How much are retail games marked up?

C

Casiotech

CAGiversary!
I used to think stores like Target made 10-20% on a new game but with the buy 2 get 1 free deal essentially that is like selling you 3 games at 33% off. Do they lose money on such promotions? Do they break even?
 
The markup isn't very high. Usually anywhere from $5-$10 on $60 games, less on games that are $50 and under.
 
[quote name='Casiotech']Do they lose money on such promotions?[/quote]

Yes a retailer loses money, but discounted items serve as 'doorbusters' and a retailer makes margin off of other items in the store. Like SL4IN, $10 at the most per title.
 
yeah but is it really wise to give away free video games to people who will show up only to buy video games and not spend money on anything else.

a place like toys r us may need it but target doesn't need to give away wii games that's for sure.

how does that work in regards to people returning games and keeping the free game, do they just change the receipt prices instead of writing

$50
$50
$0

they would do something like

$33.33
$33.33
$33.33
?
 
TRU has been doing a B2G1 promotion for years. If the chain was losing too much money on it, I'm sure the accountants would have stopped the practice long ago.

I believe TRU did the 50/50/0 this year. You can find more information in the thread located here, which I found by searching for TRU in the deal discussion forum.
 
[quote name='Casiotech']yeah but is it really wise to give away free video games to people who will show up only to buy video games and not spend money on anything else.

a place like toys r us may need it but target doesn't need to give away wii games that's for sure.

how does that work in regards to people returning games and keeping the free game, do they just change the receipt prices instead of writing

$50
$50
$0

they would do something like

$33.33
$33.33
$33.33
?[/QUOTE]

If you do a B2G1F, and you want to return a game, you have to return the free game in order to return any of the other games.
 
It's a matter of brand loyalty and add-on sales (known as the attatch rate). People who see great B2G1 sales will typically raise their personal opinion of the store (of which very, very few people are internet-saavy).

Also, if the attatch rate happens to 5-15%, that could still be very worth it. While retail games aren't very high margin, accessories (excluding points cards) are extremely high margin. Looking especially at Mad Catz and other third party brands, the margin is typically near 50% (a $20 Mad Catz controller only costs the retailer about $11) and often times more than that (especially Monster or Psyclone products which are priced 3-10x over cost).
 
Good point. You wouldn't believe how many people I saw buying junk accessories during the B2G1 free sale. (Most of them were add-ons for Wii Fit which the people didn't even have yet, but were "sure" they'd find it before Christmas.)
 
Wal-Mart's cost and "Joe's Games" cost per unit are not the same. big chain stores can run more promotions because they buy in really high volume, and have deals with distributors.
 
Reality's Fringe;5061767]Wal-Mart's cost and "Joe's Games" cost per unit are not the same. big chain stores can run more promotions because they buy in really high volume said:
This.

This is mostly the reason why big retailers like TRU, Gamestop, Best Buy, Circuit City and others can run B2G1 sales and smaller chains/mom & pop shops can't.
Click to expand...
 
My question: What if the game drops to $40 (like Blitz) ? I notice stores like Wal-Mart and Best Buy had 12+ copies, and since they only make 20% or so margin on them, that means they would lose $10 on each copy that just dropped in price?
 
[quote name='Monsta Mack']My question: What if the game drops to $40 (like Blitz) ? I notice stores like Wal-Mart and Best Buy had 12+ copies, and since they only make 20% or so margin on them, that means they would lose $10 on each copy that just dropped in price?[/quote]

That's usually what happens.

For example, my boss ordered 3 copies of Infinite Undiscovery when it came out. 2 of those 3 copies sold, and then the game receives a price drop from $59.99 to $39.99. We paid $50.50 for each copy of the game the store bought, so when it dropped to $39.99, the store ended up losing $10.
 
[quote name='Monsta Mack']My question: What if the game drops to $40 (like Blitz) ? I notice stores like Wal-Mart and Best Buy had 12+ copies, and since they only make 20% or so margin on them, that means they would lose $10 on each copy that just dropped in price?[/quote]

That's where manufacturer price protection comes in. The publishers can make a universal sale price/price drop and the retailer gets some compensation from them. But I guess that depends on where you work.
 
[quote name='Monsta Mack']My question: What if the game drops to $40 (like Blitz) ? I notice stores like Wal-Mart and Best Buy had 12+ copies, and since they only make 20% or so margin on them, that means they would lose $10 on each copy that just dropped in price?[/quote]

If you really want to find out more about this, I highly suggest listening to the cagcast with the interview with the guy who used to run the store in New york called Media 2.0.

Gave great insight into the world of owning a game store.
 
[quote name='SL4IN']That's usually what happens.

For example, my boss ordered 3 copies of Infinite Undiscovery when it came out. 2 of those 3 copies sold, and then the game receives a price drop from $59.99 to $39.99. We paid $50.50 for each copy of the game the store bought, so when it dropped to $39.99, the store ended up losing $10.[/quote]

Your boss sounds like he's ordering through a distributor, which is entirely different than large retailers.
 
[quote name='jkanownik']Your boss sounds like he's ordering through a distributor, which is entirely different than large retailers.[/quote]

Hence why I quoted earlier that Wal-Mart and Joe's Games are different.
 
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