Why are video cards selling for above MSRP?

A growing trend in the PC component world has been the upselling of graphics cards, leading them to cost far in excess of the products’ MSRP. 

In an excellent feature, Digital Trends’ John Martindale spoke to sellers and vendors in an effort to figure out why this is happening. 

Zotac marketing manager Buuy Ly puts it down to demand outweighing supply: “We typically provide an MSRP for the retailers, but this does not always hold as some retailers have increased the pricing due to high demand and limited availability.

Also, the other thing that causes confusion is marketplace sellers who list at some ridiculously high prices. These show first when the item listed at MSRP is out of stock.”

“It’s difficult to control the retailer pricing since there are so many other similar products from other manufacturers and demand is high."

There seems to be a general consensus that supply shortages will invariably lead to price increases. This sentiment is echoed by AMD graphics partner Sapphire. Philip Wynn Jones, global marketing lead for the company, said: “We maintain a price to the channel customer, but it is the market and its forces that dictates the MSRP to the end user. This is simply a case of supply and demand."

Essentially, this all is to say that while the manufacturers are setting price tag, there is little that they can do once the products are in the hands of retailers.

Without the strain of launch demand, Digital Trends looked at a few different marketplaces to see how close certain retailers were to the original MSRP set out by Nvidia and its partner companies.

Three US based retailers (NeweggTiger Direct and Amazon) were examined, along with the British, OverclockersUK. The most basic versions of the AMD’s 480 and Nvidia’s GTX 10 series were compared to see how the prices varied.

It is evident from these statistics that prices are consistently increased significantly in excess the MSRP. What is most surprising is that none of these products are in their ‘launch window’, where a surge in demand could lead to excessive pricing.

While it might seem that retailers are unnecessarily overcharging for cards, margins on sales are not as large as you might think.

Zotac’s Buu Ly said margins are usually somewhere between two and three per cent per card while OverclockersUK’s retail manager Steve Levitt said that the company rarely makes make more than £30 per card sold. He added that it often is less than that, since most cards sold are not high-end models.

Price hikes might seem like bad practice – especially when vendors have explicity spoken out against them – but while demand outweighs supply, there simply isn’t a reason or retailers to not raise their prices in excess of MSRP.

PCR’s Sector Spotlight on Gaming – in association with VIP Computers – is running throughout September 2016 – click here for more articles

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