Because if I buy - once again, hypothetically - a game on gog and decide I don't like it but could 'trade it', I would by a game from gog for the reduced price, rather than going to say, Steam, for the same game at full price.

To retain customers.

a low paying customer.... do you not think the shop would like to sell the premier game for premier price? And from whos pocked does the price-reduction come from? The retailer? The publisher?

and for this to work, you need to some form of DRM

Why are you presuming 'premier'? Also, as gog.com has decided to (mostly) stick to flat pricing, is that an issue for you?
The idea stemed from 8-bit Nintendo games. Games here on gog.com can be as low as 5.99 usd. I actually don't have a PS3/Xbox360, so I don't know how they do things.

"That loss of money by the retailer would have to get eaten by someone and it will not be by the developer or retailer...who's left in that equation, the gamerz."
So how does gog sell games that usually go for 5.99 - 9.99 usd for 1.99 - 4.99 when they are on sale?

Would need DRM. Would need central database system which checks who has what, whats activated etc... too difficult imho

Sales for a digital retailer are in direct relationship with the publishers. GOG gets a percentage of the sale. Basically it's the publisher selling lower there, not the vendor.

Please don't mix flat pricing into this - completely different issue at all

I assume "premier" as you never stated that it would only be limited to certain games. SO what you in fact are saying is then that the customer is not allowed to get any different game for a reduced price, but pick a game from a list - then get that one for a reduced price?

You also do not clarify from who's pocket the reduced price is taken from - the vendor or publishers.

I ask this as digital works different than physical.

IN a physical store - the vendor buys in a limited number of items, the stock. At this point, the vendor owns this stock and can do as they want with it - including selling it for a lower price than they bought it for, for example. The publisher do not care (as part as wanting to maintain the general pricing eco-system), as they have already been paid when they sold the stock to the vendor (this is simplified, off course). Physical can do re-sale, as when you bring in your disk they can put it back into the vendor stock again to sell to someone else.

In digital - there is no stock and vendor+publisher takes a % from each sale (normally a 30-70 split). If what you proposes happens and the reduced monies are taken from the vendor, they loose a lot of their profits. Imagine a game for £30. In a normal sale, the the split is £10 to vendor, £20 to publisher. If you want to do your hand-in for , lets say, -30% reduction in price, this means that the games is reduced by £9.99. This comes out of the vendors cut of £10 - leaving the vendor with the very healthy cut of £0.01. This goes towards covering all vendor costs....

However, if the cut is absorbed by the publisher, or split, it becomes unfair on them - as they have to take a reduced income of their game because they buyer did not like another publishers game? If you do not want to bring the cost from one publisher onto another unrelated one, you will need to ensure that a game can only be traded in for a different game by the same publisher - this limits the offers severely.