"Secrets" about the consumer audio business you may find interesting

[Mnyb]

I was using BOM to approximate COGS (which would also include labor cost as well as AVC and fixed costs). It’s been a while since my undergrad Econ and business school accounting classes!

I don’t know the exact breakdown either .
But manufacturing the “thing” is not the expensive part of running a proper company , that may surprise some .

If you want staying power in a market it’s a lot of thinking strategies and R&D involved , not to mention maintaning local presence and a service network and more .

 

[Mnyb]

I have over 15 years of experience in consulting all kinds of companies in this industry (big and small).
There is not much to add for me to the start-post to be honest.
I can't disclose many companies because of NDA's, but yeah the majority of them don't do much inhouse.
I personally find point 7 about "sophistication", spot on!

One thing the topic started probably also ran into, is how much better off big companies are when everything can be done in bulk.
The competition is quite uneven in that regard.
That 30% number plummets, so badly that labor is often orders of magnitude higher, that also counts for high-end products.

This is also were many startups struggle, scaling up from a nice (and sometimes awesome) idea, to real production.
Since this really changes the company of "developing" something, to producing.

Many many years ago, the real eye opener for me, was when I dove into some books about how marketing actually works.
Seen from a science and psychological point of view, not from a business point of view.

If anyone here really wants to understand how speakers and acoustics work in commercial products, those books are an absolute must read!
For example, what most people (here) don't realize at all, is that there are a lot more priorities than just plain and raw "audio quality" (whatever that even means).
That seems obvious maybe, but it also doesn't seems crossing a lot of people's mind judging or even reviewing those speakers or other audio equipment.

It’s quite obvious for speakers.
They are also furniture.
Baffle shape seems dictated by marketing ?
The engineering gets the brief that it need to be slim tower with a very narrow front and go to work with that premise.

 

[GWolfman]

Many audio execs would be totally lost reading threads here, and have the critical listening skills of a shriveled potato. (Bold emphasis added.)

This made the read totally worthwhile. XD

 

[Kevinfc]

That is still very far from answering all of those three questions before.

If you're going to play the Devils Advocate on this fine, what comfort means is subjective. It's a rather infantile argument to make with such an obvious choice.

 

[TonyJZX]

I have worked in a number of production facilites from food beverages to chemicals to finished manfacturered goods... and really what OP argues isnt unusual... my expectation is that if you're one of the top 50 multinationals in the world... your Unilevers Nestles of the world then the game is stepped up a notch... I remember working for French German companies and they are at another level compared to most (more German influence than French thankfully).

But production is almost always what we call a 'shit fight'... its massive expensive, goes way over time, requires massive amounts of manpower, a fleet of forklifts and usually a fair bit of rework.

I'm always amused how so many of our inputs come from China and is processed here... so it says "MaDE IN th' UsA" so it can be sold back to the Chinese as a 'premium product'.

About audio products.. to me its always amusing to see something like the AIrpods Max and sony wh-1000xm5 which cost $500 usd and really you know they probably come from a sister factory to the Ankers and Taotronics of the world but they have that huge markup...

 

[dgay42]

However, brands that sell direct to consumer get absolutely hammered on shipping costs. Ever wonder why there are no 40lb speakers that cost $100 available DTC? It's because it costs more than $100 just to ship the damn thing.

Interestingly, I just bought some large and heavy items (5 48x63x18-or-24 wire shelves, total cost >$1000) and the shipping options were:
- "Parcel": $359.37
- "FedEx Standard Overnight": $1144.14
- some "logistics" company: $59.08

You can guess which I picked The items showed up 2 days after the order, on a palette.

I think the lesson here is that if you (as a company) regularly ship large and heavy items it can be a lot cheaper than regular shipping.

 

[Rufus T. Firefly]

Well first of, I would like to see an objective test about comfort levels.
Second, I would like to see a comfort level that is good enough vs "more comfortable"
Third, I would like to see the same test were an higher level of comfort level is placed inside a crappy looking car (but still fine working) vs a meh comfort level inside a slick looking car.

If people can show me those results, I am happy to agree.
Otherwise it's subjective anecdotal stories no different than that certain cables "sound different".

I hate to be critical but why can't you just decide these things for yourself?

 

[TonyJZX]

I think any comparison with cars is moot.

Where I am a lot of people will not accept a Chinese car... it doesnt matter if the car is a $20,000 SUV that does 500 miles on a charge and has all the bells and whistles. The fact its going to a "CCP company" kills it.

Also many of you are also auto enthusiasts, watch enthusiasts... you cannot convince people who are not into watches why a a Rolex Daytona is saught after... or why car like a 911 GT3 gets that kind of money... I myself largely drive Japanese SUVs... and they are wonderful reliable cheap to run service and they have excellent ride utlity and they work day in day out... and there's nothing like leaving work on a cold midnight to a car that goes comfortably with a good heated seat and steering wheel.

But at the same time why do I want a '68 Mustang fastback manual in highland green? Or any naturally aspirated large V8 with a manual.

Its really not comparable to the audio world.

 

[Frgirard]

But at the same time why do I want a '68 Mustang fastback manual in highland green? Or any naturally aspirated large V8 with a manual.

Its really not comparable to the audio world.

The car:The winner's sexual prosthesis. Simone de Beauvoir could have called it the 4th sex.

 

[Kevinfc]

What would be cost to the retailer as percentage of the MSRP for an inexpensive DAC around $200?

 

[TonyJZX]

The car:The winner's sexual prosthesis. Simone de Beauvoir could have called it the 4th sex.

This is where I disagree and the comparison to the audio world is comparable.

I'm a selfish person. If I'm spending my money, I'm buying a car that suits my desires and suits my uses... its the same as audio... I am largely brand agnostic... I have bought JBL speakers, I have bought speakers from Canton... if the unit does the job I want and I can afford it, I buy it.

I have no issue with a Chinese car because I'm dont care how it reflects on me. I also have a fair bit of Chinese gear from Topping SMSL Fosi Xduoo you name it... it just works. It has no chachet unlike Marantz etc.

I do agree people buy cars to impress the neighbours. I dont even know my neighbours.

The SUVs I drive as largely company or family hand me down cars. When I worked for the Dept of Defence here we used Toyotas. It was found out that Ford and GM does not do the job properly.

 

[enio nery]

the things that are mentioned here. applies to any industry. i run a small business and i agree that for a business to stay afloat and be profitable. your margin should be at least 3 is to 1 of the total cost to make a product. i should add that raw materials costs arent static. so when they go high you need headroom to suck all the loses until it comes down again.

 

[kniff]

I think enthusiasts like us get emotionally involved to a degree, and expect companies to manufacture quality products only.

Problem is, companies main goal will always be profit first. It's easy to forget sometimes.

 

[Vacceo]

I think enthusiasts like us get emotionally involved to a degree, and expect companies to manufacture quality products only.

Problem is, companies main goal will always be profit first. It's easy to forget sometimes.

You can manufacture quality at different price ranges. I´d never expect Kef Q speakers to deliver what a Reference or a Blade does, but for the price, they are quite nice speakers. For electronics, things get more complicated...

 

[Frgirard]

You can manufacture quality at different price ranges. I´d never expect Kef Q speakers to deliver what a Reference or a Blade does, but for the price, they are quite nice speakers. For electronics, things get more complicated...

For électronics, it's simple. You have the review of ASR showing the price is not a sign of quality.

 

[kapelli]

Generally for audiophile shops (not electronic markets) to be profitable they need to have markup of 35% at least, usually its between 40-60% to maintain healthy business

 

[Vacceo]

For électronics, it's simple. You have the review of ASR showing the price is not a sign of quality.

It´s simple because the data is there. It is not, because the devices with the feautures I like do not come in well-designed devices.

 

[anmpr1]

Where I am a lot of people will not accept a Chinese car...

No doubt. But things change. Attitudes change. China is a hard nut to crack, because 'other' factors come in to play. Factors that are external to the product. So who knows how it will be in another twenty years?

I remember the old man looking for a new car. He wanted something with better mileage, since he was driving a distance to work and back. There was a new dealer in town, selling something called a Toyota Corona. I remember him saying, "What the heck is a Toyota? Japanese? I'm not taking a chance with that!"

 

[MaxBuck]

I auditioned a set of moderately priced Senns that got a good ASR rating. Like you, I didn't like them much. Possibilities:

1) If I was more familiar with headphones (I admit I don't use them too often) I might eventually discover through experimenting and experience that they were better than I thought. Look, ASR goes through more headphones at more price points than most people will ever be able to accommodate in their lifetime. So maybe I just got it wrong.

2) Mine were substandard, and not up to spec. Hard for a consumer to know that with something like a headphone.

3) I just didn't like them, and that is that.

Loudspeakers (and headphones) are always going to be the point of subjective difference among listeners. You find something you enjoy and then you should be happy. If you can do that you are ahead of the game.

Just goes to underscore what I've thought for years: components should be selected based on measurements; transducers should be selected based on personal subjective preference.

The degree to which "ideal" transducer behavior meets one's own preferences is highly individual, so far as I can tell.

 

[prerich]

The computer industry is really good at this. From the days of Windows 3.1, I told my wife "I refuse to buy a pre-built computer"! I started building with 386 machines and I always came out cheaper than buying. Each of my children built their own PC (except my daughter...hmm). Here we are in 2022 and I believe I've built my last dedicated PC ...as the cost of goods have come to a point that it makes no sense to DIY anymore.