Head Scratching pricing in gamestop.

mylastparadigm

so, two examples today.

f1 2011 - 39.99 new or 39.98 second hand but the online code is gone. (so you gotta spend 800 points getting the online code = approx 48-50 euro for the second hand one.)

similar deal with BF3. 35 new and 34.98 2nd hand (but the online code is gone). for BF3 thats like selling half the game for the same price as a new copy.

can anyone explain to me why they price like this? in these two examples, the 2nd hand version is much more expensive in real terms than the new one.
im a casual observer of pricing of games and im more interested in the economics.

i mean, if you want games cheap you look online or follow the cheap games thread for opportunistic buys. are the clientel of gamestop really that gullable? are the staff really that silly? im puzzled.

thanks guys. hopefully someone can shed some light on it.

Retr0gamer

Don't blame the staff. The simple explanation is that Gamestop upper management don't give a fuck.

VinLieger

Also they are making to correct assumption that alot of gamers dont know about having to pay for the online code

mylastparadigm

Retr0gamer wrote: »

Don't blame the staff. The simple explanation is that Gamestop upper management don't give a fuck.

in fairness, by staff i was referring the people that set the prices. the lads on the floor are just sandbags, poor creaturs.

Nollog

It's likely due to management setting buy prices for those games pretty "high" (15 euro is pretty high for gamestop to buy games from people), not taking the online code cost into account since they have no idea what the reality is.

If gamestop buy a game for 15 euro, they'll charge 35.

Mark Hamill

Another reason could be that those second hand games were probably traded in a while ago when the games were €45 or €50 new. The new games come down in sales, or just because a few months have passed, but the second hand games don't.

Andy!!

Mark Hamill wrote: »

Another reason could be that those second hand games were probably traded in a while ago when the games were €45 or €50 new. The new games come down in sales, or just because a few months have passed, but the second hand games don't.

First logical non-bashy post in the thread. Congrats, you win.

K.O.Kiki

If you buy used to save 2 cent, you deserve this TBH

Shryke

Their head office send down prices, and don't do a great job of it. It's general laziness or not enough people on the job to do it properly. If you're selling a new and second hand product you make sure the second hand one at least appears cheaper, especially when it's one that actually makes money for the store.
If it's an in store problem then the price may have changed without being changed on the actual shelf but there should be no reason for that. There isn't that much work going on in Gamestop compared to other retailers.
Cowboys Ted.

Procrastastudy

Okay this old chesnut!

Second hand game pricing - no one ever gets it right unless they pay you for the game and then sell it cheaper than they bought it from you.

Firstly VAT is at 23% thats TWENTY THREE!!!

For every € they sell it 23c goes to paying your dole money. So if they buy it for €15 they have to sell it at €18.45 just to break even.

They buy stock on a sliding price scale and then have to try and set the price so that they make a profit on all the stock. I know D*CKS! How dare they mark up a product!!! The staff should work for free and the landlord shouldn't dare charge rent. The electricity could be generated by all those free shop assistants on somekind of exercise bike.

Then you introduce Mr. Publisher - Mr Publisher comes along and reduces the price for a week or so to boost sales. So do you sell the P/O at a loss for a week and have the Shop assistans running around chaning all the prices (believe me this is the single biggest time sink in a game shop!)? Or just leave it and tell the customer when he comes up to the till?

To be fair to the OP there are instances where the muppet at Head office doesnt look at the database correctly or makes a mistake or indeed the muppets in the store dont get the price changes done.

TL:DR - It happens due to many issues - if they're a good store they'll always sell you the cheaper on I know I always did.

Nollog

Andy!! wrote: »

First logical non-bashy post in the thread. Congrats, you win.

I wasn't bashing them.

Azza

I like the way they are still selling Tabula Rasa and Star War Galaxies still even though both of these MMO's where shut down and no longer work and in Tabula Rasa's case its been shut down several years.

Coriolanus

I see were going to extra special effort with our straw men today.

dmcdante

i think these days gamestop are a waste of time DMC HD collection 50 euro this is 30 online and 35 in smiths how can they expect people to pay these prices in a time like this its mad is what it is.

CORaven

GCDLawstudent wrote: »

VAT is at 23% thats TWENTY THREE!!!

For every € they sell it 23c goes to paying your dole money. So if they buy it for €15 they have to sell it at €18.45 just to break even.

They claim the €3.45 back in their VAT return and make a €3.45 gross profit.

I thought I would point that out.

super_furry

Azza wrote: »

I like the way they are still selling Tabula Rasa and Star War Galaxies still even though both of these MMO's where shut down and no longer work and in Tabula Rasa's case its been shut down several years.

Tabula Rasa has been for sale in St Stephen's Green for over a year. I mentioned it to them when I noticed it before Christmas and the reaction was to say 'oh' and shrug their shoulders.

Andy!!

/\/ollog wrote: »

I wasn't bashing them.

I've got much much better than 15 for a trade in.

friend and foe

just came across this on kotaku.

it'd be interesting if something like this were to be implemented across the board, and not just in california.

http://kotaku.com/5900734/california-gamestops-now-have-to-put-dlc-warnings-on-used-games

Local-womanizer

Any GameStop I have been in I was told about the fact the dlc may be absent on a used game.

The prices of new games get adjusted, especially in sales and used prices don't change accordingly.

Prices are differ in all stores, smyths will have better prices on certain games whereas GS will be better in other areas. It's up to the consumer to shop around...

Nollog

Andy!! wrote: »

I've got much much better than 15 for a trade in.

It was just an example.
The highest I've got(not counting specials where they give extra) was for Pilotwings Resort on the 3DS, 19 euro voucher 12 euro cash.
But then I've only traded in 3DS games.

Procrastastudy

CORaven wrote: »

They claim the €3.45 back in their VAT return and make a €3.45 gross profit.

I thought I would point that out.

How do you work that one out - not being cheeky genuinely interested. They have to pay VAT on sales?

Potential-Monke

Just thought i'd point out that i got €45 credit for Crysis 2 a couple of days after purchase... I often get over €30 credit for some games...

Helix

GCDLawstudent wrote: »

How do you work that one out - not being cheeky genuinely interested. They have to pay VAT on sales?

i THINK this is how it works...

game spends money and pays vat on it
but game only pays vat on the money they earn if it exceeds the value of the amount of vat it pays when it spends

if the vat on sales = vat on purchases, they don't give the government any of the money made on vat, they keep it all

if the vat on sales < vat on purchases, they keep all the vat money and government pays them the difference back by way of tax credits

if the vat on sales > vat on purchases, they pay the vat only on the figure higher than the purchase vat figure (so if there was €1,000,000 vat on purchases, and €1,100,000 vat on sales, they'd owe €13,000 in vat)

that's how it works here, i've no experience with that high a level of management in ireland though

mylastparadigm

http://www.giantbomb.com/news/settlement-requires-gamestop-to-warn-california-customers-about-dlc-pay-customers-back/4078/

maybe there is hope coming...

Kiith

The fact that a court order is required for this to happen is ****ing ridiculous.

Coriolanus

Helix wrote: »

GCDLawstudent wrote: »

How do you work that one out - not being cheeky genuinely interested. They have to pay VAT on sales?

i THINK this is how it works...

game spends money and pays vat on it
but game only pays vat on the money they earn if it exceeds the value of the amount of vat it pays when it spends

if the vat on sales = vat on purchases, they don't give the government any of the money made on vat, they keep it all

if the vat on sales < vat on purchases, they keep all the vat money and government pays them the difference back by way of tax credits

if the vat on sales > vat on purchases, they pay the vat only on the figure higher than the purchase vat figure (so if there was €1,000,000 vat on purchases, and €1,100,000 vat on sales, they'd owe €13,000 in vat)

that's how it works here, i've no experience with that high a level of management in ireland though

You're right, but gsmestop is a profitable company so inevitably their sales will be higher than expenditure.
Plus any money they spend on second hand isn't vat claimable, because by,and Aleve the punter isn't a vat registered business or individual.

Pacing Mule

Helix wrote: »

i THINK this is how it works...

game spends money and pays vat on it
but game only pays vat on the money they earn if it exceeds the value of the amount of vat it pays when it spends

if the vat on sales = vat on purchases, they don't give the government any of the money made on vat, they keep it all

if the vat on sales < vat on purchases, they keep all the vat money and government pays them the difference back by way of tax credits

if the vat on sales > vat on purchases, they pay the vat only on the figure higher than the purchase vat figure (so if there was €1,000,000 vat on purchases, and €1,100,000 vat on sales, they'd owe €13,000 in vat)

that's how it works here, i've no experience with that high a level of management in ireland though

In your example above they would owe €100,000 in VAT (the vat on sales less the vat on purchases is the amount owed to the government)

If they had €100,000 of a difference in their turnovers (assuming all turnover was vat deductable and addable) they would owe €19,700

General public customers though are not VAT registered businesses so any games purchased from them are not claimable as if they included VAT. Trade ins for other games can be handled differently from an accounting perspective but there will still end up being a VAT component in the sales price.

CORaven wrote: »

They claim the €3.45 back in their VAT return and make a €3.45 gross profit.

I thought I would point that out.

That's completely inaccurate. Even if the purchase was VAT deductable they would not be able to claim back the full VAT content of their sale price. In essence VAT is a tax on a retailers margin so any profit content is taxed.

As to the point of the OP - as was mentioned before this happens when games were traded in at a higher price point previously, or if the new game price temporarily drops on promotion. It can certainly be argued that good business sense would be to remove the pre owned game temporarily or reduce it but that's another days debate.

Procrastastudy

Nevore wrote: »

You're right, but gsmestop is a profitable company so inevitably their sales will be higher than expenditure.
Plus any money they spend on second hand isn't vat claimable, because by,and Aleve the punter isn't a vat registered business or individual.

Any source for this? Not saying you are wrong - your info may be more upto date than mine - but I do know they were loss making during the good times so I wonder what they've maged to do to turn that around?

cloud493

They're not very competitive. Is basically what's being said here. A gamestop employee might see that the game being sold in his shop is 45 euro, while its 33 in HMV, but he doesn't necessarily have the power to change that

Coriolanus

GCDLawstudent wrote: »

Any source for this? Not saying you are wrong - your info may be more upto date than mine - but I do know they were loss making during the good times so I wonder what they've maged to do to turn that around?

400m profits in 2011 according to CNN. That's for the group as a whole. I wouldn't be surprised if individual subsidiaries posted losses year on year however, given the way multinationals tend to work. Any profits the Irish group might have made could easily have been funneled into payments to the parent.

Procrastastudy

Im pretty sure the Irish arm is loss making. Only reason I bring it up is to highlight that these companies might not get it right put arent sitting on millions in profits from ripping you all off.

HMV is trying to increase its market share so is doing mad things with pricing across its game range. I wouldn't be suprised if this was the next high profile bricks and mortar to go tits up to be honest.

Pacing Mule

Nevore wrote: »

400m profits in 2011 according to CNN. That's for the group as a whole. I wouldn't be surprised if individual subsidiaries posted losses year on year however, given the way multinationals tend to work. Any profits the Irish group might have made could easily have been funneled into payments to the parent.

And likewise any losses made by the Irish group are subsidised by the parent.

stevenmu

I didn't think there was any VAT on the sale of second hand games, that's part of what makes them so profitable?

Helix

stevenmu wrote: »

I didn't think there was any VAT on the sale of second hand games, that's part of what makes them so profitable?

what makes them so profitable is the fact that the publisher doesn't see a penny of the sale value

Absolam

Weeeell... Perhaps not so much so profitable as more profitable than new game sales. A new release game can make from 4 to 24 percent margin for a retailer. A preowned game can make up to 45 percent margin for a retailer, but the down scope (negative margin on those games traded in in promos at €45 and €49) is higher as well. So for retailers preowned has more potential risk, and more potential return. For the government, they get 23% regardless.... Best business model ever! Who could lose with a setup like that? Hmmmmm.

krudler

Azza wrote: »

I like the way they are still selling Tabula Rasa and Star War Galaxies still even though both of these MMO's where shut down and no longer work and in Tabula Rasa's case its been shut down several years.

I was in hmv a few weeks ago and a guy in front of me was buying MAG second hand, the guy at the counter said as there may not be many people playing it online anymore he could return it if there wasnt many games to join, thought that was good of him, its gonna happen where online mp games have less people playing them, like some of the older COD games, still people on there but you could be sitting in a lobby for a few minutes before a game will start, happens on COD4 all the time these days

dmcg90

krudler wrote: »

I was in hmv a few weeks ago and a guy in front of me was buying MAG second hand, the guy at the counter said as there may not be many people playing it online anymore he could return it if there wasnt many games to join, thought that was good of him, its gonna happen where online mp games have less people playing them, like some of the older COD games, still people on there but you could be sitting in a lobby for a few minutes before a game will start, happens on COD4 all the time these days

At least COD 4 has a single player campaign to play!

Pacing Mule

Helix wrote: »

what makes them so profitable is the fact that the publisher doesn't see a penny of the sale value

Profitabillity is generally made up of the difference in price from what you pay for an item versus the price you sell it at.

What makes pre owned game sales "so profitable" is that there is a marketplace where people are happy to trade in / sell their games to whatever retailer they are dealing with at a certain price point which the retailer is then selling on at a higher price. The same marketplace / consumers who are happy to sell for the prices being offered are also happy to buy at the sale prices being offered. That's why they are profitable.

The impacts (both positive and negative) on publishers of the pre owned marketplace are a different debate.

Pacing Mule

stevenmu wrote: »

I didn't think there was any VAT on the sale of second hand games, that's part of what makes them so profitable?

There is VAT included on pre owned game sales. A lot of people don't realise that and jump to the conclusion that the sale of second hand games is more profitable than it actually is. That's not saying it's not profitable - it's these profits that are keeping retailers open and keeping new game prices that bit lower.

mylastparadigm

Pageant Messiah wrote: »

There is VAT included on pre owned game sales. A lot of people don't realise that and jump to the conclusion that the sale of second hand games is more profitable than it actually is. That's not saying it's not profitable - it's these profits that are keeping retailers open and keeping new game prices that bit lower.

yeah, i can tell you over the last few years 2nd hand games have come under scrutiny from revenue because its very hard to tell how much the shop paid for them (untraceable supplier). not easy to tell if vat is on them or not.