Sony Computer Entertainment Europe boss Andrew House says PSP Go's $249/€249 price point is based on a "premium" associated with new hardware.
Speaking to MCV, House explained that PSP Go's price wasn't set in a bid to protect retailers' margins - which will be hit by the handheld's download-only software model - or to cover Sony's research and development costs.
"Those aren't the factors," he said. "When you introduce a new piece of hardware you have the opportunity to say there is a certain premium that is associated with it, and we took that into account.
"As with all hardware launches you look at the business model, the cost structure, and the necessarily level of profitability, and you use that to set the wholesale price. Much as we do with any other hardware."
PSP Go has yet to be officially priced for the UK market, but multiple indie retailers told us earlier this week that they were downbeat about the recently announced system's prospects.
Chips MD Don McCabe told us that he isn't currently planning on stocking PSP Go upon its October 1 release, while Grainger Games purchasing director Chris Harwood said that PSP "appears to have died as a format."