[quote name='cancerman1120']I am not going to pretend to know what BBY makes on games they sell for $60 but they also put their games on sale for $39.99 so that lost $20 from the price match at Target is a moot point. So what we are talking about here is the $20 cert which is money that goes right back to BBY. So from a cash perspective I give them $40 cash and they give me a coupon for $20 off something else in store. They are not selling me that game for $20. What I do with the $20 cert will determine part of the profitability of the sale.[/QUOTE]
Stop. You're looking at this completely wrong because you're looking at it from YOUR perspective.
(Removing tax from the equation.)
Best Buy understands already what a $20 certificate is worth. It's obviously not $20 cash. Say it's $15 cash or $10 cash or whatever.
Best Buy asks EA to subsidize a preorder. EA agrees to "pay" $15 (or $10 or whatever) for the promotion. Best Buy gives you the $20 GC. Best Buy is net 0 on the preorder deal.
Now, Target does a deal with EA too but it's just a straight $10 off promo two weeks following release.
When BB PMs that Target price, without a subsidy from EA, they are in effect losing that $10. (I wonder if they call it a marketing expense.)
Or if they put the game on sale for $40 a month later, that's because of a different subsidy from EA for $20. EA is not going to stack two subsidies for them.
That's why the PM policy loses money, especially when it's stretched over a long period of time and increases the chances of a promotion elsewhere.
This is completely different from your straight 50% retail markup items where if you PM, you're just making less margin. e.g. Amazon sells a $10 widget for $18 and Best Buy sells it for $20. By PMing amazon on the widget, BB only makes $8 instead of $10. Now, BB has higher overhead but at least they're not losing money straight off the top.
I suspect that price matching Amazon on already low margin products is killing them because they have so much overhead. Mentally looking through a best buy store, I gotta think most of their merchandise is really low margin stuff.
short version: price matching is killing BB. It's not like they want to get rid of it just for shits and giggles.