Kinect will cost £129.99/€149.99, and come bundled with launch title Kinect Adventures, Microsoft has confirmed.
"We obviously don't make pricing decisions without doing our research," Xbox product director Aaron Greenberg told Eurogamer in an interview published elsewhere on the site.
"We've done a number of pricing studies on a global scale across a whole variety of audience segments. We've found that when we talked to consumers about the different types of experiences you get with Kinect, the sensor with the full game at £129.99 does quite well.
"There will be a whole new wave of consumers looking for all new ways to experience games and entertainment. To be able to do that with the console plus the sensor and the game at that value is pretty unprecedented."
Microsoft also revealed a new Xbox 360 4GB model, to be launched in the UK on 20th August, priced £149.99/€199.99.
The Xbox 360 4GB plus the Kinect sensor and Kinect Adventures will be available as a bundle for £249.99/€299.99 when Kinect launches in the UK this November.
While Microsoft is yet to announce A UK release date for Kinect, retailers have this evening begun taking pre-orders for the device, the new Xbox 360 4GB and the bundle.
The new Xbox 360 4GB differs slightly from the Xbox 360 250GB unveiled during Microsoft's E3 2010 conference last month.
The 4GB is internal flash memory, and the console has a black matte finish. Otherwise it's exactly the same as the "whisper quiet" Xbox 360 250GB, and includes built in Wi-Fi, the smaller design, and a hard drive bay.
"It will effectively replace the Arcade console," Greenberg said. "We see it as a great value entry price point for consumers. We're upgrading the storage to a full 4GB, which is quite a bit of storage. At £149.99 we think that's a great price point."
More than 15 Kinect-enabled games will be available at launch, including the bundled Kinect Adventures, and Kinect Sports, Kinectimals and Kinect Joy Ride.
All first party Kinect games will retail for £39.99. Kinect Adventures, however, will be a full-price retail game.
Microsoft has high hopes for the sensor. Greenberg likened Kinect's launch to that of a new console.
"A lot of people have talked about this being the type of leap you would typically see when you went to a new generation," he said.
"But the nice thing is we're able to bring that next generation experience to market this generation.
"We already have storage. We already have high definition gaming. We already have a connected online community. So adding the sensor to the experience enables us to unlock a whole new variety of games and entertainment. We're pretty optimistic this will provide multiple years of life to the current life cycle."
Hot off the press shots of Kinect and the new Xbox 360 4GB bundle are below.