Here's Why the PlayStation 5 May Be More Expensive Than You Think

The PlayStation 5 is poised to release this holiday season alongside the Xbox Series X, and there's currently a lot of speculation about how much it will cost. Among this speculation is predictions the PS5 will be roughly as cheap as the PS4 come launch, which is to say $400, or at the worst, $450. However, at this point, this seems unlikely. Rather, it's looking like the console will at least cost $500, and may even come in around $550. And considering not that along ago Sony came a year late into the console generation with a $600 price point, I wouldn't be completely surprised if the PS5 came hot out the gate with this premium price tag, but right now, this seems even more unlikely than the $400 price point. All of this is to say, if you're expecting the console to be $400 or even $450, I think you'll be surprised come the price reveal.

The last time Sony launched a console, it was in 2013, and it went very well for them. A big reason PlayStation was so successful out the gate was because the PS4 was not only cheaper than the Xbox One, but ringed in at only $400. And Sony was able to position the console at this price point, because it only cost -- roughly -- $381 to manufacture.

The PlayStation 5 on the other hand costs around $450 to manufacture, or at least that's what Bloomberg's new report claims. Now, if this was the only cost in shipping a console, it would be reasonable to think Sony would price it at $450 or even $400. The latter would be a pretty big loss, but Sony has eaten costs up front in favor of getting units off the shelf. The strategy here is that you take the loss up front in order to create a bigger install base and make money on the backside via software. And this has been a successful strategy for Sony in the past. That said, there's more costs involved than just manufacturing.

What many are forgetting is that after the $450 of manufacturing costs, Sony still has to factor in packaging, shipping wholesale, and retail cut before determining a price. In other words, $450 isn't where the cost stops, it's actually where costs begin. Now, it's hard to gauge how much additional costs this will add up to, but it does push the price point closer $500 than $400 or $450, in my opinion.

The aforementioned Bloomberg report also mentions that Sony is anticipating the transition between PS4 and PS5 to be a gradual one, which suggests they don't anticipate the console to fly off shelves like hot cakes at launch. Again, this points to a more pricey price point, because if the console was $400, or even $450, there's no reason to think early adopters would be in short supply.

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Lastly, Sony itself has hinted at a premium price point. Back in June, it was reported that PS5 will focus on hardcore gamers, meanwhile Sony's Mark Cenry said a few months earlier that the PS5 price "will be appealing in light of its advanced feature set." At the time, many took this as a hint that the price tag of the console may be a little steep, and as time goes on, this seems like an increasingly safe assumption.

PlayStation 5 is set to release sometime this holiday season. For more news, media, rumors, and leaks on the PS5, be sure to take a second and peruse all of our past and recent coverage of the console by clicking right here.

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