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Why Is Hi-Fi Gear So Darn Expensive?!

Ralph_Cramden

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Good for a chuckle. Typical "rationalization" from TAS.

 

Mart68

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He's working from a false premise, that the crazy money kit does actually give better sound.

His £50K speaker example is ridiculous. 'So, let’s say it took a team of 10 people over the period of 2 years to do the design.' For a little two-way speaker? Ten people? Two years? Maybe if they all started not even knowing what a loudspeaker was. Even then it's a bit of a stretch.
 

ta240

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They use the same argument that is often used for "why you should DIY":
The product was priced at $50,000 or thereabouts, per pair. Allowing for distribution and marketing leaves about $25,000. Add management and cost of capital, that leaves maybe $12,500 per pair for parts and assembly and engineering. Say the cost of parts was $5000 and assembly was $2500.

With the exception of things like jewelry and high end, name brand goods; in the real world the more expensive something gets the lower the percentage markup usually is. A $25 necklace at a department store probably cost them less than $5 whereas something for $100 was more likely $50. Pre Covid shortages, a new car dealership would have been thrilled beyond belief to clear $1,000 on a $25,000 sale.

Their reasoning just puts high end audio into the 'luxury goods' category; where all reasoning goes out the window. Sure there, often, is quality and design investment but you are first and foremost paying for exclusivity. That is the reason the high end clothing manufactures will incinerate their left over inventory instead of letting it go at a discount.
 

Waxx

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It's often huge profit margins, for the seller and the company who makes it. I know a fullrange speaker design that is sold for 5K before VAT that has a 100€ driver (that you can buy) and maybe a few hundreds in fancy oak plywwood in it. Count 25 for a very fancy binding post and 5€ for the cable (and that is even stretching it) and a few hours of work when doing it efficient and the rest is profit for the bussiness. And it sells a lot.

I did help to make a copy of it in 18mm baltic birch plywood (the best we could find) and spend about 500€ on parts on that project, + about 6 hours of manual work with 2 guys to build it with a router, a table saw, an electric screwdriver and a sanding machine as only electric tools. And we pay a lot more for the driver and the wood and other parts than companies who buy big quantities...

There is off course also costs we don't pay, we don't pay for the overhead of the company, the space and all kind of taxes, but i can't believe that is the remaining sum, or even half or a quarter of it. But the markups for hifi, especially the "higher end" stuff is big, often half the price or more.
 

Blumlein 88

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I've heard the 10% parts cost vs retail for years so I'm assuming it is true. What amazes me are things like $120 blu-ray players. Something somewhat complex and technically advanced and they can make it from $12 of parts. Wow! Or maybe those are really low margin and parts cost is $20 which is still a wow. Or a $400 AVR for $40 parts cost again WOW!

25 years ago a friend and I put together a pretty terrific speaker. A fellow whose name everyone here would recognize heard it after his son-in-law heard it and told him about it. He wanted to make it a product. This fellow has done this for some other notable products including speakers. When he inquired about the parts we used, he lost interest, mainly due to the top quality drivers we had used. Told us it would have to retail for $20-25k, and while it still might work the market was too thin for him to take a chance on it. That was really a lot of money for speakers 25 years ago.

I've worked repairing a few expensive high end bits of gear. Some of those by far the greatest expense is in the fancy case that holds everything. Others did have very high quality expensive parts inside.
 

MakeMineVinyl

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Building big multi-channel power amplifiers yields surprisingly little manufacturer's margin. ;)
 

AdamG

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Because there are boat loads of Rubes willing to shell out ridiculous amounts of money for Style over performance. Like buying a Ferrari with a lawnmower engine.
 

MattHooper

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You folks are just jealous that you can't afford a music server like this:


Price: $59,000; $76,495 with Akasa optical cable and optical input module for Reference DAC
 

MakeMineVinyl

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You folks are just jealous that you can't afford a music server like this:


Price: $59,000; $76,495 with Akasa optical cable and optical input module for Reference DAC
I don't think I would ever be talented enough to design something as ugly as that thing. :facepalm:
 

DMill

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You folks are just jealous that you can't afford a music server like this:


Price: $59,000; $76,495 with Akasa optical cable and optical input module for Reference DAC
Hmmm. Send my girlfriends kids to college or this? It’s so tempting. I really need to look in a mirror. :)
 

phoenixdogfan

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You can blame Harry Pearson for this. Around 1980 he changed The Absolute Sound from a quirky journal wherein the reviewers listed their zodiac signs while reviewing expensive but hardly stratospherically priced audio gear and manifesting a strong preference for tubed gear over solid state. Given the state of solid state in 1980, it was IMHO a defensible position. But around the time Pearson reviewed the first iteration of the Infinity IRS (which cost an unprecedented for the day $20,000), things took a turn toward pushing Veblen priced gear. He suddenly began reviewing dozens of products like the Conrad Johnson Premier One, a $6000 300WPC tube amp, Audio Research Sp 11 for over $7000, and a host of Levinson and Krell gear none of which was priced below $5000. Eventually, a Swiss company called Goldmund produced a $25k turntable with matching radial tracking tonearm. And Infinity and Wilson pushed the price of their designs over $100k. All of it praised to the sky by Pearson and his crew of reviewers as groundbreaking stuff. By no small coincidence, TAS started simultaneously taking advertising from these self same companies. Given this was the 1980's, an era of resurgent conspicuous consumption fueled by Wall Street types with money to burn, TAS did very, very well.

It was also around this time that audio stores like Lyric HiFi in Manhatten emerged to cater to the need for high priced audio gear among the emergent new status symbol seeking audiophile class.

The aftermath has been the creation of a High End Audio establishment which pimps the idea that there exists a direct and linear relationship between the amount spent on a component and the audio quality it delivers. I don't know how many times I've walked into an audio store and said I was looking to buy, say, a power amplifier only to be asked by the sales lizard "how much was I willing to spend" which assured me he would try to sell me the maximum item fitting withing my "budget" while assuring me that anything less expensive merely "sounds pretty good for the money." Talk about damning with faint praise!

Only now, with the advent of publications like ASR, Archimago, Audio Critic, EAC, and Audioholics are these exhorbitantly priced products being subjected to rigorous analysis and it's become clear that they in no way produce magical, transcendent audio experiences. In point of fact, these analysis are revealing poor design, shoddy materials, and substandard performance with prices that bear no rational correlation with their production and development costs.

So, yeah, when it comes to audio it's both the best and worst of times. Your $10k budget can buy you a USB cable, a box'o'dirt grounding box, or a Wilson Tune Tot speaker system that grades out at 2.7 on the Harman Scale-- or it can buy you a state of the art speaker from Revel, Kef, Genelec, Neuman, Dutch & Dutch, or Kii. Your choice, so be aware and informed.
 

DMill

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You can blame Harry Pearson for this. Around 1980 he changed The Absolute Sound from a quirky journal wherein the reviewers listed their zodiac signs while reviewing expensive but hardly stratospherically priced audio gear and manifesting a strong preference for tubed gear over solid state. Given the state of solid state in 1980, it was IMHO a defensible position. But around the time Pearson reviewed the first iteration of the Infinity IRS (which cost an unprecedented for the day $20,000), things took a turn toward pushing Veblen priced gear. He suddenly began reviewing dozens of products like the Conrad Johnson Premier One, a $6000 300WPC tube amp, Audio Research Sp 11 for over $7000, and a host of Levinson and Krell gear none of which was priced below $5000. Eventually, a Swiss company called Goldmund produced a $25k turntable with matching radial tracking tonearm. And Infinity and Wilson pushed the price of their designs over $100k. All of it praised to the sky by Pearson and his crew of reviewers as groundbreaking stuff. By no small coincidence, TAS started simultaneously taking advertising from these self same companies. Given this was the 1980's, an era of resurgent conspicuous consumption fueled by Wall Street types with money to burn, TAS did very, very well.

It was also around this time that audio stores like Lyric HiFi in Manhatten emerged to cater to the need for high priced audio gear among the emergent new status symbol seeking audiophile class.

The aftermath has been the creation of a High End Audio establishment which pimps the idea that there exists a direct and linear relationship between the amount spent on a component and the audio quality it delivers. I don't know how many times I've walked into an audio store and said I was looking to buy, say, a power amplifier only to be asked by the sales lizard "how much was I willing to spend" which assured me he would try to sell me the maximum item fitting withing my "budget" while assuring me that anything less expensive merely "sounds pretty good for the money." Talk about damning with faint praise!

Only now, with the advent of publications like ASR, Archimago, Audio Critic, EAC, and Audioholics are these exhorbitantly priced products being subjected to rigorous analysis and it's become clear that they in no way produce magical, transcendent audio experiences. In point of fact, these analysis are revealing poor design, shoddy materials, and substandard performance with prices that bear no rational correlation with their production and development costs.

So, yeah, when it comes to audio it's both the best and worst of times. Your $10k budget can buy you a USB cable, a box'o'dirt grounding box, or a Wilson Tune Tot speaker system that grades out at 2.7 on the Harman Scale-- or it can buy you a state of the art speaker from Revel, Kef, Genelec, Neuman, Dutch & Dutch, or Kii. Your choice, so be aware and informed.
A brilliant thoughtful perspective. I got into audio a few years later. Back then we didn’t have objective measure for equipment so it was a bit of Wild West. I give Harry Pearson a bit of a pass just because Conrad Johnson amps did seem so cool at the time.
 

iMickey503

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Aliens! They got to fuel their spaceships somehow.
1654310447603.png
 

hex168

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I heard Harry Pearson's IRSs and they were damn good. Sorry I did not have any measurement equipment with me. (Not defending the Absolute Sound shtick here, but do not tar the IRSs with the same brush. And HP gets credit for realizing they were that good.)
 

JJB70

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You don't necessarily have to buy any true audio gear to enjoy excellent sound. I had a Samsung Galaxy S10 and using it to listen to FLAC files with the bundled AKG IEMs was perfectly acceptable.
 

Blumlein 88

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Because there are boat loads of Rubes willing to shell out ridiculous amounts of money for Style over performance. Like buying a Ferrari with a lawnmower engine.
Even buying a Ferrari with a Ferrari motor can be questionable use of money for something used on public roads. There are both types of high end audio hardware. Those without the goods are a ripoff, and those with it are mainly conspicuous consumption.
 

HarmonicTHD

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Even buying a Ferrari with a Ferrari motor can be questionable use of money for something used on public roads. There are both types of high end audio hardware. Those without the goods are a ripoff, and those with it are mainly conspicuous consumption.
At least with a Ferrari (provided it actually starts ;)) one can measure the performance being better than a VW. In Hi-Fi nowadays the VW performs like a Ferrari objectively. ;)
 
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