How does Gamestop make money?
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reibeatall
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Chances are, they didn't pay very much for those games.
They make a pretty decent amount on new games, so that's how they can afford to take a hit on those crappy games.
Also, buying 360 games for 25 and selling them for 55 helps.
They make a pretty decent amount on new games, so that's how they can afford to take a hit on those crappy games.
Also, buying 360 games for 25 and selling them for 55 helps.
secretvampire
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Buying a few good games for $5-10 and reselling them for $30-45 easily pays for all of those crappy games that sit on their shelves for a long time.
[quote name='reibeatall']Chances are, they didn't pay very much for those games.
They make a pretty decent amount on new games, so that's how they can afford to take a hit on those crappy games.
Also, buying 360 games for 25 and selling them for 55 helps.[/quote]
They make money on new games????
Since when?
They make a pretty decent amount on new games, so that's how they can afford to take a hit on those crappy games.
Also, buying 360 games for 25 and selling them for 55 helps.[/quote]
They make money on new games????
Since when?
reibeatall
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Selling 200 copies of WoW:BC per store has to get them SOME money.
[quote name='reibeatall']Selling 200 copies of WoW:BC per store has to get them SOME money.[/QUOTE]
At the most, like $4 a copy.
Most store sell new games only as a conveinence. Plus, with PC games, the profit stops right there, since they won't be getting that game back used to sell again at a high profit margin.
The only games I know that are marked up by a good $9 - $10 are 360 games.
At the most, like $4 a copy.
Most store sell new games only as a conveinence. Plus, with PC games, the profit stops right there, since they won't be getting that game back used to sell again at a high profit margin.
The only games I know that are marked up by a good $9 - $10 are 360 games.
[quote name='reibeatall']Chances are, they didn't pay very much for those games.
They make a pretty decent amount on new games, so that's how they can afford to take a hit on those crappy games.
Also, buying 360 games for 25 and selling them for 55 helps.[/quote]
From what I have heard, they dont make much off new games. Trade in wise, I have only seen games traded in, never saw someone buy a used games, and my friends say they will NEVER buy used games, no matter what the discount is.
They make a pretty decent amount on new games, so that's how they can afford to take a hit on those crappy games.
Also, buying 360 games for 25 and selling them for 55 helps.[/quote]
From what I have heard, they dont make much off new games. Trade in wise, I have only seen games traded in, never saw someone buy a used games, and my friends say they will NEVER buy used games, no matter what the discount is.
Depends on the games, mostly. It also doesn't hurt that, in some cases (especially back in the Pittsburgh area), you have at least a hundred teens and 20-somethings trading in every current gen and past gen thing they have (EB/GS and local independent places) just so they could have enough credit for the latest blockbuster game. As such, EB/GS is lapping it up since most of those piles had around three to four "high markup" titles (ie: Zone of the Enders 2, Valkyrie Profile, Marvel vs. Capcom 2) and the rest were trade-in fodder that they were doling out 25 cents to $1 a pop on.
What happened, at least in Pittsburgh, was that the game-lovers (CMU and Pitt tended to be full of them, same with Duquesne in some cases) would pick up the high-markups because they were there in the store and the trade-in fodder would disappear due to two or three specific reasons:
1) The Sports titles would fly since many people were just as apt to buy this year's/last year's Madden or Tiger Woods much later, when it was down to near-nothing. [In this case EB still nets a small, yet still substantial, profit.]
2) The game-lovers would be telling friends and customers what they should look at, especially within the cheap (and sometimes overlooked) titles. [I did this a lot for friends and strangers. Some $4.99 to $7.99 titles are strange yet unique gems, even if they are overpriced.]
Of course, this doesn't work everywhere but it is how most of the nearby Pittsburgh stores did fairly well even though their shelves almost always seemed stocked. It also didn't hurt any when people would buy off of their shelves, go across the street to The Exchange and return games they didn't like over there. It was like an endless cycle of buying and reselling between Customer - EB/GS - The Exchange based on buyback costs, what "next big game" was hitting, and whether or not anyone had promos.
What happened, at least in Pittsburgh, was that the game-lovers (CMU and Pitt tended to be full of them, same with Duquesne in some cases) would pick up the high-markups because they were there in the store and the trade-in fodder would disappear due to two or three specific reasons:
1) The Sports titles would fly since many people were just as apt to buy this year's/last year's Madden or Tiger Woods much later, when it was down to near-nothing. [In this case EB still nets a small, yet still substantial, profit.]
2) The game-lovers would be telling friends and customers what they should look at, especially within the cheap (and sometimes overlooked) titles. [I did this a lot for friends and strangers. Some $4.99 to $7.99 titles are strange yet unique gems, even if they are overpriced.]
Of course, this doesn't work everywhere but it is how most of the nearby Pittsburgh stores did fairly well even though their shelves almost always seemed stocked. It also didn't hurt any when people would buy off of their shelves, go across the street to The Exchange and return games they didn't like over there. It was like an endless cycle of buying and reselling between Customer - EB/GS - The Exchange based on buyback costs, what "next big game" was hitting, and whether or not anyone had promos.
The trades compound on each other, so basically everytime someone pays for a used game, Gamestop didn't pay ANYTHING for it. After the store is open for a bit, trades just keep compounding so they are making serious money off of everything but new games.
A lot of times, you will have the same game traded in multiple times, making serious money off of each one. They didn't pay a dime for that game.
You trade in 2 games for $20
You pick up a $20 game with your credit. Gamestop only gave $10 in credit for that game.
They sell your 2 games for $40. They have just made $40 off you, and all you did was take a used game that they also only gave partial credit for. Multiply that by thousands and you have a lot of money. Basically they are just recycling their inventory over and over. Sure you will have people that sell the game on ebay or take it to Gamecrazy. But TONS of people, play the game, then take it right back to that store and trade it back in.
A lot of times, you will have the same game traded in multiple times, making serious money off of each one. They didn't pay a dime for that game.
You trade in 2 games for $20
You pick up a $20 game with your credit. Gamestop only gave $10 in credit for that game.
They sell your 2 games for $40. They have just made $40 off you, and all you did was take a used game that they also only gave partial credit for. Multiply that by thousands and you have a lot of money. Basically they are just recycling their inventory over and over. Sure you will have people that sell the game on ebay or take it to Gamecrazy. But TONS of people, play the game, then take it right back to that store and trade it back in.
Surferflames
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As others have said, the money is definitely in the used game market. Why do you think Sony was so forward about trying to put "activation" type software in all of their games in the early part of 2006? They wanted to put an end to the used game market so people would buy new games, thus giving them more cash.
In most areas, there is no competition (or if there is it gets absorbed by the company [ see Rhino ] ) so they can offer pretty much anything for trades.
In most areas, there is no competition (or if there is it gets absorbed by the company [ see Rhino ] ) so they can offer pretty much anything for trades.
SlimJim0725
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he was saying used games that were just recently released. they pay you like $25-$30 for the games and then sell it for like $55. that is a huge difference for them and they pay employees very low wages (at least here in VA).
rabidmonkeys
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[quote name='schuerm26']The trades compound on each other, so basically everytime someone pays for a used game, Gamestop didn't pay ANYTHING for it. After the store is open for a bit, trades just keep compounding so they are making serious money off of everything but new games.
A lot of times, you will have the same game traded in multiple times, making serious money off of each one. They didn't pay a dime for that game.
You trade in 2 games for $20
You pick up a $20 game with your credit. Gamestop only gave $10 in credit for that game.
They sell your 2 games for $40. They have just made $40 off you, and all you did was take a used game that they also only gave partial credit for. Multiply that by thousands and you have a lot of money. Basically they are just recycling their inventory over and over. Sure you will have people that sell the game on ebay or take it to Gamecrazy. But TONS of people, play the game, then take it right back to that store and trade it back in.[/QUOTE]
Exactly! Most people stop at "they give $25 for XXX game, but they sell it for $55." But the real money is made when you look at what was given for the game you take home. Once you do that, you can clearly see the massive profit margin.
A lot of times, you will have the same game traded in multiple times, making serious money off of each one. They didn't pay a dime for that game.
You trade in 2 games for $20
You pick up a $20 game with your credit. Gamestop only gave $10 in credit for that game.
They sell your 2 games for $40. They have just made $40 off you, and all you did was take a used game that they also only gave partial credit for. Multiply that by thousands and you have a lot of money. Basically they are just recycling their inventory over and over. Sure you will have people that sell the game on ebay or take it to Gamecrazy. But TONS of people, play the game, then take it right back to that store and trade it back in.[/QUOTE]
Exactly! Most people stop at "they give $25 for XXX game, but they sell it for $55." But the real money is made when you look at what was given for the game you take home. Once you do that, you can clearly see the massive profit margin.
sendmesomegames
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Don't forget about the "Edge" card since that is a mechanism to make sure that you comeback for more. You pay them $15 bucks for the privelege of 10% off used games and accesories only. They give you 10% extra on bad trade in prices anyhow so they are still screwing people.
I got my edge card for $2 since I told the guy that I would never pay $15 to save 10%.
I got my edge card for $2 since I told the guy that I would never pay $15 to save 10%.
FrankTheFrowner
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[quote name='help1']From what I have heard, they dont make much off new games. Trade in wise, I have only seen games traded in, never saw someone buy a used games, and my friends say they will NEVER buy used games, no matter what the discount is.[/quote]
I don't know what part of LI you're in, but the used game sales are pretty high at the EB/GS stores around here. I also don't understand why you wouldn't buy a used game -- they're less expensive, you can check out the condition before you buy them if you're worried about that, and there's a 7-day return policy in case you beat the game or it just sucks.
I don't know what part of LI you're in, but the used game sales are pretty high at the EB/GS stores around here. I also don't understand why you wouldn't buy a used game -- they're less expensive, you can check out the condition before you buy them if you're worried about that, and there's a 7-day return policy in case you beat the game or it just sucks.
[quote name='schuerm26']The trades compound on each other, so basically everytime someone pays for a used game, Gamestop didn't pay ANYTHING for it. After the store is open for a bit, trades just keep compounding so they are making serious money off of everything but new games.
A lot of times, you will have the same game traded in multiple times, making serious money off of each one. They didn't pay a dime for that game.
You trade in 2 games for $20
You pick up a $20 game with your credit. Gamestop only gave $10 in credit for that game.
They sell your 2 games for $40. They have just made $40 off you, and all you did was take a used game that they also only gave partial credit for. Multiply that by thousands and you have a lot of money. Basically they are just recycling their inventory over and over. Sure you will have people that sell the game on ebay or take it to Gamecrazy. But TONS of people, play the game, then take it right back to that store and trade it back in.[/quote]
I dont know how it is in your gamestop, but ours is jsut one display case with new games in it and a lot of used spread aroudn the whole store. IF no one buys the used games, then gamestop doesnt make any money, and it seems like that is what happens in my area atleast.
A lot of times, you will have the same game traded in multiple times, making serious money off of each one. They didn't pay a dime for that game.
You trade in 2 games for $20
You pick up a $20 game with your credit. Gamestop only gave $10 in credit for that game.
They sell your 2 games for $40. They have just made $40 off you, and all you did was take a used game that they also only gave partial credit for. Multiply that by thousands and you have a lot of money. Basically they are just recycling their inventory over and over. Sure you will have people that sell the game on ebay or take it to Gamecrazy. But TONS of people, play the game, then take it right back to that store and trade it back in.[/quote]
I dont know how it is in your gamestop, but ours is jsut one display case with new games in it and a lot of used spread aroudn the whole store. IF no one buys the used games, then gamestop doesnt make any money, and it seems like that is what happens in my area atleast.
[quote name='FrankTheFrowner']I don't know what part of LI you're in, but the used game sales are pretty high at the EB/GS stores around here. I also don't understand why you wouldn't buy a used game -- they're less expensive, you can check out the condition before you buy them if you're worried about that, and there's a 7-day return policy in case you beat the game or it just sucks.[/quote]
Im talking specifically from Walt Whitman, and although I dont work there, live there or go there a lot, I ahve never once seens a used game purchased there, only new.
Im talking specifically from Walt Whitman, and although I dont work there, live there or go there a lot, I ahve never once seens a used game purchased there, only new.
FrankTheFrowner
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[quote name='help1']Im talking specifically from Walt Whitman, and although I dont work there, live there or go there a lot, I ahve never once seens a used game purchased there, only new.[/quote]
Never been to that store -- but the ones on L.I. that I've been to sell TONS of used games. Remember, that the stores also supply games to corporate for them to sell online or redistribute to other locations -- so they can keep taking trade-ins even if they don't sell in a particular store.
Never been to that store -- but the ones on L.I. that I've been to sell TONS of used games. Remember, that the stores also supply games to corporate for them to sell online or redistribute to other locations -- so they can keep taking trade-ins even if they don't sell in a particular store.
SlimJim0725
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they lose like maybe $10 for those games sitting on the shelves in which most cases they still sell copies of them to people who don't want to spend a whole lot of money at all. the profit they make off the newer used games that they sell is quite a bit and once the person is done with it, they usually trade it back in and get less than the original person who traded it in got and gamestop still sells it for the same price. so in most cases lets say it was something like rainbow six vegas on the xbox 360. i'd say the will give $35 within the first 1-3 weeks, depending on how many trade ins they get of it. then they turn around and sell it for $55 to someone who didn't spend the extra $5 for a new copy. that person then beats the game and trades it back in to get credit towards another game, right? well now there are enough used copies that gamestop doesn't need nearly as many used copies of it, so the trade in value drops another $10 to make it $25 for the trade in. thing is they are still selling the used copy for $55. so they pay $60 for the trade in of the one game and sell it for $110. they just made a $50 profit right there off of 1 game.
[quote name='help1']Im talking specifically from Walt Whitman, and although I dont work there, live there or go there a lot, I ahve never once seens a used game purchased there, only new.[/quote]
You must miss me every time I'm in there since my brother and I tend to buy the crap out of that store. Well, at least we used to back in the day, when it was under different management and all (I'm talking around three or four years ago).
The problem is that most of what they have had on the shelves over the past...oh, six months is utter shit. And that's shocking for that location since it never used to be like that. It's where I picked up Res near the end of its first run, used, for a nice $27. Hell, they used to have plenty of obscure, rare games too that would just pop in and would go unnoticed for weeks. Nowadays the only thing they have going is their DVD section and, honestly, if it gets any larger they're going to have to do something about it since those aren't moving either.
I just think it's that the location is getting hit with slower sales in the Used department since they are getting more trade-ins in certain games than otherwise, but their New sales seem to be keeping them going without a problem for the moment. Then again, that location has ~always~ had a problem with quality (read: worthwhile) Used games for two months preceding and two months following Christmas.
...god, I shop too much. Hope you got in on the TRU deal, though. The TRU right by Walt Whitman had tons of the obscure stuff for trading here.
[Edit:] OK, I'm going to be nice to all of you Nassau people since I like fellow CAGers. Are you trying to look for a title that just seems hard to find? Hit up the EB in Plainview. Not only is the store massive and the workers excellent but their stock is simply beyond reproach. There have been times where they've had almost every single worthwhile, hard-to-find RPG that was worth owning on the PS2 just sitting on their shelves. It doesn't get the mall crowd and the only other people who shop there are parents doing their errands and little kids who have just come from shoe shopping, Tiger Schulman, or the toy store (god bless independent toy stores, by the way) Teens aren't anywhere nearby since they would rather be off over in Hicksville (ie: Broadway Mall) or somewhere else entirely and 20-somethings...well, for the most part, they're either off at college, working (and therefore rarely in the area) or going to a local school. In that last case the closest one they would be at would be SUNY Old Westbury (maybe C.W. Post) and they would sooner hit up Broadway Mall instead.
Hope this helps, too!
You must miss me every time I'm in there since my brother and I tend to buy the crap out of that store. Well, at least we used to back in the day, when it was under different management and all (I'm talking around three or four years ago).
The problem is that most of what they have had on the shelves over the past...oh, six months is utter shit. And that's shocking for that location since it never used to be like that. It's where I picked up Res near the end of its first run, used, for a nice $27. Hell, they used to have plenty of obscure, rare games too that would just pop in and would go unnoticed for weeks. Nowadays the only thing they have going is their DVD section and, honestly, if it gets any larger they're going to have to do something about it since those aren't moving either.
I just think it's that the location is getting hit with slower sales in the Used department since they are getting more trade-ins in certain games than otherwise, but their New sales seem to be keeping them going without a problem for the moment. Then again, that location has ~always~ had a problem with quality (read: worthwhile) Used games for two months preceding and two months following Christmas.
...god, I shop too much. Hope you got in on the TRU deal, though. The TRU right by Walt Whitman had tons of the obscure stuff for trading here.
[Edit:] OK, I'm going to be nice to all of you Nassau people since I like fellow CAGers. Are you trying to look for a title that just seems hard to find? Hit up the EB in Plainview. Not only is the store massive and the workers excellent but their stock is simply beyond reproach. There have been times where they've had almost every single worthwhile, hard-to-find RPG that was worth owning on the PS2 just sitting on their shelves. It doesn't get the mall crowd and the only other people who shop there are parents doing their errands and little kids who have just come from shoe shopping, Tiger Schulman, or the toy store (god bless independent toy stores, by the way) Teens aren't anywhere nearby since they would rather be off over in Hicksville (ie: Broadway Mall) or somewhere else entirely and 20-somethings...well, for the most part, they're either off at college, working (and therefore rarely in the area) or going to a local school. In that last case the closest one they would be at would be SUNY Old Westbury (maybe C.W. Post) and they would sooner hit up Broadway Mall instead.
Hope this helps, too!
addicted2games
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As was stated earlier, the majority of the money is made on the used games/accessories. There is very little profit made on brand new games. (unless they are quickly traded in and resold as used). But I would guess that most used games are sold for more than twice(or more) what GS gives in credit for the games. Yes they have tons of crappy games that will sit for years, but then again you have the moms/grandmas that come in, see a game for $4 and buy it thinking its a good gift for their son/grandchild. (I've seen that a lot)
Most money is made on new games.. I work at best buy and we got 9 off a 40 game. Thats 20% mark up... Selling 400 warcrafts at 40..While costco sells it for 35 and still makes money... All in all its a combination. While they get trade ins they make money on the trade in say you get 30 for final fantasy VII.. They sell it for 45.. They make 15. But when you use that trade in credit they also win when you buy a product so that 30 trade in credit in reality cost the company 20.. So the company wins on both ends.
zionoverfire
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Selling used games, it's why they have so many special promotions, they try to get people in the habit of reselling things as quickly as possible before the value drops to nothing so they can turn around and resell it for twice what they paid.
Plenty of people buy used games, given the option I'll buy the used copy since it's cheaper, almost always in excellent quality (since half of them aren't played more than a couple of hours) and if it doesn't work I can always take it back. Also having crappy games around makes the selection larger, giving the customer some belief that they have better odds of finding things at GS than BB or CC.
They also make money off reservations people never pick up and game/system warranties.
Plenty of people buy used games, given the option I'll buy the used copy since it's cheaper, almost always in excellent quality (since half of them aren't played more than a couple of hours) and if it doesn't work I can always take it back. Also having crappy games around makes the selection larger, giving the customer some belief that they have better odds of finding things at GS than BB or CC.
They also make money off reservations people never pick up and game/system warranties.
[quote name='adidas']Most money is made on new games.. I work at best buy and we got 9 off a 40 game. Thats 20% mark up... Selling 400 warcrafts at 40..While costco sells it for 35 and still makes money... All in all its a combination. While they get trade ins they make money on the trade in say you get 30 for final fantasy VII.. They sell it for 45.. They make 15. But when you use that trade in credit they also win when you buy a product so that 30 trade in credit in reality cost the company 20.. So the company wins on both ends.[/QUOTE]
You are 100% correct. The people in this thread saying they don't make any money off of new games don't have their facts straight. Most retail stores make 20-30% margin off new products. How do you think they can have sales? Costco (where I work) only makes a max margin of around 12% on any product. Games and media are much less, usually in the 3-9% range.
You are 100% correct. The people in this thread saying they don't make any money off of new games don't have their facts straight. Most retail stores make 20-30% margin off new products. How do you think they can have sales? Costco (where I work) only makes a max margin of around 12% on any product. Games and media are much less, usually in the 3-9% range.
SlimJim0725
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i'm not saying that there is no money to be made off of new games at all. what most of us are saying that it is not nearly as much as the used game difference that gamestop makes. when those people trade in games, they are buying games (that have probably been traded in as well) with their credit and more than likely spending more than they got in credit. gamestop makes a lot of money any time they sell used games or even get trade ins...those cheap games you see on the shelves all the time probably got traded in for next to nothing. that person that traded in them (usually multiple items) probably didn't even get a whole lot. lets say they traded in 5-6 older games that don't sell much at all. gamestop will probably give them $20 to $30 tops (depending on promotions on trade ins) and then get them to buy a newer game that is like $45. so that person is spending more than they even made off those games most of the time.
For you people saying they make money off of new games, why do you think they push the used product so hard? Why do you think the first thing they ask is for trade ins? Why do you think they check to see if they have the game used before they sell you the new one, and if they do, ask if you want to buy the used instead? Sure it's saving you money, though they don't give a rat's a** about the saving you money part. They want you to buy the used copy because they are making pretty much 100% profit on used stuff compared to a small margin on new stuff.
The money is in the used games, NOT the new games.
The money is in the used games, NOT the new games.
Reality's Fringe
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Buying used hurts GDP growth. Thanks a lot Gamestop, you commie bastards.
[quote name='marctina']You are 100% correct. The people in this thread saying they don't make any money off of new games don't have their facts straight. Most retail stores make 20-30% margin off new products. How do you thing they can have sales? Costco (where I work) only makes a max margin of around 12% on any product. Games and media are much less, usually in the 3-9% range.[/QUOTE]
Those sales are called loss leaders, and are only there to get you in the store. Companies hope if you come in for a cheap game, you'll be tempted to pick up something else, or when you need to go buy that new television, car speaker system you'll say "Hey, remember Best Buy had that awesome deal on Madden? Let's go there to check out deals on television's".
Best Buy can stop carrying video games tomorrow and it really wouldn't hurt them at all... they just carry them as a conveinence and a way to get people in the store.
Accessories are where the big mark up is, not video games.
Those sales are called loss leaders, and are only there to get you in the store. Companies hope if you come in for a cheap game, you'll be tempted to pick up something else, or when you need to go buy that new television, car speaker system you'll say "Hey, remember Best Buy had that awesome deal on Madden? Let's go there to check out deals on television's".
Best Buy can stop carrying video games tomorrow and it really wouldn't hurt them at all... they just carry them as a conveinence and a way to get people in the store.
Accessories are where the big mark up is, not video games.
[quote name='Roufuss']Those sales are called loss leaders, and are only there to get you in the store. Companies hope if you come in for a cheap game, you'll be tempted to pick up something else, or when you need to go buy that new television, car speaker system you'll say "Hey, remember Best Buy had that awesome deal on Madden? Let's go there to check out deals on television's".
Best Buy can stop carrying video games tomorrow and it really wouldn't hurt them at all... they just carry them as a conveinence and a way to get people in the store.
Accessories are where the big mark up is, not video games.[/quote]
Amen.
BB would be bankrupt tomorrow on a paltry 22% margin.
Costco is a completely different business model.
Apples n Oranges ....
Back to the original question -
Used is where the bills get paid and profit is realized.
Best Buy can stop carrying video games tomorrow and it really wouldn't hurt them at all... they just carry them as a conveinence and a way to get people in the store.
Accessories are where the big mark up is, not video games.[/quote]
Amen.
BB would be bankrupt tomorrow on a paltry 22% margin.
Costco is a completely different business model.
Apples n Oranges ....
Back to the original question -
Used is where the bills get paid and profit is realized.
[quote name='Roufuss']Accessories are where the big mark up is, not video games.[/quote]For Best Buy and the like, you ain't kiddin'.
Go to Best Buy sometime and compare prices on cables to those sold on Monoprice.com. It's criminal the markup on those, in the neighborhood of 400%-1000% depending on what it is.
It's not one or the other on profit from used and new games. The make a nice chunk of change off of new games, but they make considerably more on used, plus their extraneous warranties, discount programs, etc. And remember that by-and-large, people aren't trading in games to get cash (because you get less money) but store credit. So they are assured that you'll be back in their store to use that. And if you don't? Free games for them.
Go to Best Buy sometime and compare prices on cables to those sold on Monoprice.com. It's criminal the markup on those, in the neighborhood of 400%-1000% depending on what it is.
It's not one or the other on profit from used and new games. The make a nice chunk of change off of new games, but they make considerably more on used, plus their extraneous warranties, discount programs, etc. And remember that by-and-large, people aren't trading in games to get cash (because you get less money) but store credit. So they are assured that you'll be back in their store to use that. And if you don't? Free games for them.
The fact that gamestop expects people who buy new games there to trade them in as quickly as possible must be the reason why gamestop hates me so much as i tend to keep the new games i buy there, then i either sell them on ebay if i do not want them in a while or keep them or trade them to someone else somewhere for a different game. Sounds like this is their business model, get people to buy a game and trade it in right away, so that you have store credit which assures you come back to our store, if you do not do that then you do not belong in our store and you should go shop somewhere else.
I dont know why the people who dont intend on keeping/reselling or trading their games dont sign up with one of the numerous rental programs, one price a month would save them a lot of money if they just wanted to play the game then get rid of it afterwards, its amazing how stupid people can be.
However if you are trading in games that wont move until christmas time, and making profit off them from the store even if it is store credit then by all means trade them in, it should only infuriate the store employees and manager that someone has caught on to their business model and knows how to make money/get better games off them. These types of games do not sell well on ebay and if you sold there you would most likely be losing out, just take your credit from gamestop and run!
I dont know why the people who dont intend on keeping/reselling or trading their games dont sign up with one of the numerous rental programs, one price a month would save them a lot of money if they just wanted to play the game then get rid of it afterwards, its amazing how stupid people can be.
However if you are trading in games that wont move until christmas time, and making profit off them from the store even if it is store credit then by all means trade them in, it should only infuriate the store employees and manager that someone has caught on to their business model and knows how to make money/get better games off them. These types of games do not sell well on ebay and if you sold there you would most likely be losing out, just take your credit from gamestop and run!
jeffreyjrose
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rabidmonkeys
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[quote name='marctina']You are 100% correct. The people in this thread saying they don't make any money off of new games don't have their facts straight. Most retail stores make 20-30% margin off new products. How do you thing they can have sales? Costco (where I work) only makes a max margin of around 12% on any product. Games and media are much less, usually in the 3-9% range.[/QUOTE]
Ask any CAGer that has worked at a gamestore at a marginally high level and they will all tell you that you are full of it. Or ask any BB employee how much a discount is on any new game that came out that week. All new games only have a profit margin of $5-10. You can't run a business on a 10% mark-up, and once you factor in operating costs you'll quickly see why there is NOT ONE STORE THAT SELLS ONLY NEW GAMES.
Couple that with a market space where independent gamestores cant compete with the big guys who buy in bulk and send their product back for credit when massive price drops hit or spread the loss across multiple products once the customer is in the store and you see why the industry is looking to direct-distribution rather than retail within the next decade.
You are the one who doesn't have the facts straight. You work at Costco; "Loss-leader" - look it up.
Ask any CAGer that has worked at a gamestore at a marginally high level and they will all tell you that you are full of it. Or ask any BB employee how much a discount is on any new game that came out that week. All new games only have a profit margin of $5-10. You can't run a business on a 10% mark-up, and once you factor in operating costs you'll quickly see why there is NOT ONE STORE THAT SELLS ONLY NEW GAMES.
Couple that with a market space where independent gamestores cant compete with the big guys who buy in bulk and send their product back for credit when massive price drops hit or spread the loss across multiple products once the customer is in the store and you see why the industry is looking to direct-distribution rather than retail within the next decade.
You are the one who doesn't have the facts straight. You work at Costco; "Loss-leader" - look it up.
Yeah a 10% markup isn't very much at all. Look at it this way. Gamestop buys games for $.50 and sells em for $3.99. Thats a 800% markup. Imagine them giving you $30 for a 360 game and selling it for $54.99 which is an 80%+ profit. Thats where there real money is. Especially since they get EXTRA profit because they give you money in credit. if you want $$$ you get 20% less which would be $24 which increases their profit even more.
Yeah they make money on new games but the real profit is in used merchandise.
Yeah they make money on new games but the real profit is in used merchandise.
omegaweapon7
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ofcourse they make profit on new games, otherwise how does CC/best buy/walmart make profits selling new videogames?
omegaweapon7
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[quote name='Brian9824']Yeah a 10% markup isn't very much at all. Look at it this way. Gamestop buys games for $.50 and sells em for $3.99. Thats a 800% markup. Imagine them giving you $30 for a 360 game and selling it for $54.99 which is an 80%+ profit. Thats where there real money is. Especially since they get EXTRA profit because they give you money in credit. if you want $$$ you get 20% less which would be $24 which increases their profit even more.
Yeah they make money on new games but the real profit is in used merchandise.[/QUOTE]
hate to get all technical on your ass, but thats a 88% markup, there is no such thing as 100% or more markups.
is calculated (store price - retail price/store price)
Yeah they make money on new games but the real profit is in used merchandise.[/QUOTE]
hate to get all technical on your ass, but thats a 88% markup, there is no such thing as 100% or more markups.
is calculated (store price - retail price/store price)
[quote name='omegaweapon7']ofcourse they make profit on new games, otherwise how does CC/best buy/walmart make profits selling new videogames?[/quote]
Geez people, READ!! COMPANIES DON'T MAKE THEIR MONEY OFF THE NEW VIDEO GAMES (as stated by the last about 50 posts)! Think about it, does CC, Best Buy and Walmart sell OTHER things besides video games? Of course they make a small profit on new video games, but that isn't where the companies make their money.
Geez people, READ!! COMPANIES DON'T MAKE THEIR MONEY OFF THE NEW VIDEO GAMES (as stated by the last about 50 posts)! Think about it, does CC, Best Buy and Walmart sell OTHER things besides video games? Of course they make a small profit on new video games, but that isn't where the companies make their money.
zionoverfire
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[quote name='adidas']think of all the obslute maddens they will get..and grand theft autos... Many times the used games that are too scratch turn into write offs.. 40 % of gamestops business (profit) is made in the use game business.. Thats what they said.. So bottom line.. its a combination..[/quote]
Yes and the REST of it comes from selling accessories, warranties and preorders people never pick up. I would be suprised if over 20% of their profit comes from new videogame sales.
And GS isn't full of idiots, you can resurface a pretty
ed up disk.
Yes and the REST of it comes from selling accessories, warranties and preorders people never pick up. I would be suprised if over 20% of their profit comes from new videogame sales.
And GS isn't full of idiots, you can resurface a pretty
ed up disk.
[quote name='omegaweapon7']ofcourse they make profit on new games, otherwise how does CC/best buy/walmart make profits selling new videogames?[/QUOTE]
Did you read anything in this thread?
Lets do an example!
WarioWare for Wii just came out
Best Buy sells it for $49.99
They purchased it for $44.00
They make $6 "Profit" off the game
They also have to pay for shipping, price tags, etc.
They make roughly $5 per copy sold
Best Buy Profit = $5
While In Best Buy you decide to buy a Wii Remote
Best Buy sells it for $39.99
They purchased it for $22
Profit = $18
Woah! New Texas Chainsaw Movie came out?!?
Best Buy Sells it for $16.99
They bought it for $11
Profit = $6
Game Stores only sell new games in hopes of either
a. Getting trades from you to resell at a 100-400% profit
b. You trade that new game in RIGHT AWAY while its still 'Hot' so they can resell for profit (instead of selling a new version)
c. Hope to sell you extra items (Accessories, Magazines, Subscriptions etc.)
Thats how Game Stores make money.
Did you read anything in this thread?
Lets do an example!
WarioWare for Wii just came out
Best Buy sells it for $49.99
They purchased it for $44.00
They make $6 "Profit" off the game
They also have to pay for shipping, price tags, etc.
They make roughly $5 per copy sold
Best Buy Profit = $5
While In Best Buy you decide to buy a Wii Remote
Best Buy sells it for $39.99
They purchased it for $22
Profit = $18
Woah! New Texas Chainsaw Movie came out?!?
Best Buy Sells it for $16.99
They bought it for $11
Profit = $6
Game Stores only sell new games in hopes of either
a. Getting trades from you to resell at a 100-400% profit
b. You trade that new game in RIGHT AWAY while its still 'Hot' so they can resell for profit (instead of selling a new version)
c. Hope to sell you extra items (Accessories, Magazines, Subscriptions etc.)
Thats how Game Stores make money.
Don't presume to know whether a business is profitable unless you have access to all the numbers. Unless you spend an inordinate amount of time hanging around that store you cannot really claim to know what happens over the course of a business day.
Not too far from me, there is a Wal-Mart Supercenter open 24/7. It's come in extremely handy on some occasions when a job ran very late and I needed to get some items for the next day before allowing sleep to set in. At 3:00 AM the value of having this massive store seems a bit questionable but that isn't a realistic measure of what actually happens in the course of a day. The stretching out to the horizon row of checkout lanes is rarely fully utilized but during the holiday shopping season it can seem inadequate to processing sales fast enough for the crowd.
Retailers indeed make money on new game sales. Not great margins but cumulatively worth enough to bother having the hardware, which at times can be a negative revenue after everything is factored. Coupled with accessory sales, this works out quite well for the retailers. While they'd like to see 20-30% margins on everything, that just isn't the way it works out in the real world.
Not too far from me, there is a Wal-Mart Supercenter open 24/7. It's come in extremely handy on some occasions when a job ran very late and I needed to get some items for the next day before allowing sleep to set in. At 3:00 AM the value of having this massive store seems a bit questionable but that isn't a realistic measure of what actually happens in the course of a day. The stretching out to the horizon row of checkout lanes is rarely fully utilized but during the holiday shopping season it can seem inadequate to processing sales fast enough for the crowd.
Retailers indeed make money on new game sales. Not great margins but cumulatively worth enough to bother having the hardware, which at times can be a negative revenue after everything is factored. Coupled with accessory sales, this works out quite well for the retailers. While they'd like to see 20-30% margins on everything, that just isn't the way it works out in the real world.
Some people have mentioned the pre-orders that people don't pick-up as profit. I didn't see anybody mention that just placing the pre-order amounts to a 0% loan to the company from you. They can take the money you put down and use it for other things until they need to purchase your game. This also increases the profit for them.
They also have to give you the money you put down back if you request it, so you can get it back at any time, i see no reason why you shouldn't pre order a game that may be very very difficult to find at launch and where ebay prices could spike way way over MSRP for the game.
It find it quite amusing that everyone posting that NEW games don't make any money on this thread are pulling numbers out of the air. Do you guys buy video games for a business or company? I have quite a bit of experience in this area, and saying that BB or CC buys a $50 game for $45 is quite funny. On average most publishers sell the $50 game for $35-40.
Now this would be a $10-15 margin for the retail store, which is a 20-30% profit. They do not make $5 off selling a game. How in the hell do you think Sony can loose $300 on each PS3 and still turn a profit eventually? By selling games at a high margin to the retailer!
Then the retailer sells it at a healthy margin also!
I never said USED GAMES are not a bad market, I was only commenting on how you all think new games are little interest to retailers. They are a huge deal, because then they get traded back in, and YES they can resell them for up too 100% profit.
USED GAMES are a huge market, and the publishers and game companies hate the secondary market. They also hate the rental market, because they don't get a piece of the pie. They would rather just sell a brand new game each time.
So to summarize:
NEW GAMES: Up to 20-30% profit
USED GAMES: Up to 100% profit
ACCESSORIES: Priceless
Now this would be a $10-15 margin for the retail store, which is a 20-30% profit. They do not make $5 off selling a game. How in the hell do you think Sony can loose $300 on each PS3 and still turn a profit eventually? By selling games at a high margin to the retailer!
Then the retailer sells it at a healthy margin also!
I never said USED GAMES are not a bad market, I was only commenting on how you all think new games are little interest to retailers. They are a huge deal, because then they get traded back in, and YES they can resell them for up too 100% profit.
USED GAMES are a huge market, and the publishers and game companies hate the secondary market. They also hate the rental market, because they don't get a piece of the pie. They would rather just sell a brand new game each time.
So to summarize:
NEW GAMES: Up to 20-30% profit
USED GAMES: Up to 100% profit
ACCESSORIES: Priceless
rabidmonkeys
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[quote name='marctina']It find it quite amusing that everyone posting that NEW games don't make any money on this thread are pulling numbers out of the air. Do you guys buy video games for a business or company? I have quite a bit of experience in this area, and saying that BB or CC buys a $50 game for $45 is quite funny. On average most publishers sell the $50 game for $35-40.
Now this would be a $10-15 margin for the retail store, which is a 20-30% profit. They do not make $5 off selling a game. How in the hell do you think Sony can loose $300 on each PS3 and still turn a profit eventually? By selling games at a high margin to the retailer!
Then the retailer sells it at a healthy margin also!
I never said USED GAMES are not a bad market, I was only commenting on how you all think new games are little interest to retailers. They are a huge deal, because then they get traded back in, and YES they can resell them for up too 100% profit.
USED GAMES are a huge market, and the publishers and game companies hate the secondary market. They also hate the rental market, because they don't get a piece of the pie. They would rather just sell a brand new game each time.
So to summarize:
NEW GAMES: Up to 20-30% profit
USED GAMES: Up to 100% profit
ACCESSORIES: Priceless
[/QUOTE]
I do in fact. And you are wrong, as I have stated many times in this thread. The Publishers don't sell directly to the retailers, they sell to middle-men distributors and they mark them up generally 50% of the difference between the MSRP and what they bought it for, meaning that the total profit of the game is split between the retailer and the distributor; hence the difference between "SHIPPED" and "SOLD." So once again, hopefully for the final time: A RETAIL STORE DOESN NOT MAKE MORE THAN ROUGHLY $5-7 PER TITLE. And once again a 20-30% mark up is not significant enough to keep a business alive, even if that were the case. WHICH IT'S NOT.
Now this would be a $10-15 margin for the retail store, which is a 20-30% profit. They do not make $5 off selling a game. How in the hell do you think Sony can loose $300 on each PS3 and still turn a profit eventually? By selling games at a high margin to the retailer!
Then the retailer sells it at a healthy margin also!
I never said USED GAMES are not a bad market, I was only commenting on how you all think new games are little interest to retailers. They are a huge deal, because then they get traded back in, and YES they can resell them for up too 100% profit.
USED GAMES are a huge market, and the publishers and game companies hate the secondary market. They also hate the rental market, because they don't get a piece of the pie. They would rather just sell a brand new game each time.
So to summarize:
NEW GAMES: Up to 20-30% profit
USED GAMES: Up to 100% profit
ACCESSORIES: Priceless
[/QUOTE]I do in fact. And you are wrong, as I have stated many times in this thread. The Publishers don't sell directly to the retailers, they sell to middle-men distributors and they mark them up generally 50% of the difference between the MSRP and what they bought it for, meaning that the total profit of the game is split between the retailer and the distributor; hence the difference between "SHIPPED" and "SOLD." So once again, hopefully for the final time: A RETAIL STORE DOESN NOT MAKE MORE THAN ROUGHLY $5-7 PER TITLE. And once again a 20-30% mark up is not significant enough to keep a business alive, even if that were the case. WHICH IT'S NOT.
[quote name='rabidmonkeys']I do in fact. And you are wrong, as I have stated many times in this thread. The Publishers don't sell directly to the retailers, they sell to middle-men distributors and they mark them up generally 50% of the difference between the MSRP and what they bought it for, meaning that the total profit of the game is split between the retailer and the distributor; hence the difference between "SHIPPED" and "SOLD." So once again, hopefully for the final time: A RETAIL STORE DOESN NOT MAKE MORE THAN ROUGHLY $5-7 PER TITLE. And once again a 20-30% mark up is not significant enough to keep a business alive, even if that were the case. WHICH IT'S NOT.[/QUOTE]
companies like taketwo witch owns rockstar games and ea have their own distributors which is a company within a company.. Take two games owns rockstar games, 2ksports, 2k games and has them distribute under taketwo games... .. 20% to 30% is enough.. Apple ipods only have 10% markup... and everyplace that sells them seems to do well.. Many food places that sell food giant food, safeway only have 2-4% profit margins. Places like costco only have between 5-15 % profit margins. Circuit City has 22% and best buy is roughly around 25%..
companies like taketwo witch owns rockstar games and ea have their own distributors which is a company within a company.. Take two games owns rockstar games, 2ksports, 2k games and has them distribute under taketwo games... .. 20% to 30% is enough.. Apple ipods only have 10% markup... and everyplace that sells them seems to do well.. Many food places that sell food giant food, safeway only have 2-4% profit margins. Places like costco only have between 5-15 % profit margins. Circuit City has 22% and best buy is roughly around 25%..
[quote name='rabidmonkeys']I do in fact. And you are wrong, as I have stated many times in this thread. The Publishers don't sell directly to the retailers, they sell to middle-men distributors and they mark them up generally 50% of the difference between the MSRP and what they bought it for, meaning that the total profit of the game is split between the retailer and the distributor; hence the difference between "SHIPPED" and "SOLD." So once again, hopefully for the final time: A RETAIL STORE DOESN NOT MAKE MORE THAN ROUGHLY $5-7 PER TITLE. And once again a 20-30% mark up is not significant enough to keep a business alive, even if that were the case. WHICH IT'S NOT.[/QUOTE]
You know what, I don't want to have a flame war here over something so stupid, so I'm not going to continue after this message.
If you want to believe your middle man concept in the world of video games you are sorely wrong. Last time I checked we never did business with any company other than the publishers of the games. Do you really think a big retail store/chain doesn't have any buying power? Publishers are giddy with excitement when they get an order for 10,000+ copies of a game.
I am also not saying that there are NO middle-men in the distribution channel, but large retailers don't use them.
I also don't know where your getting this idea that the retailer and distributor is splitting some kind of magical profit. This wouldn't even make economical sense?!?!? The only thing we are required to buy from a "middle-man" distributor in Washington State is alcohol. And this is because it is a stupid state law that Costco is trying to get changed.
Just in case you don't believe me Forbes online just did a breakdown on Gears of War, and they show who gets what from a $60 sale.
http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_slide.html
Over at RPGamer they did a summary if you don't want to watch the slide show:
http://www.rpgamer.com/news/currents/2007/column/tl010507.html
"When you shell out your hard earned dollars for a game, have you ever wondered where the money went? Well Forbes took a pie chart to an average $60 video game, and analyzed who gets the profit. I won't NUMB3R CRUNCH this set of data, since Forbes has already made a snappy slide show about the whole thing, but here's some of the highlights:
Console Owner: On a $60 game, the console owner is paid about $7 in royalty fees. Blades and razors.
Retailer: There's about $12 in markup on an average game.
Design: The artists and designers get about $25 from the sale, which is comforting; nearly half of what you pay goes towards making the game look and feel good.
Engineering: The programming and encoding of the game costs about $12, which includes localization.
Marketing: $7 goes to advertisements and keeping the game "funky fresh" in the eyes of consumers
Corporate Costs: Only about 20 cents goes towards corporate salaries and other executive positions."
So looks like the retailer makes around a 20% profit on an X-Box 360 game.
Costco generally sells a 360 game for around 53.99-54.99, which is around $6 profit per game, so about %10.
Sounds like some good profit to me at the retail level
You know what, I don't want to have a flame war here over something so stupid, so I'm not going to continue after this message.
If you want to believe your middle man concept in the world of video games you are sorely wrong. Last time I checked we never did business with any company other than the publishers of the games. Do you really think a big retail store/chain doesn't have any buying power? Publishers are giddy with excitement when they get an order for 10,000+ copies of a game.
I am also not saying that there are NO middle-men in the distribution channel, but large retailers don't use them.
I also don't know where your getting this idea that the retailer and distributor is splitting some kind of magical profit. This wouldn't even make economical sense?!?!? The only thing we are required to buy from a "middle-man" distributor in Washington State is alcohol. And this is because it is a stupid state law that Costco is trying to get changed.
Just in case you don't believe me Forbes online just did a breakdown on Gears of War, and they show who gets what from a $60 sale.
http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames_slide.html
Over at RPGamer they did a summary if you don't want to watch the slide show:
http://www.rpgamer.com/news/currents/2007/column/tl010507.html
"When you shell out your hard earned dollars for a game, have you ever wondered where the money went? Well Forbes took a pie chart to an average $60 video game, and analyzed who gets the profit. I won't NUMB3R CRUNCH this set of data, since Forbes has already made a snappy slide show about the whole thing, but here's some of the highlights:
Console Owner: On a $60 game, the console owner is paid about $7 in royalty fees. Blades and razors.
Retailer: There's about $12 in markup on an average game.
Design: The artists and designers get about $25 from the sale, which is comforting; nearly half of what you pay goes towards making the game look and feel good.
Engineering: The programming and encoding of the game costs about $12, which includes localization.
Marketing: $7 goes to advertisements and keeping the game "funky fresh" in the eyes of consumers
Corporate Costs: Only about 20 cents goes towards corporate salaries and other executive positions."
So looks like the retailer makes around a 20% profit on an X-Box 360 game.
Costco generally sells a 360 game for around 53.99-54.99, which is around $6 profit per game, so about %10.
Sounds like some good profit to me at the retail level
bread's done