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http://dubiousquality.blogspot.com/2008/05/console-post-of-week-they-said-what.html
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Let's say they lower the price of the 360. We don't know exactly how much it costs them to make one (and repair it when it breaks), but they probably do. So they can do the calculation of how much a price drop of $50 on the console will cost them, and how many games, TV Shows, DLC they need to sell to make up that difference, and how likely such sales are. While they may not announce the details of that calculation, the fact that they haven't lowered the price sort of suggests what the answer comes out to be.
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