I think the better way to ask this question is “why do physical games not cost more than digital copies.”

Nowadays the majority of game sales are digital, which means that publishers are going to set prices so that they can sell a digital game with an optimal profit. According to this article, physical retailers cause price parity because raising the price of physical copies would cause them to not stock your game (which would of course open shelf space to other publishers). In all likelihood, physical copies will go up in price once they are only stocked by niche retailers and/or online distributors (who don’t have the shelf space issue since most folks already know what they want by the time they browse Amazon).

Why should they be? As others have pointed out none of the prices are based on cost to make and distribute. At least not until you get down to the bargain basement, clearance level prices. The only thing making digital cheaper would accomplish is pissing off retail partners and shareholders.

Pricing is based off what you will pay, not what you should pay. You also don’t get a discount for using the self checkout in a grocery store. That one attendant is replacing 6-9 registers, and they’re saving all those salaries, but they pass the savings on to themselves.

The price of the game is mostly the license (paying for the development), not making the box.

With digital games, the publisher controls the price; there is no competition. With physical copies, they have to share some of the profit with the stores, i.e. if the publisher expects that the retail price will be $60 (and is selling it for that price on their online platform), they may have to sell it to stores for $40 (I don’t know what the actual numbers are).

Stores compete with each other, so a large online store like Amazon (which has lower operating costs than others) may decide that they can still make a decent profit when reselling it for $50 instead of $60, so they sell it cheaper so people buy from them (giving them e.g. $6 of profit if their cost to sell it is $4, rather than $0 because the customer buys elsewhere).

Now, you may have noticed that the publisher could sell the digital edition for $40 and still make the same amount of money. So, why don’t they do it? I think it’s a combination of

• greed/“because they can” (if people will pay $60, why charge less)
• not wanting to undercut retail too much, because otherwise stores may not consider it worth putting the game on the shelf, which is advertising the game and increasing sales. This may also involve agreements between the stores and the publisher.

Because manufacturing the physical copy is a very small part of the expense in creating the game. It also has no practical effect on a players enjoyment or likeliness to purchase the game.

Prices are made up and capitalism is one big shell game

You don’t calculate the price of something by totalling up the cost to produce it and then adding a bit for profit - you calculate it based on what people are willing to pay. That doesn’t really change if it’s digital or physical. Some people might be willing to pay a bit more for a physical copy, but probably not many and you’d turn off more people by having the higher price.