The Nintendo Switch is estimated to cost $257 to make, and interestingly enough, that's not far off from the $299.99 MSRP.
The console is not exactly a simple device. It's got a pair of Joy-Con controllers, it turns into a handheld device in a snap, and so on, but everyone probably knows that already. Nonetheless, those features give a good idea of the work that went into it.
Switch Costs $257 To Make, Sells For $299.99
Japanese teardown company Fomaulhaut Techno Solutions dismantled the Switch and determined the cost of each piece it has under the hood, from the innards of the console itself to the Joy-Con controllers and charging dock.
To break things down, the Nvidia Tegra processor, the dock, and the touch screen boils down to $167. Meanwhile, the Joy-Cons amount to $45 apiece.
Nintendo's Potential Switch Profits
Considering that the Switch fetches $299.99 a pop, Nintendo isn't really making much of a profit for each sale since retailers are getting a slice of the pie too.
While the gaming company's gains are looking slim, it's still raking in some cash. However, this arguably indicates that it's starting to heavily rely on software and games to really amp up revenue. That could also explain why Switch game cards are more expensive than PS4 or Xbox One disks — aside from being more expensive to manufacture, that is. The Legend of Zelda: Breath of the Wild became available for $59.99, after all.
That's not all either. These findings may have inadvertently revealed why it's not a high-performance beast, as they'll simply be pricier to make. Consumers will also have a harder time purchasing the device if it's slapped with a tag higher than $299.99, and in turn, Nintendo will have to be a bit more patient before it starts to generate significant profits.
Switch's Cost To Make And MSRP Difference Not Surprising
Of course, this shouldn't come as much of a surprise because console makers have already been selling their products for as close as they can to the manufacturing cost.
This is evidenced by Sony selling the PS4 with a launch price of $399.99 when it cost the company $381 to make back in 2013. This also applies to Microsoft rolling out the Xbox One in 2013 with an introductory price of $499.99 when the console was estimated to cost $471 to build.
Last but not least, the Wii U came out with a $299.99 price tag for the Basic Set in 2012, which cost Nintendo approximately $228 to manufacture.
Needless to say, manufacturing each console will become more cost-effective by way of hardware and production improvements in due time, and the case with the Switch will be no exception.
To sum things up, the Switch costs $257 to make and sells for $299.99, which puts profits at about $40 between Nintendo and retailers.
With all said and done, what do you think of the manufacturing cost of the Switch and Nintendo's seemingly going with the razor-and-blade approach? Feel free to drop by our comments section below and let us know.