As much as we enjoy the gaming experience, the pricing is a huge factor in the gaming console we choose.
The Xbox One is significantly more expensive than its main competitor, the PS4.
It costs $100 more.
The Xbox One launched with a starting price of $500, while the PS4 launched at $400. Moreover, the Wii U is a lot cheaper.
In the previous editions, the PS3 was relatively affordable to many gaming lovers.
What makes the Xbox One significantly more expensive than its competitors?
In this article, we will investigate the various reasons Xbox One is so expensive.
Why Is Xbox One So Expensive? (Top 13 Reasons)
1. The Economies Of Scale
One of the main reasons the Xbox One is expensive is that there are a limited number of games made for the console.
The PlayStation 4 has a lot of games, almost double the number of games available on the Xbox One.
Therefore, PlayStation can afford to sell their console for a lower price because they can gain enough revenue from the sale of games.
Moreover, PlayStation can also afford to sell their games for a lower price.
PlayStation 4 and Xbox One games are usually the same prices when the games first hit the market.
However, as time goes on, the PlayStation 4 games become cheaper because PlayStation has more flexibility to lower the prices.
The PlayStation still outsells the Xbox One by a significant margin despite the lower prices.
They sell about twice as many games as Xbox.
Xbox prices its console for a higher price to try and recover the sales revenue.
Furthermore, PlayStation has more accessories for games available like cases, artwork, discs, and more, making it possible to lower the price.
PlayStation 4, in this case, uses the economies of scale approach where they price their products lower because they have a huge variety to sell.
The economies of scale principle is where you lower the prices of your products to be able to sell more.
2. Imports And Supply
There are more PlayStation 4 owners around the world than Xbox One owners.
Furthermore, they have more access to PlayStation 4 games than Xbox games.
Importers and retailers acquire more PS4 games because they know they offer their customers a wider variety of games.
They also know that more people prefer the PS4 because the games are cheaply available.
Basic economics states that the supply of a product is inversely proportional to its price.
It means that an increase in the supply of the PS4 and its accessories lowers its price.
However, Xbox has a lower demand and supply worldwide, making it more expensive to acquire the console, purchase games, and maintain it.
3. Launch And Demand
The Xbox One is significantly costlier than the PS4 because it has a low demand.
Both consoles compete fiercely in quality and features, but people seem to appreciate the PlayStation 4 more.
It delivers the features they want and need.
The PS4 features high-quality, efficient equipment and new integration technology that makes users want to use the console more.
Xbox One remains pricier than the PS4 because it has a significantly lower demand.
Microsoft, the manufacturer of the Xbox One, had little success in launching the product.
They were unable to increase demand with incentives such as the ones PS4 offered. Sony, PlayStation 4 manufacturers, fully gifted the buyers with exclusives during the launch.
Microsoft had a terrible launch for the Xbox One because of other factors like the company cutting off its previous gaming retailers and was unable to identify and acknowledge its target audience’s needs.
Therefore, there was a considerable drop in sales and an increase in prices.
Furthermore, the launch date of the Xbox One hurt its price because there was a large and monumental shift of consumers to the PS4 products.
Previously, the Xbox 360 was more popular than the PS3. Xbox One came into the market just a day before the PlayStation 4.
Therefore, PS4 had an excellent chance to remodel its marketing and branding strategy to appeal more to consumers.
Furthermore, the other elements of the launch that affected the demand and price of the Xbox One were the Xbox One Game Studio.
Every game on the top ten list of the Xbox One Game Studio was available on the PS4 except one game.
Therefore, people felt little loss by choosing the PS4 console instead.
4. Cost Of Manufacture
Microsoft partnered with Kinect to manufacture the Xbox One.
However, the partnership resulted in an expensive model to produce and sell.
The collaboration exposed Microsoft to additional manufacturing costs, which also affects the overall price of the Xbox One.
On the other hand, their rival, PS4, offers similar features with the same high-quality range of features and build-up without the additional costs.
The Xbox One is also expensive because of the manufacturing costs.
Microsoft had an initial production cost of $471 to manufacture a single Xbox One unit with a Kinect controller.
The initial retail price for the Xbox One was $500, which leaves a profit margin of $29.
On the other hand, their fierce competitor, PS4, had an initial production cost of $381, and the initial cost of one unit was $400.
Despite the profit margins, the manufacturers hardly make any money from the consoles.
The larger part of their income comes from games.
5. Cost Of Components
Some of the components of the Xbox One have a significant impact on the price of the console.
The biggest cost component of the Xbox One is the Kinect unit.
It is available on every Xbox One Unit.
There is no equivalent component on the PS4.
Therefore, Xbox One costs significantly more.
The Kinect unit is a sensor with a powerful peripheral that lets the console respond to your voice commands and read your heart rate.
However, the Kinect is only responsive to vocal cues that are extremely specific.
For example, “Xbox Bing” opens up the Bing browser and “Xbox turn-off” to switch off your console.
There are many voice command prompts you can access from Microsoft’s cheat sheet, which features many examples.
It costs Microsoft $75 to produce one Kinect unit for the Xbox One.
The Kinect system is inbuilt on the Xbox One.
However, on the PS4, you get to choose the camera as an additional accessory.
The AMD processor also costs $10 more than the one on the PS4.
Interestingly, the Xbox One unit without the additional components costs $332.
The extra $139 in the final production cost comes from the headsets, which cost $10, assembly ($14), controller ($15), external power supply ($25), and the Kinect ($75).
Sony spent $28 more for the PlayStation 4’s high-end RAM.
Xbox is pricier because there is a low demand for its games, unlike the PS4, which has numerous games which have become a hit in the market.
Moreover, the PS4 has a larger variety of games.
Therefore, the console is more popular than the Xbox One, making Sony flexible in lowering the price.
Moreover, Xbox One makes exclusive games that help to make it stand out.
For example, you can only find Blur, a thrilling racing game, on Xbox devices and not PS4.
Other exclusive games on the Xbox One include:
- Gears of war
PS4 also has its list of exclusive games such as God of War and The Last of Us.
7. Additional Components And Live Subscription
Various add-ons affect the price of the Xbox One.
The basic cost of a console for both Xbox One and PlayStation 4 covers one controller.
You will pay almost the same for the extra PS4 or Xbox One controller.
A controller currently costs between $40 and $60.
The Xbox One has a Play and Charge Kit, which features a charging cable and a rechargeable battery pack.
It will cost you an extra $25 to get the Play and Charge bundle.
The alternative to the play and charge kit is using a USB which you use to connect the controller to the console at all times.
Most retailers sell an extra controller together with the play and charge kit at $75, which features a $10 discount on the play and charge kit.
Moreover, the PS4 does not charge any additional fees for chatting with friends, free-to-play games, and using apps such as Netflix.
The Xbox One will also cost you more in annual subscriptions to access these features.
You will pay about $60 per year for an Xbox Live subscription.
For the PS4, you will only need to pay a subscription fee of $50 per year to access online multiplayer. It is $10 less than on Xbox One.
8. Branding And Marketing Strategy
The Xbox One is expensive because the pricing is part of a marketing strategy.
People tend to associate expensive products with luxury or premium experiences.
The Xbox One does offer premium features such as the Kinect system to live up to the standards of the marketing strategy.
Moreover, Xbox One has larger backward compatibility, which enables it to play games from previous generations.
The Xbox One has better backward compatibility than competitors like the PS4.
Moreover, there are exclusive features on the Xbox, such as mouse and computer compatibility.
These features are possible because Microsoft, the Xbox manufacturer, also produced computer software.
9. The AMD Microprocessor
Xbox One has a similar AMD microprocessor chip as PS4.
The chip combines the system’s CPU and graphics unit. It has an estimated cost of $110, making it the largest cost factor or most expensive component on the Xbox One.
The chip on the Xbox One costs $10 more than the AMD chip in the PS4.
Currently, the Xbox is expensive because there is a microchip shortage.
The memory of the Xbox One also contributes to the price of the console.
It uses DDR3 memory which is an older version compared to PS4’s GDDR5.
The GDDR5 may offer better graphics quality, but it is at the expense of latency.
Latency is the amount of time your console needs to send data to the game server.
11. Minimal Discounts
Xbox One offers minimal discounts to the buyers, which makes it pricey.
During the launch of Xbox One, Microsoft offered lesser incentives compared to PS4.
However, it offers some discounts, including deals on games, Game Pass, and gear due to the release of newer versions like the Xbox One S, Xbox One X, and Xbox Series X.
Advertising costs always factor into the cost of a product.
Xbox is a huge brand and therefore uses major advertising channels.
For example, the Xbox 360 launched on MTV and later premiered at the Electronic Entertainment Expo (E3).
However, most of the promotion takes place on their website.
They also advertise on other internet sites, billboards, magazines, and more.
The Xbox is also expensive because of the cross-play feature, enabling users to play some games on other devices such as your PC or Nintendo Switch.
Moreover, you can make a single purchase and play the game on your console or PC. Xbox enables Cross-Play through the “Play Anywhere” feature.
You get to share the achievements and information of the game through a single purchase.
PS4 also has the cross-play feature to let you play Xbox One purchases on PC even if you don’t own a console.
How To Save Money On Xbox One
Xbox One may be expensive, exclusive, and with many features, but there are various strategies you can use to save money.
The strategies could vary with the time and place.
However, gamers always find loopholes, even in the cost of the Xbox One.
The strategies you can use include the following:
1. Monitor The Microsoft Store For Upcoming Deals
One of the best places to find deals to help you save money is the Microsoft store.
You can find various purchase deals and bundle deals in this store.
For example, you can get a three- to six-month Xbox Game Pass if you buy a new console.
2. Look Out For Free-To-Play Games
Some of the best games on Xbox One are paid titles.
However, it does not mean that you get a better experience if you pay for a game.
Many free games on the Microsoft store will keep you glued to your console.
Most of the free-to-play games on the Microsoft store are smaller titles from independent developers.
You will also find games from major developers that have been successful on the PC.
Some of the free games have in-game purchases.
Examples of games with such models include Path of Exile, Hawken, and World of Tanks.
3. Find Deals, Buy Online, And Buy During Holidays
Purchasing the Xbox One and its accessories online could be cheaper than using a local retailer who will factor in their shipping cost.
Also, you are more likely to find better deals for the console and its accessories during holidays like Christmas, Thanksgiving, Easter, and more.
4. Wait Before You Buy A New Game Or Console
You may get the exclusive feeling if you buy the Xbox One or any other console or game right after its release.
It is better to wait for a little while, and the prices will drop in a few months.
Alternatively, you can make sure you get the pre-order deal for a game or console which is cheaper than the launch deal.
5. Sell Your Old Xbox And Games Or Make An Exchange
If you have the Xbox 360, you can sell it to get extra money to fund the purchase of the Xbox One.
You can sell your old console and games to people who are collectors, first-time console owners, and various dealers of second-hand consoles or games.
There are second-hand shops and dealers online who can give you the best price for your collection.
6. Buy Or Borrow Games And Consoles From Your Friends
While not many friends are willing to let their consoles go, you may have an easier time exchanging games.
If they bought a new game that they are currently not using, you can borrow, make a swap, or rent it out from them, and it is cheaper.
It is also usually cheaper to buy games and consoles from your friends.
They will offer you a discount, and you will be offering them a quick sale.
Also, your friend can let you have the game or console upfront if you don’t have the cash at hand.
They can also let you test the Xbox One to see if it is the console you want before you buy it.
7. Rent Games
To keep your gaming expenses on the Xbox One low, you can rent games.
Also, try and rent a console before buying it to help decide whether it is what you want.
Visit your local gaming store to rent the console or game you want.
Try to finish the game or play as much of it as possible before you return it.
Beware of penalty fees for late return of the game.
If you are a regular at the store, the manager could be lenient with you.
It also opens the opportunity for getting a discount on your future purchases.
8. Bundle Purchases
Bundle deals usually help you to save money in the long run.
You can buy a console together with games, an extra controller, headphones, and more.
The bundle could also focus on games only.
If you want to buy the Xbox One, try to find a deal that offers the best or most interesting bundle.
Moreover, bundles are usually available all year round.
9. Start Saving
It is important to start saving early for your new console or game.
You can sell your old games, DVDs, CDs, or older consoles to contribute to your savings.
Furthermore, you will feel that you have spent less on purchasing your console or game if you have savings.
10. Use A Gift Card Or Store Credits
A gift card or store credit will help make your purchase less expensive or entirely free.
Large retailers like Walmart and Target offer $25 to $40 gift cards for your purchases.
Various retailers will have different deals, system of store credits, and gift card limits.
11. Look Out For Free Upgrades
Some upgrades and features in your game or console could add the Xbox One purchase expense of the Xbox.
Free upgrades of various games can save you money, unlock new features and levels, and enhance your experience.