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PS5 costs $450 to make: Here's what you'll pay (report)

(Image credit: Joeri Mostmans / Shutterstock.com)

We now have an idea of an actual price range for the PS5. Bloomberg reports that the PS5 is costing Sony around $450 per unit. However, Bloomberg's source claims that Sony is taking a "wait-and-see approach" to decide on the pricing of the console.

Bloomberg predicts that the price will have to be at least $470. However, we're expecting the PS5 to be at least $499 if Sony wants to make some semblance of a profit. Then again, the PS4 sold for $399 at launch, but the cost to manufacture was actually $381, as estimated by IHS Markit.

In an interview with Bloomberg, Macquarie Capital analyst Damian Thong said, "Consumers will benchmark their expectations based on the PS4 Pro and PS4. If Sony prices above that, it would likely be to balance a need to offset higher materials cost, against risk to demand."

Apparently, Sony's biggest issue is obtaining a steady supply of DRAM and NAND flash memory, which is currently in high-demand for smartphone makers.

Most consoles cost the companies more money to make than they get to sell it for, and that's because companies bank on making that money back with live subscriptions along with selling first-party and third-party games on their platform. 

Let's say Sony wanted to be super competitive with Microsoft. They'd either sell the console at cost, $450, or even undersell it, at $400. They would take a huge hit, but that would leave Microsoft dead in the water, especially since PlayStation has a much larger fan base to begin with (based on PS4 vs Xbox One sales figures).

The thing is, people are going to come to PlayStation for its games, so even if it sells at a relatively high price, people will buy it. If anything, Microsoft needs to be the one that aims for an aggressive price point if it wants to go after Sony.

Bloomberg's source also said that the cooling system for the PS5 is unusually expensive, at a few dollars per unit. Clearly, the company wants to ensure that the components won't overheat.

Other details the unnamed source added is that Sony cancelled its plans for a mirrorless camera due to the strained DRAM supply, and that a new PlayStation VR would be launching soon after the PS5 does. Sony also plans its PS5 games to launch on the PS4 at the same time to keep "business performance intact." 

Overall, it seems that Sony won't officially decide on pricing until Microsoft announces what the Xbox Series X will sell for. This should be a fun little game -- both companies might not release pricing until the days before each console launches and then they'll both need to scramble. I think Sony should opt for a safe but not too expensive price point, whereas Microsoft needs to nail that aggressive price to even the playing field.