Nintendo needs to hit the right price or they risk failure again.
Nintendo have a rather appealing looking product lined up with the upcoming Nintendo Switch- but no matter ho appealing it is, the wrong price point could kill it. Just ask Sony with the PS Vita, or Nintendo themselves with the 3DS. So it is very important that they price it right- not so high that people won’t want to buy it, but also not so low that they devalue the brand, lose money on it, and lose headroom for further price drops.
What would this ideal price point be? In a new episode of the Pachter Factor, dedicated entirely to Nintendo’s upcoming Switch console, well known Wedbush Securities analyst Michael Pachter said to Siftd that the magic price point for the system, and the one that he expects, will be $249.
‘You know, I think that Nintendo needs to make a console that is competitive with PS4, which is currently $249,’ he said. ‘It can be slightly underpowered at $249, and people can buy it, because it’s a Nintendo console. It probably can’t justify a price above $299, which is the current price for the Xbox One S, unless it’s powered more than them, which doesn’t seem likely to me with a Tegra chipset.
‘So, I think the price has to be between $199 and $299. Below $200 is a magic price point- I don’t expect that, but below that point it will fly off the shelves. $249 is I think the right price, $299 is the outside, higher price. Above $299 is in trouble. So if I had to make a bet? $249. And I think that’s reasonable, because PS4 is there, PS4 Pro is $399, Xbox One S is probably going to be $249 by March, once Sony kick Microsoft’s butt again this Holiday. So, I think, that’s just the right price. I think people- I think it’s a good supplement for a PS4 or an Xbox One S. The other thing is, a lot of people will look at it as a handheld even though it’s far more sophisticated than a handheld. So I kind of thing they can’t get too far away from the price of a Nintendo DS, even though this is much, much more capable. So I don’t think you can charge more than twice the price- Nintendo DS is now under $100, shocking. So they’ll keep making those, 3DS I mean, because that’s a good product lineup. $99 for 3DS, $249 for Switch. So that’s my call.’
I do agree with him almost fully this time- $199 would be a magic price point, but it is unlikely that Nintendo hits that right away (they will probably want to save that for the first price cut). They can go as high as $299 and get away with it, and $249 is the safest price they can launch at. I personally expect two SKUs at launch, a $249 one, and a higher priced $299 one. Those two, along with the 3DS, which I think Nintendo will continue to sell for a while as well, should let Nintendo cover all price ranges.
The Nintendo Switch is due to launch some time in March, and details on the console, its games, its pricing, and launch lineup, as well as its final release date, will be shared during an event in January.