS3 when it came out. I had no complaints. Money isn't an issue for me. It will be for some people though, but not that big to make everyone buy a Ps4 over an Xbone. Most people didn't buy a PS3 because they said it didn't have enough "games" for the price. And when it had enough games, it didn't have enough "exclusives". People are going to find excuses, no matter how illogical, to buy or not buy something. Ps3 struggled because the Ps3 was to expensive for Sony to make a profit on the ones they did sell and that hurt more then the lack of total sales because they had to keep the price tag high to help offset the losses.  There is a range of acceptable losses when selling a console, and the Ps3's was just too large at the time of its release. Sony is doing it right this time and not taking a big hit on each Ps4 sold and keeping production cost low to not suffer hits like they did last generation. That will be the reason they succeed this generation. Microsoft isn't loosing with a 500$ price tag because I'm pretty sure they aren't taking huge losses on the console sold. What is the point of selling 1 million consoles if you're losing so much money with each one sold? PS4 may sell more simply because it's 100 bucks cheaper, but Xbone isn't going to be knocked out in the first year of it's release.

UnifiedGamer
UnifiedGamer

I have to agree with Rafi Mohammed, if you asked someone on the street today if they were willing to pay over half a grand for a gaming console you'd mostly like receive a big fat no. Though the difference may only be just $100, that $100 that your spending on the console could have gone toward another game and a controller, or in MS case an xbox live subscription card. MS should drop it's price, the very fact that they are pushing the kinect which is the $100 addition is ridiculous since most hardcore gamers find the kinect pointless or just an extra feature nothing game changing.

crazyintheface
crazyintheface

I don't see the big deal of $100. If $100 is that big of a factor for you, then you probably have no business buying any console. Not trying to be a snob but there are probably more important expenditures in your life if a measly $100 decides what console you get.

zzanzabar
zzanzabar

Here are just a few things Microsoft is overlooking with their Xboxone and its pricing:

Not everyone (like college students) have the ROOM for the Kinect to be effective, so it is actually useless in a dorm room lets say. 

No matter how 'false' the rumor that the Xboxone is ALWAYS looking through the Kinect, do you think the military (a significant consumer base) is going to take the chance?

Once you add tax, a game and another controller (very few people just have ONE controller anymore, or just one game at launch for that matter) then the price is damn near $700 within a week of buying the system (if you wait to by the controller).

That is a little too close to $1,000 (or 750 pounds) for a gaming system.  But according to Microsoft we gamers are getting 'thousands of dollars work of value'.

FIERCEnando
FIERCEnando

Its price here in Brasil is $980. Now THAT'S comething...

Pmsmm
Pmsmm

Well Microsoft isn't acting blindly, yet the fact is the things that they are demanding to gamers are too much, the world is facing a crises and they are demanding 499,99€, of course it may bring the Kinect along with the Xbox yet the PlayStation 4 doesn't bring PlayStation eye along with the console, yet if You buy this equipment you will still be able to pay less.

razor_rj
razor_rj

Think about it as a gaming computer, would you have a gaming computer of that power for that money ? no, then its "cheap". sure its hard for the majority of gamers but the price point is not that far off.

focuspuller
focuspuller

I called the policy change, and now I'm callling this. A price drop before release.

Not that I care either way. That thing is not coming any where near my home.

Qixote
Qixote

Given the sad state of the economy, I am not convinced that families are willing to plop down a half grand for a game console this holiday season.  Yes, it supposedly "does so much more".  But still at its core, it is a game console.  And they still have to pay for the expensive games on top of that.

innocent69
innocent69

Wii U is $100 cheaper than Crapstation 4.....Wii U has free online......Wii U has actual physical games that you can purchase right now. Crapstation has games "in development", therefore Crapstation 4 HAS NO GAMES!!!

BoltNinety
BoltNinety

Its $500. Thats nothing. Didn't the ps3 launch at a far higher price? If you can't afford $500, stick to your wii.

Karmazyn
Karmazyn

for $500 I can get PS4 and one new and two used PS4 games.

ohhdirkadirka
ohhdirkadirka

Microsoft isn't getting anymore of my money. Hell no. PS4 ftw

FrankDuxx
FrankDuxx

lol PS4 what a piece of crap, there game are soooo boring. Im glad Microsoft reverse there policie and I don't care to pay 500$ for this console im XBOX WON all the way.

LucasGSirimarco
LucasGSirimarco

Wow Microsoft screwed even more. OK for those of you saying ok ill deal with the 500 and buy a X-box One but guess what. No mic included in the purchase of the system. A mic is a must in X-box since it involves way too much online. Unless they make the new system compatible with the old systems mic, guess what?? In the end the X-box costs $500(too much) + whatever the mic costs. Deam what a rip-off. Definitely don't like that. Yes people will say well PS dosn't either, but to those i say it never did so its nothing new. PS4 for me all the way!!

123crip123
123crip123

dasgina hate to burst your bubble but the PS3 has yellow and red lights of death.... lets not forget the 26 days of down time from being hacked.... (great quality) oh and the most recent firmware brick (Sony cant even release a good update for the PS3 how in the hell are they going to get it right on PS4).Get your PS4 LOL

dasgina
dasgina

I think quality is the most important thing. I had an elite that red ringed after 2 years and very little play. I spent over 500 on games and accessories there. Since this happened to som many people why would I trust them to deliver a system without quality issues. I don't. I'll get a ps4.

Cubs360
Cubs360

Just make it $400 Microsoft, and you will win the generation.

The_Mind_Blowz
The_Mind_Blowz

500$ is way too high for consumers buying a console which in our days is not The Most Important plateform for gaming compare to PC or even Androids. They need to get other package and diverse a little to touch every type of customers for a larger scale. I recommend a pack with the Xbox One + added with a micro for the dealing price of 389$ to crush the market of video gaming and in an other way to get over Sony. 

Well, this is only an option but we'll see this november !



el_mariarchi_01
el_mariarchi_01

Oh my God... not only is the X Box ONE wayy over priced but it doesn't come with a mic??? Are they serious?

EL_Bomberdor
EL_Bomberdor

Funny stuff. Force the Kinect on people, something most wouldn't buy by choice. Show off all the social features of the Xbox One but don't bother adding a headset with it, a headset they know people will buy because after shelling out for the system ya hardly not going to get a headset. Such shining beacons of light.

VicariousWolf88
VicariousWolf88

This "this buisness author" can fuck off ^_^ it is not priced to high.

el_mariarchi_01
el_mariarchi_01

Business author is correct the X Box ONE is priced too high. I am not going to pay £425 for a games console! Its insane! Who do they think they are? Apple? Unless they drop the price ASAP I am going with Sony PS4.

zeta
zeta

You can't help that pricing when you bundle the Kinect with it.. how about giving us a SKU that doesn't require the use of the Kinect and sell it at $399? I'm sure many more would buy it on day one.

jark888
jark888

Suggesting solution

Sell console and Kinect separately. Xbox One $350; Kinect 2 $150 and everybody should be happy (Applied the original idea from Unboxtherapy, Youtube).

dmblum1799
dmblum1799

When I think about it, when buying a product I look at myself as an investor. Do I want to be in business with Microsoft? Or Sony? Or a PC I can build from stuff from Newegg?

1.PC

2. Sony

3. Microsoft Xbox1

Microsoft has had monopolies and put out crap software like Vista. Yes they are a necessary evil on the PC.  Sony is fighting for its life because of electronics competition from Korea and will try to give their customers the best product.

ken4062
ken4062

Yeah too high a price for a underpowered console that makes you buy a Kinect and doesnt come with a headset. too much money.

wearelegion5000
wearelegion5000

What the Snowden affair teaches us, is that people should be more cautious about what information they allow corporations or the government to collect. And Kinect can definitely be used as a spying device, and it will, no matter what microsoft tells us. If the Big Brother demands it, microsoft will have no choice but to hand over any information they collected on you.

quiksilver38
quiksilver38

o yea and is it really that hard to put some electrical tape over the kinnect bar lol

quiksilver38
quiksilver38

the new Xb1 controllers better comes stock as rechargable like ps3 otherwise what another $29 for a recharge pack? greedy ***s

orthodox1976
orthodox1976

I should add to my post below that I'm not getting a PS4 Eye camera either. 

WTF is with these cameras on consoles now? I'll stop playing games before I get a system that forces a camera onto me.

To be fair, I don't trust ANY company with my image likeness, not just M$. It creeps me out. It's just a f*cking video game system. What's with the cameras? Am I paranoid? Probably... LOL

M$ has admitted (informed us) that they have MAD SERVERS for the X1. Where do you think all of the Kinect footage, voice recordings and heartrate information is going to go? That's right: to the CLOUD.

orthodox1976
orthodox1976

Sorry Mohammed, the Kinect is not a "benefit over the PS4". Every 360 owner I know, including myself, has no interest in Kinect and never will. It should be optional.

M$ isn't listening to people. Yes, they rescinded their ridiculous policies about DRM and 24-hour-check-ins, but they're still not getting it. I haven't met one person who likes Kinect and I'm not putting a device into my home that can record audio and video of the people in my home. M$ has already been caught spying on people. I don't know if these articles are true, but the mere posting of them is bad enough.

They want to charge us an extra $100 (over PS4) so they can spy on us.

http://www.dogtownmedia.com/no-one-is-safe-microsoft-caught-spying-on-skype-messages/

http://news.yahoo.com/microsoft-waits-fix-software-bugs-nsa-them-first-140237627.html

http://www.slate.com/blogs/future_tense/2013/06/13/nsa_surveillance_leaks_suggest_microsoft_may_have_misled_public_on_skype.html?fb_ref=sm_fb_share_blogpost

http://www.huffingtonpost.com/2013/06/06/nsa-prism-data-mining_n_3399310.html?utm_hp_ref=fb&src=sp&comm_ref=false#sb=2464935b=facebook

dmblum1799
dmblum1799

By the time it comes out, you probably will be able to build a PC that blows it away for a couple hundred dollars more.

But wait. PC games on Steam are often discounted, so you could make up that money in terms of software very quickly. 

I'm still getting a PS4 for exclusives (and I have a big HDTV). But if you're cash strapped PC will be the way to go.

kenlars
kenlars

just found out PS4 controller is bigger than the x1 now what are the xbots going to say is better?xbox one time exclusives (6 months) maybe less like titanfall?Well thats better on PC anyways:P

mrfaceman23
mrfaceman23

You Guys Are Slow Didnt the Ps3 Cost This Much At Launch

TheOnlyConan
TheOnlyConan

"Why don't console gamers flush the toilet?

Because they prefer to keep the same shit for 5 to 6 years."

PC for life!

Enforcer246
Enforcer246

The reason why they priced it so high because they know idiots will still pay that much.

cyberslammer
cyberslammer

No one wants to spend $500 on three or four bricked XBox ones during the course of its life.  I'm on my fifth 360 and have reserved a PS4.

LordCrisp
LordCrisp

Please support wired Xbox 360 controllers on the Xbox One, you won't really loose anything like that, since most people only has the wireless. But people with stearingwheels and fightsticks would get something out of it, and all that is bought from 3rd part companys anyway.


It would REALLY make a big difference for people with "wheels or sticks" since those types of controllers are really expensive and for both of them there's also a lot of people making their own mods to them. So it would save people a lot of money and time, and it would help you guys sell more games because people don't have to use  an extra 200-400$ on controllers they basically already have. 

Hope you read this and really think about it.

Thanks a lot for bringing back Killer Instinct to us, and thanks for listening to the community about the DRM!

bfmv2007
bfmv2007

PS4 console, comes with one controller, and most likely a headset. $400
1 game. $60
PS Plus. $50
PS Eye (optional) $60
Minimum PS4 spending price not including tax. $510

Xbox One console, comes with one controller, mandatory Kinect, no headset. $500
1 game. $60
Xbox Live Gold. $60
Headset. Most likely $20-40$, most people are going to want a headset.
Minimum Xbox One spending price not including tax. $620
If headset is bought. $640-$660

Total differences using the minimum spending price $110.

If Kinect wasn't bundled and mandatory, the Xbox One could very well be priced at $350. PS4 is a stronger system, using more advanced parts inside, making the system cost more to build than the Xbox One. So Microsoft has no excuse for the system costing $100 more.

dadkwashere
dadkwashere

Let's not forget the crap they put everybody through until they finally changed their minds.

I believe that is also a deciding factor, judging from my friends.

blkgto
blkgto

People bought PS3's when they launched and they were six hundred bucks.  It'll sell. 

evoloner
evoloner

hopefully they will do a digital game add on, or some sort of comp for the price difference.

Kalbent
Kalbent

It's so funny, they allude to Sony being the far better option without saying it. Xbox 1 includes a Kinect for 500 bux and you're trapped into getting that perpherial. but PS4 is 400 but the eye toy is "$60". Compare the two and PS4 is $40 cheaper if you buy the eye toy. but what's even better, Sony is offering us an OPTION. I'll be getting a PS4...

CaptWaffle
CaptWaffle

I got the 360 because it was a lot cheaper than the PS3.... I'll get the PS4 because it is a lot cheaper than the 720 (and that's even without including all the Microsoft screwups and bad policies.... I don't care that they retracted these policies.... it shows terrible judgement and it just shows that they will likely make more horrible decisions in the future.