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Region | Units Sold | Profit per Unit | Total Profit |
---|---|---|---|
US | 500,000 | $30 | $15,000,000 |
RoW | 500,000 | $30 | $15,000,000 |
Huge price hike → Expect major drop in sales.
Scenario | US Profit | RoW Profit | Total Profit |
---|---|---|---|
Before Tariff | $15M | $15M | $30M |
After Tariff (50k US sales) | $1.5M | $15M | $16.5M |
After Tariff (75k US sales) | $2.25M | $15M | $17.25M |
Region | Current MSRP | New MSRP | Change | % Increase |
---|---|---|---|---|
EU | €449.99 | €492.95 | €42.96 | ~9.5% |
UK | £359.99 | £423.30 | £63.31 | ~17.6% |
I just averaged out their annual margin of 7% on 399. Which was close to 30. I mean I didn't even calculate the loss in sales as a result of a price increase. The model was not meant to be accurate, but just to showcase how a tariff in an important market could increase the cost elsewhere. I had to assume there was a profit because if they sold for a loss, then losing those sales may not necessarily hit their bottom line as hard in theory.Or, price lower in EU and sell more consoles. $30 per unit is a rather meaningless number as there's far more money to be made from long term digital content and subscriptions. So instead of selling 500k units at a hardware profit (and probably less than that because interest will decrease with a higher price), sell 900k at a lower price with the unwanted US stock and maintain your population growth and all its ongoing monetisation.
Region | Units | Profit/Unit | Total Profit |
---|---|---|---|
US | 500,000 | $27.93 | $13,965,000 |
EU | 250,000 | $27.93 | $6,982,500 |
UK | 250,000 | $27.93 | $6,982,500 |
New US Sales | Profit/Unit | Total Profit |
---|---|---|
62,500 | $27.93 | $1,745,625 |
Region | Units Sold | Profit/Unit | Profit |
---|---|---|---|
US | 62,500 | $27.93 | $1,745,625 |
EU | 219,125 | $27.93 | $6,119,936 |
UK | 183,999 | $27.93 | $5,139,154 |
Region | Original MSRP | New MSRP | Buyers After Drop | % Price ↑ | Final Profit |
---|---|---|---|---|---|
US | $399 | $977.55 | 62,500 | ~145% | $1.75M |
EU | €449.99 | €505.41 | 219,125 | ~12.3% | $14.23M (via higher margin) |
UK | £359.99 | £434.01 | 183,999 | ~20.6% | $11.95M (via higher margin) |
That's right. Tariffs are paid at the importer. So any tariffs would be applied there at a lower price point. Retailers would pay a marked up price + transportation. It definitely won't be 145% to the customer. Maybe closer to 120%. But the tariff amount is so massive, it's just going to jack the price through the roof.I heard the tariff isn't imposed on the retail price of the product but the wholesale or cost to the importer.
Of course with consoles, that may not be a lot less than the retail price.
Or rather, the costs can be spread around anyone involved. Although charged at import, if a distributor feels the retail price will be too high, they might refuse to buy the product in at the supplier's asking price, at which point the supplier might feel it prudent to drop the price and make less money to ease the distributors concerns. Likewise, the distributor might pass that on to the retailer, or the retailer may fear they won't shift units and won't buy, at which point the distributor might take on the burden. Or it might be negotiated across all three, so the hit is shared.That's right. Tariffs are paid at the importer. So any tariffs would be applied there at a lower price point. Retailers would pay a marked up price + transportation.
Well. precisely. At which point adjusting the EU price to accommodate US tariffs when those tariffs aren't affecting the supplier seems premature, particularly when you are hoping rather reasonably that ultra tariffs won't remain in place for months/years. Extra income now from EU won't be offsetting US losses.I think the main move was for them to stockpile consoles as much as possible and leave them in the US. Then any newly manufactured consoles are sent to rest of world, and hopefully they have enough stock to whether this and reverse course on tariffs.
The EU will put up tariffs to avoid products being shifted from the USA and dumped into the EU market. If it will cover electronics from Japan to, who knows, but that is usually the merry go round according to what I read.Or, price lower in EU and sell more consoles.
This why USA i tariffing Canada and other countries, because allegedly China is doing this through Canada etc.Would it be possible for a product that's made in china to be sent to the EU, and then another company sends it to the US therefore bypassing the 145% tariffs and just paying the 10% tariff from the EU?
There's been discussion on that, notably exporting from China to Vietnam or wherever as a stop-gap. Ultimately it'd be tax wrangling via loopholes that'd be closed, and never a long-term viable trade solution.
Edit: Technically there could be a roaring trade of Europeans selling EU stock to Americans on eBay, and grey market imports. In the case of ~150% tariffs, and >$1000 consoles, a legitimate private purchase in the EU could be sold to the US with a couple hundred dollar markup and still be a huge bargain! There'd also be smuggling up the wazoo potentially, shipping goods from Europe to the US to avoid tariffs. It's just unworkable. The whole situation of such extraordinary tariffs could never become a feasible trade structure.
There's been discussion on that, notably exporting from China to Vietnam or wherever as a stop-gap. Ultimately it'd be tax wrangling via loopholes that'd be closed, and never a long-term viable trade solution.
Edit: Technically there could be a roaring trade of Europeans selling EU stock to Americans on eBay, and grey market imports. In the case of ~150% tariffs, and >$1000 consoles, a legitimate private purchase in the EU could be sold to the US with a couple hundred dollar markup and still be a huge bargain! There'd also be smuggling up the wazoo potentially, shipping goods from Europe to the US to avoid tariffs. It's just unworkable. The whole situation of such extraordinary tariffs could never become a feasible trade structure.
I don't follow why the EU would tariff gaming consoles to prevent dumping - they punish their consumers (and electorates) when there is no appreciable (to my knowledge) endogenous supplier of consoles? I understand it for say, automotive, machine tools, and some intermediate inputs - where you are protecting industries from products being dumped because the original target market now has a tariff wall. That does not seem to be the case with respect to EU and gaming consoles.The EU will put up tariffs to avoid products being shifted from the USA and dumped into the EU market. If it will cover electronics from Japan to, who knows, but that is usually the merry go round according to what I read.
I think there is capacity to do this many of the world's major ports - but for the rates and volumes involved, and the volatility, the administrative overhead seems like it would be very high.I wonder if the toll free zones would work, we used to have them at my old place of work. It basically was a designated area of the warehouse we stored goods in. We did not have to pay import tax on goods in there until we moved it on from the zone into the "real" part of the warehouse. So if you store it there and just pull out stock on the days when the tariffs are low it could save you a coin.
I doubt that it would work, I was never involved with it except for ordering stuff that would taken out from that area and sent on to customers abroad.
I don't follow why the EU would tariff gaming consoles to prevent dumping - they punish their consumers (and electorates) when there is no appreciable (to my knowledge) endogenous supplier of consoles? I understand it for say, automotive, machine tools, and some intermediate inputs - where you are protecting industries from products being dumped because the original target market now has a tariff wall. That does not seem to be the case with respect to EU and gaming consoles.
It would be a high tariff wall indeed that protected the GX4000.