PlayStation 5 price: All the evidence that PS5 may cost $499

Multiple reports say Sony's PlayStation 5 will cost more than the Xbox Series X. No one knows for sure how much the PS5 will cost, but Sony's yearly forecast gives us clues on an attractive mass-market price point.

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The PlayStation 5 will be more expensive than the PS4. That's a given. The console features high-end specs that usher in the enthusiast age of console gaming, complete with a Navi GPU capable of native 4K (and even 8K) gaming, an 8-core, 16-thread Zen 2 CPU at 3.5GHz, both of which are on an SoC with variable clock rates and set voltages, 16GB of GDDR6 RAM, and the fastest storage ever to be put in a console with a 6-channel PCie 4.0 SSD that can hit 5.5GB/sec speeds. But how much will it be? Could the PS5 break $600? That's not very likely.

We don't know exactly how much the PlayStation 5 will cost, nor do we claim to. All we can do is tally up the evidence with current reports and look at what Sony's said so far--and more importantly, what its yearly earnings forecasts lay out for investors.

So let's start with the basics and go over manufacturing costs.

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PS5 costs $450 to make

Sources told Bloomberg in February the PlayStation 5 costs roughly $450 to manufacture, and more than half of that is from memory costs. The 16GB GDDR6 RAM and PCIe 4.0 flash memory alone cost $250, the sources say.

This could put the PS5 in a comfortable $499 price tag and Sony may only lose a little bit from every sale after shipment costs.

Now let's take a look at what Sony's said about the PlayStation 5.

In February 2020, Sony CFO Hiroki Totoki said the most important thing for the PS5 was to strike a balance between costs and consumer price.

"First, we must absolutely control the labor cost, the personnel cost, and the initial ramp up...how much can we prepare initially, and we will work on the production and the sales costs. We will have to prepare the right volume.

"So it's a question of balance, and because it's a balancing act, it's very difficult to say anything concrete at this point in time. But when I said smooth transitions between console generations, we mean that we will definitely choose the optimal approach to ensure profitability in the life of the PlayStation 5."

It appears that balance has been struck.

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Image Credit: Nikkei Asian Review

Sony doubles PS5 production order

The company has tremendous confidence in the PS5, which underlines a certain price point. Sony learned the hard way in the PS3 era that $599 MSRP won't sell consoles. That's not to say the PS5 won't be $599--we simply don't know for sure--but everything we've seen so far indicates a lower sales cost.

Sony is doubling-down on PS5 production to meet demand. The company has doubled its production order to 9-10 million units, which will be fabricated and assembled from launch until March 31, 2021. Not all of those consoles are likely to be sold, though, because there's lag between the finished product and store availability.

If Sony sells even 8 million PS5s, they will beat the PS4's 7.5 million launch sales by 500,000 units.

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Sony expects PS5 to sell 120 million units in 5 years

Sources tell DigiTimes that Sony expects the PlayStation 5 to sell up to 120 million units in just 5 years, which would make it their second best-selling console of all time.

For reference, it's taken the PS4 nearly 7 years to hit 112.3 million shipments.

If this information is accurate, Sony has extreme confidence in the PS5's sell appeal, which would be hard to do at a $599 price.

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Sony expects the PS5 to 'significantly' raise console and game sales for FY2020

This is the biggest indicator of confidence that we can find. It's a concrete and solid bit of info directly from Sony, and isn't a back-hand source.

In its recent Q1'20 earnings report, which saw the PlayStation brand make more money than any other company in the history of video games, Sony said the PlayStation 5 will significantly contribute to a record $23 billion in game segment earnings.

"Sales are expected to increase significantly year-on-year mainly due to an expected significant increase in sales of game software and hardware as a result of the launch of PS5," Sony CFO Hiroki Totoki said in the presentation.

This pretty much tells us all we need to know. Sony wouldn't make these bold claims to investors if they didn't see strong demand being sparked from a certain price point.

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Sony insists PlayStation 5 production is going smoothly

Last but not least, we have official confirmation that the PlayStation 5 is being produced and assembled at Sony's internal and external plants.

Sony says PS5 manufacturing is right on schedule and there won't be any delays due to COVID-19.

"Regarding the launch of PlayStation 5, although factors such as constraints due to employees working from home and restrictions on international travel remain, necessary measures are being taken and preparations are underway with the launch of the console scheduled for the 2020 holiday season.

"At this time, no major problems have arisen in the game software development pipeline for Sony's own first-party studios or its partners' studios."

Wrap-Up: All signs point to $499 price

Combined together, these bits and pieces make for a compelling price guesstimation. Sony's faith in the PlayStation 5 speaks volumes about a price tag, and while we won't know official details until they're, well, official, we have good reason to believe the console will cost $499 when it launches this holiday season.