PlayStation 5 Costs $450 to Manufacture

Alonzo Simpson
February 14, 2020

Considering PS4's manufacturing cost of $381 and its $400 retail price, applying this same gross margin to PS5 could result in the new console's retail price sitting at $470. With the upcoming Xbox Series X expected to release in the same window, Sony has tough choices to make for the PlayStation 5's price tag.

Historically, console launch price has proven a delicate topic, as evidenced by the PS3 introductory price of $599, which Sony exec Shawn Layden later described as a "stark moment of hubris" after the record-breaking success of the PS2.

The biggest problem Sony is facing in regards to the PlayStation 5 is a "reliable supply of DRAM and NAND flash memory".

A report from Bloomberg, which cites "people with knowledge of the matter", suggests nothing is finalized as of yet. The other alternative for Sony is to book a loss on each console sold, recouping the money through services, like the PlayStation Plus subscription that is effectively mandatory these days given the online-only nature of most games.

Sony's Chief Executive Officer Kenichiro Yoshida has said the business should be judged by the number of active users, not the number of hardware units sold.

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Typically, companies would spend less than a dollar, but Sony opted to lavish more on making sure heat dissipation from the powerful chips housed inside the console isn't an issue.

Bloomberg reports new information on the PlayStation 5.

According to the source, Sony already locked down most of the components for the PlayStation 5. It's worth noting that the ongoing Coronavirus outbreak has had no impact on PlayStation 5's production preparations. Sony is competing for limited stock against all the major smartphone manufacturers preparing to launch their 5G phones later this year.

Sony is also thought to be using a relatively expensive cooling system for its new console. The console was created to play both standard SNES cartridge-based and CD-ROM games. However, according to "people within the PlayStation business unit" a key factor in deciding the PlayStation 5 retail price will be what Microsoft decides to do with the Xbox Series X's pricing. For instance, a boxed copy of the original Mega Man went for $75,000 last year, and a couple of years ago a copy of Super Mario Bros was sold for $100,000.

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