I'm sorry for American Tilderinos, but what else would everyone expect? If the price for importing became higher than someone has to pay it. And that someone would be the customer.
I'm sorry for American Tilderinos, but what else would everyone expect? If the price for importing became higher than someone has to pay it. And that someone would be the customer.
I know you're just explaining the reality of things, but I hate this so much. Did these people not learn about tariffs in middle school? And how it made the Great Depression worse? Or how they...
I know you're just explaining the reality of things, but I hate this so much. Did these people not learn about tariffs in middle school? And how it made the Great Depression worse? Or how they actually helped Toyota be even more profitable in the US? That might have been high school. But I attended public schools in a rural/suburban district (red part of a blue state) and learned about all of this.
It's one thing to say that misinformation/disinformation is rampant, it is. But how did it become so easy for people to buy into it with arms wide open? I suppose the decades-long attack on education in the US is mostly to blame.
I mean, I think the only thing I learned about tariffs from school was the Smoot Hawley Tariff Act, and I don't really remember anything about it. No, I wasn't taught about Toyota either. It's...
I mean, I think the only thing I learned about tariffs from school was the Smoot Hawley Tariff Act, and I don't really remember anything about it. No, I wasn't taught about Toyota either. It's also been a few decades, so I may have learned more and remembered none of it.
But I did learn how to find information and learn things on my own. Which is why I didn't have the same misconception. That's the key piece IMO.
I'd guess under 25% of the US population even know what a tariff is, and far fewer even understand the effects. Democrats should've just called it a Trump Tax instead to get the point across.
I'd guess under 25% of the US population even know what a tariff is, and far fewer even understand the effects. Democrats should've just called it a Trump Tax instead to get the point across.
You must have went to one of them classy schools where they actually teach you history. I didn't learn any of that at my school (southern U.S.). /s But seriously, when were you attending school?...
Did these people not learn about tariffs in middle school? And how it made the Great Depression worse? Or how they actually helped Toyota be even more profitable in the US?
You must have went to one of them classy schools where they actually teach you history. I didn't learn any of that at my school (southern U.S.). /s
But seriously, when were you attending school? Things have changed quite a bit in the last decade or so.
I didn't want to be bold or rude, but I completely agree with what you wrote. I'm still careful when expressing myself as I'm not native English speaker and sometimes my words didn't land as I...
I didn't want to be bold or rude, but I completely agree with what you wrote.
I'm still careful when expressing myself as I'm not native English speaker and sometimes my words didn't land as I thought they would. Even if I translate my thoughts exactly, they can be understood differently in various cultures.
In practice, it’s somewhere in between depending on the properties of the demand curve. You can kind of see that with the price increases here. The PS5 pro only went up by 7%, and none of them...
In practice, it’s somewhere in between depending on the properties of the demand curve. You can kind of see that with the price increases here. The PS5 pro only went up by 7%, and none of them went up by 15%, the full tariff amount.
I suppose Sony considers the PS5 pro to be the most vulnerable price-wise.
Makes sense to me. Sony doesn't pay the tariffs, they pay in the form of lost sales. A 7% price hike may be calculated to offset the amount of sales lost to a 15% cost increase on the consumer....
Makes sense to me. Sony doesn't pay the tariffs, they pay in the form of lost sales. A 7% price hike may be calculated to offset the amount of sales lost to a 15% cost increase on the consumer. It'll reduce their profits a bit. With a tiny bit of mental gymnastics you could even argue that it's a price reduction from Sony's end. It's supposed to go up with 15% after all.
A company has two options:
let the tariff increase the price.
cut some profits and reduce the price increase.
The latter is a better method of securing more sales in the long term.
I think Sony actually pays the tariff. I don't have any proof, but I think they may be importing consoles to US as Sony America (or whatever they are called there) and only then selling it to...
I think Sony actually pays the tariff. I don't have any proof, but I think they may be importing consoles to US as Sony America (or whatever they are called there) and only then selling it to retailers. This would mean they are the importer thus they have to pay.
This is based on no evidence and is just my thought.
I’d imagine people are talking metaphorically. Sony absolutely pays the tariff. They are the importer. It’s more about the sophistry in, if Sony raises the unit price by exactly the tariff (which,...
I’d imagine people are talking metaphorically. Sony absolutely pays the tariff. They are the importer. It’s more about the sophistry in, if Sony raises the unit price by exactly the tariff (which, to be clear, they didn’t), who is paying for the tariff?
If they went up by the full 15% tariff (assuming the COO is Japan and not China) on the resale cost, they would probably be making more profit than before the tariffs. I'm going to make some...
If they went up by the full 15% tariff (assuming the COO is Japan and not China) on the resale cost, they would probably be making more profit than before the tariffs. I'm going to make some educated guesses here on the cost of manufacturing, COO, and that they're selling from the Japanese division to the US division at cost:
PS5 Pro Pre-Tariff: $699.99
PS5 Pro New Price: $749.99
Estimated cost to manufacture: $450.00
Estimated 15% Tariff Cost: $67.50
Loss of $17.50
If they had increased the console by the full tariff amount:
PS5 Pro Pre-Tariff: $699.99
PS5 Pro with 15% increase: $804.99
Estimated cost to manufacture: $450.00
Estimated 15% Tariff Cost: $67.50
Profit of $37.50
I think you're mistaking profit with margin, and also how the tariff calculation works. So, first, yes their per unit margin would go up after you increase the unit price - of course. But that...
I think you're mistaking profit with margin, and also how the tariff calculation works. So, first, yes their per unit margin would go up after you increase the unit price - of course. But that doesn't mean their profit would. For every $1 increase, the number of units you sell goes down by X. What X is depends on your demand curve, which is highly specific to your good. But increasing prices does not always increase profit (if it did, all goods would cost infinite dollars), and generally the prices of goods are already at or around their price of optimal profitability - companies pay their data scientists good money for this!
Secondly, tariffs aren't applied on the sale price. As the importer, Sony would have to declare the value of the goods they're importing. On that price, the tariffs are applied. Once the tariffs are paid, Sony are free to do whatever they want with them.
So it's more like
PS5 Pro Declared Value: $700
Tariffs Applied: $105
MSRP: $750
Change in margin: $-55
And from here Sony can price it whatever they want. The tariff doesn't apply retroactively to the price they're selling at, so you don't need to worry about wacky recursion.
On your first point, yes, I meant margin not profit. The GP per unit would go up is where I was leading. I am confused by your second point. The import tariff is applied based on the invoice from...
On your first point, yes, I meant margin not profit. The GP per unit would go up is where I was leading.
I am confused by your second point. The import tariff is applied based on the invoice from the seller. My assumption is that Sony Japan is selling units at cost to Sony US - no markup when selling intercompany. Previous MSRP has nothing to do with the invoiced cost - it is just a suggested retail price. I gather that $700 in your example came from the price prior to September 21. The $450 I used in my example was the estimated cost in goods and labor to manufacture each unit and (the assumed) intercompany price listed on the invoice. This is the price the tariff is assessed on.
I suppose it would be somewhere in between. Sony still wants to sell their stuff so hey can't crank the price up full amount. Wel, they can, actually, but they may get less money due to lower...
I suppose it would be somewhere in between. Sony still wants to sell their stuff so hey can't crank the price up full amount. Wel, they can, actually, but they may get less money due to lower sales overall. There would be many people thinking hard about such price changes.
Likely due to tariffs in the region. Always interesting to see the exact price changes, since it allows us to peek at what Sony thinks the demand curves for its products are by how much of the...
Likely due to tariffs in the region. Always interesting to see the exact price changes, since it allows us to peek at what Sony thinks the demand curves for its products are by how much of the tariff it’s willing to eat.
This is disappointing, but I suppose it is expected. I was actually looking into trading in my base ps5 for a pro within the next few weeks but may hold off.
This is disappointing, but I suppose it is expected. I was actually looking into trading in my base ps5 for a pro within the next few weeks but may hold off.
I'm sorry for American Tilderinos, but what else would everyone expect? If the price for importing became higher than someone has to pay it. And that someone would be the customer.
Apparently no, a loud group of people think that definitely the other countries pay for it. Mostly because they're being told that is the case.
I know you're just explaining the reality of things, but I hate this so much. Did these people not learn about tariffs in middle school? And how it made the Great Depression worse? Or how they actually helped Toyota be even more profitable in the US? That might have been high school. But I attended public schools in a rural/suburban district (red part of a blue state) and learned about all of this.
It's one thing to say that misinformation/disinformation is rampant, it is. But how did it become so easy for people to buy into it with arms wide open? I suppose the decades-long attack on education in the US is mostly to blame.
I mean, I think the only thing I learned about tariffs from school was the Smoot Hawley Tariff Act, and I don't really remember anything about it. No, I wasn't taught about Toyota either. It's also been a few decades, so I may have learned more and remembered none of it.
But I did learn how to find information and learn things on my own. Which is why I didn't have the same misconception. That's the key piece IMO.
I'd guess under 25% of the US population even know what a tariff is, and far fewer even understand the effects. Democrats should've just called it a Trump Tax instead to get the point across.
You must have went to one of them classy schools where they actually teach you history. I didn't learn any of that at my school (southern U.S.). /s
But seriously, when were you attending school? Things have changed quite a bit in the last decade or so.
I didn't want to be bold or rude, but I completely agree with what you wrote.
I'm still careful when expressing myself as I'm not native English speaker and sometimes my words didn't land as I thought they would. Even if I translate my thoughts exactly, they can be understood differently in various cultures.
No worries you're good.
In practice, it’s somewhere in between depending on the properties of the demand curve. You can kind of see that with the price increases here. The PS5 pro only went up by 7%, and none of them went up by 15%, the full tariff amount.
I suppose Sony considers the PS5 pro to be the most vulnerable price-wise.
Makes sense to me. Sony doesn't pay the tariffs, they pay in the form of lost sales. A 7% price hike may be calculated to offset the amount of sales lost to a 15% cost increase on the consumer. It'll reduce their profits a bit. With a tiny bit of mental gymnastics you could even argue that it's a price reduction from Sony's end. It's supposed to go up with 15% after all.
A company has two options:
The latter is a better method of securing more sales in the long term.
I think Sony actually pays the tariff. I don't have any proof, but I think they may be importing consoles to US as Sony America (or whatever they are called there) and only then selling it to retailers. This would mean they are the importer thus they have to pay.
This is based on no evidence and is just my thought.
That's a possibility. Either way, that means they're going for a profit cut.
Better a profit cut than selling with original price tag and losing a lot of money, I guess. Either way it sucks for consumers.
I’d imagine people are talking metaphorically. Sony absolutely pays the tariff. They are the importer. It’s more about the sophistry in, if Sony raises the unit price by exactly the tariff (which, to be clear, they didn’t), who is paying for the tariff?
If they went up by the full 15% tariff (assuming the COO is Japan and not China) on the resale cost, they would probably be making more profit than before the tariffs. I'm going to make some educated guesses here on the cost of manufacturing, COO, and that they're selling from the Japanese division to the US division at cost:
PS5 Pro Pre-Tariff: $699.99
PS5 Pro New Price: $749.99
Estimated cost to manufacture: $450.00
Estimated 15% Tariff Cost: $67.50
Loss of $17.50
If they had increased the console by the full tariff amount:
PS5 Pro Pre-Tariff: $699.99
PS5 Pro with 15% increase: $804.99
Estimated cost to manufacture: $450.00
Estimated 15% Tariff Cost: $67.50
Profit of $37.50
I think you're mistaking profit with margin, and also how the tariff calculation works. So, first, yes their per unit margin would go up after you increase the unit price - of course. But that doesn't mean their profit would. For every $1 increase, the number of units you sell goes down by X. What X is depends on your demand curve, which is highly specific to your good. But increasing prices does not always increase profit (if it did, all goods would cost infinite dollars), and generally the prices of goods are already at or around their price of optimal profitability - companies pay their data scientists good money for this!
Secondly, tariffs aren't applied on the sale price. As the importer, Sony would have to declare the value of the goods they're importing. On that price, the tariffs are applied. Once the tariffs are paid, Sony are free to do whatever they want with them.
So it's more like
PS5 Pro Declared Value: $700
Tariffs Applied: $105
MSRP: $750
Change in margin: $-55
And from here Sony can price it whatever they want. The tariff doesn't apply retroactively to the price they're selling at, so you don't need to worry about wacky recursion.
On your first point, yes, I meant margin not profit. The GP per unit would go up is where I was leading.
I am confused by your second point. The import tariff is applied based on the invoice from the seller. My assumption is that Sony Japan is selling units at cost to Sony US - no markup when selling intercompany. Previous MSRP has nothing to do with the invoiced cost - it is just a suggested retail price. I gather that $700 in your example came from the price prior to September 21. The $450 I used in my example was the estimated cost in goods and labor to manufacture each unit and (the assumed) intercompany price listed on the invoice. This is the price the tariff is assessed on.
I suppose it would be somewhere in between. Sony still wants to sell their stuff so hey can't crank the price up full amount. Wel, they can, actually, but they may get less money due to lower sales overall. There would be many people thinking hard about such price changes.
Likely due to tariffs in the region. Always interesting to see the exact price changes, since it allows us to peek at what Sony thinks the demand curves for its products are by how much of the tariff it’s willing to eat.
PlayStation 5 – $549.99
PlayStation 5 Digital Edition – $499.99
PlayStation 5 Pro – $749.99
This is disappointing, but I suppose it is expected. I was actually looking into trading in my base ps5 for a pro within the next few weeks but may hold off.
You might want to move fast for the used market. It could take a few weeks for them to adjust.