Why do websites other than Ebay and amazon overprice games and systems?

[xDragonWarrior]

A website that i was just looking at here:http://www.dkoldies.com/Buy-Nintendo-Gameboy-Color-Games-s/203.htm was selling a Gameboy color for $39.99 and claiming the retail price is $50.Now gameboy colors are only worth $10 and anymore without games is overpriced.for $50 you can go on Ebay a get one or two with a sh**load of games. PS1's for $25 when there only worth $10 and it's just wrong.Just think how many people buy from these websites when they could have went to Ebay or Amazon and got it for cheaper.

[sqoon]

Yes, I think they prey on the possibility that unsuspecting buyers will not shop around before buying from them. Unfortunately, they hook one once in a while.

[StoneAgeGamer]

Yes, I think they prey on the possibility that unsuspecting buyers will not shop around before buying from them. Unfortunately, they hook one once in a while.

 

How exactly do you prey on someone who doesn't take the time to shop around?

[sega_SHARK]

How exactly do you prey on someone who doesn't take the time to shop around?

Because inflating prices with extremely high buy it now prices makes noob sellers think that they are entitled to that price. This statement endorses Greed, not profit.

[StoneAgeGamer]

Because inflating prices with extremely high buy it now prices makes noob sellers think that they are entitled to that price. This statement endorses Greed, not profit.

 

If that's the case then greed actually goes both ways. Both the retailer and consumer can be greedy. You can't say the retailer is greedy because its priced at $40 and not say the consumer is greedy for wanting it priced at $10. The free market is based on greed from both sides and finding the balance between those two "greeds".

 

Something is worth what people are willing to pay for it. Now we could argue that certain things should be kept affordable like water, gas, electricity, etc. However its pretty hard to argue that video games should have some type of regulation, because its a luxury. DKOldies does not owe it to anyone to sell something at a specific price point. In return people do not have to buy from DKOldies. If no one buys from DKOldies they will either be forced to drop their prices or go out of business. I have never heard of any collusion happening in to retro gaming market. The only thing I have heard of is certain buyers on eBay trying to corner the market on certain rare items. If there was collusion then the original post wouldn't even exist because he wouldn't be able to get a GBC for $10 on eBay like he stated.

 

Now the example the original poster used of the GBC. Yes $40 seems really over priced for the market. I highly doubt DKOldies sells very many of them anyways. Yes there may be a few people occasionally that do but them.

 

Lets say DKOldies got those GBC for $7.50. Now lets say right now at the $40 price point out of every 100 customers coming to their site looking for a GBC only 5 of them buy it at that $40 price point. Gross profit would be $162.50. Very high profit margin. Now lets say they drop the price to a more reasonable $20. The more affordable the price normally the more buyers you will get at that price exponentially speaking. So instead of only 5 buying out of the 100 now you have 35 people who bought the GBC. That is $437.50 gross profit. Finally lets say he decides to drop price to $10. Now 80 of the 100 customers bought the GBC at that price. That's $200.00 gross profit. We are almost back at exactly where we started in gross profit when it was priced at $40, BUT we have done 40 times the labor. So finally to give you an idea how labor affects this as well. lets say he is paying himself or someone else $15 an hour to package orders and it takes them 5 minutes from start to finish to package and get the GBC completely ready to ship. That means it cost them $1.25 in labor to package that item. Out of all 80 sold that is a total of $100 in labor cost. Now your gross profit just got cut in half and we still haven't taken into consideration any other overhead costs.

 

So as we see from the paragraph above DKOldies would actually make more profit in the end selling at $40 than $10. However, at the price point of $20 they would make the optimal profit. Now of course I understand this is all just guess work on how many people would buy out of the 100, etc. However its an example of why pricing too high and too low really isn't in the sellers advantage. The only time pricing low is an advantage is if you want to get more customers to purchase from your store and hopefully have a great experience and become a repeat customer, but all the repeat customers in the world won't help your business if you are not making any profit.

 

Now in the case of an Amazon, for example, they can keep their prices lower because the massive volume they do. There seems to be a threshold where this can happen. However they also have high tech inventory/packing systems, get the best shipping prices on shipping, and they can maximize their profits because of these advantages. Comparing Amazon to a retro gaming store that probably has 1 employee (the owner) is not really a fair comparison.

[sega_SHARK]

If that's the case then greed actually goes both ways. Both the retailer and consumer can be greedy. You can't say the retailer is greedy because its priced at $40 and not say the consumer is greedy for wanting it priced at $10. The free market is based on greed from both sides and finding the balance between those two "greeds".

This +1.

 

I do think that "overpricing" does add a false inflation to the market. I've seen this happen with other collectable markets such as comics and vintage toys. A couple of vintage toy stores that have websites do the same thing. They know what the product will move at, but they would rather stick a price tag on the item that is three times this value. Joe Schmoe collector sees this price and goes to ebay and posts a similar item and slaps the same price on it. This is the problem.