Why do games cost more to direct download on a console than to buy a disc? Surely direct download saves the manufacturer costs on transport, shipping, actual materials for disks and packaging, setting up deals with retailers etc…
In: Technology
This is because of a common error people make when thinking about companies pricing products: It has almost nothing to do with the expense to produce it.
Suppose you want to make some money. You hire a worker and pay them $10 to make a product, you spend $3 on materials to make it, you spend $0.50 to package it, $1 to ship it, and $2 on marketing. How much should you charge for this product?
As much as you can get! The goal is making money, not offsetting your costs with a certain percentage markup. Obviously you need to make more ~~then~~ than you spent on it or you are losing money and shouldn’t do that again, but even if you have a product you can’t sell for more than you spent on it the goal is still to get as much for it as possible.
So in your question about selling a game that the producer doesn’t have a bunch of costs they otherwise would have, the price doesn’t change because there is no reason for it to do so.
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