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XBOX 360 has slimmer margins, but greater net profit than Wii

Exactly a week ago, we brought news of CompUSA's cost and markup on Nintendo Wii. Today, costs have been revealed for XBOX 360, which we know will remain unchanged throughout the holiday season.

Product MSRP in USD Cost in USD Margin in %
XBOX 360 Premium 399.99 384.21 3.9
XBOX 360 Core 299.99 292.09 2.6
Nintendo Wii 249.99 237.50 5.0

This article on Joystiq explains the whole concept of a pull strategy versus a push strategy. By giving retailers a greater margin on the Wii, there is a greater incentive to "push" the product to the consumer. With the slightly lower margin on the XBOX, Microsoft may have to rely on a "pull" strategy through marketing to drum up consumer demand so the products are "pulled" off the shelves.

Raw percentages, however, may not tell the entire story. XBOX 360 Premium would net the retailer a higher amount at $15.78 as compared to $12.49 for the Wii, which turns the tables a bit. Of course, it will likely be easier to push a $249.99 sale over a $399.99 one.

Although we do not not have XBOX 360 accessory and games markups yet, peripheral and software play a major role in retailer profits. Retailers may want to boost their bottom lines by forcing accessory and game bundles with every system sold, though that is something we have yet to see for latest rounds of PlayStation 3 and Wii preorders.





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