Sony struggles with how to price PlayStation due to costly parts

How Sony prices its unit may depend on how Microsoft prices its next console

A battle of tech giants is on the horizon this year as both Sony and Microsoft are expected to debut new gaming consoles.

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Due to the cost of parts, Sony is struggling with how to price the next PlayStation as it competes with rivals in the next holiday season, according to Bloomberg.

The next console could cost $450 per unit to make, according to people with knowledge of the situation.

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To get ready for holiday season sales, there is an order that manufacturers follow. That usually means production in the spring, but pricing is done in February.

The last console was released in 2013 at a retail price of $399, was estimated by IHS Markit to cost $381 to manufacture.

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With a $450 unit cost, the PlayStation 5’s retail price would have to be at least $470, according to Bloomberg.

That may be hard for consumers to swallow.

TickerSecurityLastChangeChange %
SNESONY CORPORATION92.75-1.97-2.07%
MSFTMICROSOFT CORP.215.35-0.86-0.40%

Sony declined to comment to Bloomberg.

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The competition for memory is tough as demand is high due to smartphone manufacturersprepare for fifth generation devices.

While a console may have a thin profit margin, companies usually profit from game software and subscriptions.

Sony so far says the ongoing coronavirus outbreak has had no impact on preparations for PlayStation 5 production.

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How Sony prices its unit may depend on how Microsoft prices its next console.