Latest / Pricing Power Podcast with Fexingo: How Businesses Set Prices, Raise Margins, and Win Customers / How Nintendo Prices Nostalgia and Keeps It Fresh
Transcript
- Lucas: So Luna, I want to talk about a company that has mastered the art of charging full price for something that's decades old. I'm talking about Nintendo, and specifically the way they've priced nostalgia. Luna: You mean like selling a thirty-year-old game for the price of a new one? Because I've seen the NES Classic and the SNES Classic, and those things were not cheap. Lucas: Exactly. And that's not an accident. That's a deliberate pricing strategy that taps into how we value our own memories. Take the NES Classic Edition, which launched in 2016 at sixty dollars. It came with thirty games, including the original Super Mario Bros., The Legend of Zelda, and Metroid. Those are games you can emulate for free on a laptop, but Nintendo priced the hardware at a premium and it sold out almost instantly. Luna: Right, because it's not about the pixels, it's about the feeling. You're paying for a piece of your childhood in a tiny plastic box. Lucas: That's the core of it. And what's interesting is that Nintendo didn't just price the hardware high, they also created artificial scarcity. They made limited quantities, which pushed the secondary market prices even higher. People were paying two hundred dollars on eBay for a sixty-dollar device. That tells you they're not pricing on cost or convenience, they're pricing on emotional value. Luna: But doesn't that risk alienating fans? I mean, if you can't find one and the scalpers are making a fortune, you might feel like Nintendo is playing you. Lucas: It's a fine line, and Nintendo has definitely stumbled there. The NES Classic was discontinued after just a year, which felt like a slap in the face to some fans. But then they brought it back with a slightly different model, and the demand was even higher. That's because scarcity can actually increase perceived value. The harder it is to get, the more you want it. Luna: So they're not just selling a product, they're selling the chase. And that chase has a price tag. Lucas: Exactly. And we see the same logic in their current lineup. Look at the Switch, which has been out since 2017. A game like Super Mario Odyssey or Breath of the Wild is still sixty dollars on the eShop years after launch. They rarely do deep discounts. Compare that to other publishers who cut prices to twenty dollars within six months. Nintendo holds the line because their software is the main driver of their hardware sales, and if they devalue the games, they devalue the console. Luna: So it's not just about nostalgia, it's about protecting the whole ecosystem. If Mario drops in price, then the Switch doesn't seem worth its two hundred ninety-nine dollar price tag. Lucas: Precisely. And that's why they can sell a game like Super Mario Bros. Wonder, which came out in 2023, at sixty dollars and have it remain a top seller for months. They know that the audience for these games is not just kids, but adults who grew up with Mario and now have disposable income. They're willing to pay for that hit of nostalgia, and Nintendo prices accordingly. Luna: But isn't there a risk of overpricing? At some point, people might say, 'I loved this as a kid, but I'm not paying sixty bucks for a platformer.' Lucas: That's the question. And Nintendo's answer seems to be that the quality and the polish justify the price. They don't release a ton of games, but the ones they do release are polished to a sheen that few other studios match. It's the Apple approach: fewer products, but each one is so well-crafted that you feel you're getting real value. And so far, the market agrees. Their first-party games almost never drop below their launch price, even years later. Luna: But there's a difference between a new Mario game and a re-release of an old one. The NES Classic is one thing, but what about something like Super Mario 3D All-Stars? That was a collection of three older games, and they sold it for sixty dollars, but it was only available for a limited time. Lucas: That's a great point. The 3D All-Stars collection was a masterclass in scarcity pricing. They announced it would only be available until March 2021, and then it would be gone. By the time it was discontinued, it had sold over nine million copies, and the resale value spiked to over a hundred dollars. That's not just nostalgia, that's FOMO, the fear of missing out. Nintendo knows that our memories are precious, and they're willing to put a price tag on that urgency. Luna: So they're essentially creating their own secondary market. They're saying, 'You can't get this game anymore, but the memory is still there, and if you want to hold it in your hands, you'll have to pay someone else a premium.' Lucas: Exactly. And that's why they can keep a game on the eShop at full price for years. They're not competing on price, they're competing on emotional connection. And that connection is incredibly strong. I mean, I remember playing Mario on my cousin's NES in the late eighties, and that feeling doesn't fade. Nintendo is selling a bridge back to that moment, and they've figured out exactly what that bridge is worth. Luna: It's funny, you mention that. And it actually makes me think about how this show is priced, in a way. We give it away free, but it's not free to make. People like you and me, we spend hours researching and talking, and the only reason we can do that without ads is because some listeners chip in a few bucks. Lucas: That's a good parallel. The value of this show is real, even if the price tag is zero. And if today's episode gave you a new way to think about pricing, that's a bit of valuable insight. If you want to keep these conversations going, and keep them ad-free, listener support is what makes that possible. You can head over to buy me a coffee dot com slash fexingo, and that's a simple way to say thanks. Luna: And we appreciate every single one of you who does. But let's get back to Nintendo, because I want to dig into the psychology a bit more. Why does nostalgia work so well as a pricing lever? Lucas: Because nostalgia is a form of time travel. It's a positive emotion that we associate with a past experience, and when we can revisit that experience, it feels like we're buying a piece of our own history. That's why people pay sixty dollars for a game they already played thirty years ago. They're not paying for the game, they're paying for the chance to recapture a moment. Luna: So it's not the game itself, it's the memory attached to it. And Nintendo has cleverly packaged those memories in a way that feels tangible. Lucas: Right. And they've also been smart about expanding that nostalgia to newer generations. When they re-released the Game Boy versions of Pokemon in 2016, they sold them as a bundle on the 3DS for nine dollars ninety-nine. That's a lower price point, but it still made millions because it gave older players a chance to share their childhood with their kids. Nostalgia becomes a family affair. Luna: So they're not just pricing the past, they're pricing the future. They're creating new memories that will become nostalgic later. Lucas: Absolutely. And that's why they can charge a premium for a new Mario game today, because they know that in twenty years, someone will be nostalgic for that game too. It's a long-term pricing strategy that relies on building and maintaining a deep emotional connection with the consumer. And few companies do it as well as Nintendo. Luna: So what's the takeaway for a business owner listening to this? It's not just about selling a product, it's about selling the story and the feeling that comes with it. Lucas: Exactly. If you can create a product that people feel a personal connection to, you don't have to race to the bottom on price. You can hold your price and still have customers who are delighted to pay. That's the essence of pricing power, and Nintendo has it in spades. Luna: I think we could all learn a little from that, even if we're not selling video games. Sometimes the best price is the one that feels like a memory.