There are only two things in life that are guaranteed: Death and taxes. Coincidentally, it’s taxes that may lead to the death of the PlayStation 4’s chances in the Brazilian market. Sony says that the country’s high taxes on imported electronics are the reason for their next-gen console being priced at the Brazilian equivalent of over $1,800 US dollars.

In a post on the Brazilian PlayStation Blog,  Mark Stanley, Sony general manager for Latin America, tried to explain why a console that would cost consumers only $400 in America over $1,800 USD in Brazil.

To do so, Sony posted the graphic below to explain how they arrived at a price of R$3,999 (R$ means Brazilian real) for the PS4 at launch. The cost of the console hardware itself is R$858 which is roughly $392 USD (converted last night [October 23rd]). Sony claims that almost two-thirds of the price of the console is to cover the cost of import duties and taxes to bring the console into the country. That amounts to R$2,524 or about $1,150 USD. There is also a built-in margin of R$875 ($400 USD) which goes to retailers and the distributer, Sony of Brazil.

The total cost, Sony claims, is R$4,257 but they eat R$258 to arrive at the retail price of R$3,999. Built-in margins and paper discounts make for some funny cost accounting here. It Sony is to believed, the PlayStation division makes out the worst here. Actually, the Brazilian gamer makes out the worst. Clearly, the Brazilian government gets away the best from this deal. They could buy three PS4s in America for what they’re getting in import taxes.

For the sake of comparison, the Xbox One will cost gamers only about R$2,200 which comes out to about $1,000 in American coin. One has to wonder how Microsoft was able to get their price to be almost half (55%) of the price of a PS4. Either they’re taking a massive loss or they found a way around most of the import taxes.

For their part, Sony is looking into shifting some production of the PS4 to Brazil. If the console is built in Brazil rather than at Foxconn in China, the price of the console in Brazil should come down massively. For now, Sony becomes a very prominent example of Brazil’s high import taxes and electronics prices.

Source: NPR