Does anyone know how much money a store makes on a $50 game?

Follandboy

Follandboy

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I always wondered how much money a store like Wal-Mart makes on a new released video game that sells for $50. I was thinking as to why EB gives you so little in trade in value compared to the price they sell it for. I saw someone trade in a GBA with Kirby's Mirror, Advanced Wars 2 and some GBC game for a lousy $28. Do stores make over double on every game they sell (buy it for $25 sell for $50)?
 
Rumor has it (and this is just from what I've picked up on these boards) that the margin is only about $5-7 on a $50 title. I'm really curious what they are on $20 titles.

And yes, EB/GS and other used stores routinely abuse customer's lack of information all the time by giving only 50% or less of retail value for a game - most times even less. At most you could get $25 for a brand new retail game, which would in turn be sold for $45.

These are generalizations...
 
It depends on the quantity you buy. When I worked at a large retailer doing financials (I won't name which one :p ) if a small retailer wanted to buy units the margin is anywhere from $5-$12 depending on whether they used a distributor or whether they bought from a direct source. It would usually be about $7 though. That doesn't count the fact you have to pay for shipping + taxes after you sell the game + your other overhead, etc.

Our margin was much higher because the quantity we purchased was higher, and that's pretty basic for any business venture you go into.

My mother owned a liquor store and the liquor she was buying was at a higher price than what the large liquor store about 10 miles away was selling at!

Quantity is King in many businesses :p
 
$7-$10 is about right I believe

I work at Best Buy and the employee discount if 5% over cost. So 5% of $50 is $2.50. And the employee prices on games is anywhere from $42-$46. So theoritically, Best Buy is paying anywhere from $39.50 to $43.50 for each game they try to sell.
 
At gamecrazy the wholesale prices for all our games are in the computer, I've looked some games up and they range from $40.00 (I think I remember quite a few GameCube titles being at this range) to anywhere up to $47 (big titles, EA games) and game boy titles coming in around $20-$25. Stores don't make much money at all on individual new sales.. especially consoles. We pay $142.50 for Xboxes and PS2s, and around $90 for gamecubes.

Thats why you see the trade in values of $25 for a new game, sold at $44.99 on the shelf, or a not quite old one getting you $12 trade in and selling at 29.99 used. we've gotta make our money back somewhere. EB is the absolute worst at this though. Their used prices are just rediculous, I don't see why the used price always has to be barely $5 under the new price.. We have decent used prices, sometimes as much as $15 under new prices. Can't beat the independent retailers(Local mom n' pop stores) for deals on trade in and used though.. i love those stores
 
[quote name='Follandboy']I always wondered how much money a store like Wal-Mart makes on a new released video game that sells for $50. I was thinking as to why EB gives you so little in trade in value compared to the price they sell it for. I saw someone trade in a GBA with Kirby's Mirror, Advanced Wars 2 and some GBC game for a lousy $28. Do stores make over double on every game they sell (buy it for $25 sell for $50)?[/quote]

Well, its hard to put Wal-Mart in the same category as all other stores. They buy things at such high quantity and end up selling so low that there isn't a huge markup on any product they sell. They make it up by the sheer amount of stuff they sell every single day. You figure if Best Buy makes $5 on Halo 2, Wal-Mart will cut the price $3 and only make a $2 profit - but they'll sell 3 times as many copies of the game as Best Buy.
 
Margin is usually between 26%-30%.Do the math.Consoles are like 5-6%.

Do the math.

EDIT:BTW this is WM margin.I work there.
 
For the $20 ESPN games, my WalMart pays $16.80 or so for each, so they make around $3.20.
(Some employee left the packing slip/invoice in the bin with the ESPN games lol)
 
I work at a mom/pop game store.
We have to use a distributor, and pay around $18 for $19.99 games, $26 for $29.99 games $43 for $49.99 games. It sucks because we don't get games until the day after release. If I told you what we pay for systems, you probably wouldn't believe me. I'll just say it's often cheaper to buy from Walmart than our distributors.

Our trade in is usually around half of what we'll resell the games for. Used $49.99 games are $34.99 (you'd get $20 trade in, maybe $25 if really new title), $39.99 new sell for $29.99 used (you'd get $17), $29.99 new for $19.99 used(you'd get $12) and $19.99 new sells for $9.99-$12.99 depending on title (you'd get $5-$7)

I really don't get why people pay what EB charges for used games. For a difference of $2-$5, I'd prefer to have it new. It irks me when people complain about our prices, it's like, have you never been to the mall?

edit: and don't get me started on paying full price for opened games....
 
[quote name='mmn'][quote name='Follandboy']I always wondered how much money a store like Wal-Mart makes on a new released video game that sells for $50. I was thinking as to why EB gives you so little in trade in value compared to the price they sell it for. I saw someone trade in a GBA with Kirby's Mirror, Advanced Wars 2 and some GBC game for a lousy $28. Do stores make over double on every game they sell (buy it for $25 sell for $50)?[/quote]

Well, its hard to put Wal-Mart in the same category as all other stores. They buy things at such high quantity and end up selling so low that there isn't a huge markup on any product they sell. They make it up by the sheer amount of stuff they sell every single day. You figure if Best Buy makes $5 on Halo 2, Wal-Mart will cut the price $3 and only make a $2 profit - but they'll sell 3 times as many copies of the game as Best Buy.[/quote]

Except Wal-Mart still charges $50 for all their games (actually $49.88 or something). They do tend to ruthlessly cut the price on most other stuff but for some reason they are routinely undersold on video games.
 
Take into account too that most places have went into the used game business to turn profit there and be able to cut prices on newer games to beat out competitors.

Places like Walmart and Target can afford price cuts on games as they make it up elsewhere in store, such as cheap import items. Seasonal probably nets the most often running at double what the cost from buyer is. Kmart often paid $100 or less for an entire patio furniture set and sold for $300 or more.
 
The pre-played games are what keeps gamestop and eb profitable. Back when they used to only sell new games, those stores struggled. Gamestop(software etc./babbages) even went through bankruptcy if I remember correctly. Then they figured out that they can give $20 trade-in value for games they can turn around and sell for $40+, and they've never looked back.

Just take a look inside those stores. Over the last 5 years or so, the shelf space dedicated to pre-owned stuff only continues to grow. At my local stores, pre-owned shelf space is larger than space for new stuff.

You know how to figure out if something is a money printing machine? See if their competitors copy. They all do it now. Even FYE/sam goody stores in the malls. If toysrus knew what was good for them, they'd sell pre-owned games before they go bankrupt. I would think game trade-ins at toysrus would be a gold mine for attracting uninformed game buyers to give up their new release games for $20.
 
[quote name='SevereTireDamage']And yes, EB/GS and other used stores routinely abuse customer's lack of information all the time by giving only 50% or less of retail value for a game - most times even less. At most you could get $25 for a brand new retail game, which would in turn be sold for $45.[/quote]

Forgive me for playing Devil's advocate, but what abuse? Are both parties not agreeing to the amount? If the customer objects to the value, can they not walk out the door, game in hand?

Don't get me wrong; I've worked at GS for over 3 years, so I am very familiar with the insane margins of profit on both new games and used trade-in values. I've never traded anything at GS, because I am aware of how much more I could get through another source. But is it GS's fault that some are too ignorant to know what they could be getting? I think not.

GS/EB/GR/any resale store is simply a place where people can quickly and without hassle be rid of their played games. I'm positive that almost %80 or so of my customers are aware of what they could be getting. But they continue to trade anyway. Why? Because it's quick and (relatively) painless. Some people don't like to use eBay or trading sites; not everyone has freinds that they can sell their games too. Some people just don't give a shit.

The day that a GS employee snatches a game out of a customer's hands and replaces it with a measly amount of credit without the customer's consent is the day you'll have an argument against resale stores.
 
[quote name='Ledhed'][quote name='SevereTireDamage']And yes, EB/GS and other used stores routinely abuse customer's lack of information all the time by giving only 50% or less of retail value for a game - most times even less. At most you could get $25 for a brand new retail game, which would in turn be sold for $45.[/quote]

Forgive me for playing Devil's advocate, but what abuse? Are both parties not agreeing to the amount? If the customer objects to the value, can they not walk out the door, game in hand?

Don't get me wrong; I've worked at GS for over 3 years, so I am very familiar with the insane margins of profit on both new games and used trade-in values. I've never traded anything at GS, because I am aware of how much more I could get through another source. But is it GS's fault that some are too ignorant to know what they could be getting? I think not.

GS/EB/GR/any resale store is simply a place where people can quickly and without hassle be rid of their played games. I'm positive that almost %80 or so of my customers are aware of what they could be getting. But they continue to trade anyway. Why? Because it's quick and (relatively) painless. Some people don't like to use eBay or trading sites; not everyone has freinds that they can sell their games too. Some people just don't give a shit.

The day that a GS employee snatches a game out of a customer's hands and replaces it with a measly amount of credit without the customer's consent is the day you'll have an argument against resale stores.[/quote]

Exactly, I don't fault EB/GS for giving terrbile trade-in prices and turning around and selling games for ridiculous prices, I fault the consumers who actually go for it.
 
[quote name='msdmoney']Exactly, I don't fault EB/GS for giving terrbile trade-in prices and turning around and selling games for ridiculous prices, I fault the consumers who actually go for it.[/quote]

See folks, Mos Def gets it; why can't you?

As long as people keep doing it, what motive will these stores have to up their trade values? None.
 
I'd say between $6 and $10 which is why Hastings offers the 4 for 1 on titles on $49.99.. if they buy MechAssault 2 and I trade in four games that they sell for $9.99 each, they break even.
 
The profit margins on strategy guides is a lot higher, which is why they always try to shove them down peoples' throats.
 
I have always wondered this question myself. And Ledhed speaks the truth. The customer must be in agreement with the price that EB/GC/GS/etc. is willing to give and then rightfully give the game to store to complete the transaction. If the customer doesn't like what he is being offered then he can leave.
 
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