Xbox prices are rising again after Microsoft helped drive up component costs

Another hour, another batch of price increases for notable consumer products. Microsoft says it's once again jacking up the prices of Xbox consoles. Starting August 1, the 512GB Xbox Series S will be $100 more expensive and all 1TB models will run you an additional $150. The company is dropping the 2TB version of the Xbox Series X.

These changes will apply globally. Here's what the updated prices will look like in the US:

• Xbox Series S (512GB): $500
• Xbox Series S (1TB): $600 
• Xbox Series X Digital (no disc drive): $750
• Xbox Series X: $800

Astonishingly, this is the third price hike for the consoles in the US since the start of 2025 for systems that debuted nearly six years ago. Microsoft increased Xbox prices in May last year then again in October. You already know exactly why.

"We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options. Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027," Xbox said in a blog post. "The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles. Unlike phones, computers, speakers and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make."

The blog post doesn't get into the details of why storage and memory costs have skyrocketed, but Xbox's parent is very much complicit. AI companies, which include Microsoft, are plowing immense levels of capital into building out data centers that require tons of memory and storage. The rules of supply and demand dictate that prices go up, which — as Xbox notes — is affecting all manner of consumer devices. Sony and Nintendo recently made their consoles more expensive as well, while Valve said this week the component crisis has affected price and availability of the Steam Machine, which starts at a whopping $1,049.

Microsoft says it's looking to lessen the sting of the Xbox price increases in a few ways. Those include a buy now, pay later program at Microsoft Stores, zero percent APR financing through Amazon, second-hand console purchases and certified refurbished systems. As it stands, Microsoft is not reviving its Xbox All Access program that allowed customers to buy a console and Game Pass Ultimate via a monthly payment plan.

The company announced the console price increases as Xbox leaders "reset" the division in a bid to reduce costs and increase profitability. It's expected that another round of widespread layoffs are set to hit Xbox following the end of Microsoft's fiscal year on June 30. The head of Xbox Game Studios just stepped down, while several studios are said to be on the chopping block, including Ninja Theory, Double Fine and Compulsion Games. It's been reported that the leaders of the studios have been negotiating with Xbox in the hope of spinning out their teams or finding new ownership.