Is it possible for a high end manufacturer to overprice their goods?

@hilde45

Very good points. Well stated.

I think it is interesting to point out that, typically, "high end" audio is sold thru a dealer nietwork. So?

The dealer is the manufacturer’s "customer". And, the end user is the dealer’s "customer". While the manufuacturer is on "stand by" for tech support, etc. it is the dealer who displays, demos, delivers, sets up, and supports the end user. The dealer, being the "customer" also has to make smart decisions about what he purchases. The dealer must determine if a product has a high degree of certainty for sell through or he will be stuck with it. Or, risk selling it below what he paid for it. The penalties for the dealer for bad choices could be severe. So, there’s another "value proposition" in the equation, whereby, the dealer must (literally) buy in to the propostion. No dealer orders. No sales to end users. The manufacturer must FIRST convince the dealer that the product is worth the money. Then, it’s the dealer’s job to create value in the product to the end user. So, there’s another cost/performance filter (the dealer) in the mix before the product is presented to the end user.

From an economic perspective, the dealer pays wholesale costs, so the manufacturer’s selling price to the dealer is far south of the $133k the customer pays.. I am thinking about presenting a topic somthing like The Myth of Manufacturer and Dealer "Profits" to take a deep(er) dive into this subject. To this point, let’s take, as an example, a major contributor to the design team who makes $200k per year (could be low?). If the manufacture sells 2 million of the item, that’s $10 of the retail cost of the item for engineering. When only 200 are built, that’s $1,000 of engineering costs of the retail cost for each item. Some end users place a lot attention on parts costs vs retail priicing. Okay. Fair enough. But what about services we obtain that are purely intellectual with no parts costs? Should attorneys, consultants, etc. offer their work for free becuase their "parts costs" are free? It doesn’t take long to see how silly the parts cost vs selling price argument is. So, what is a product segment’s most gifted designer’s talent worth relative to the ultimate selling price? This is hard (impossible) to measure. 

The "market distortion" aspect as suggested by @hilde45 has merit in my opinion. Here’s this audio market where everyone plays nicely and introduces "new products or new versions" with incremental price increases of, say 10%-20%. Then, out of nowhere some manufacturer has the audacity to take that metric and increase it by a factor of 2 over previous "norms". This presents a number of possibilities for other manufacturers. The "sticker shock" of their top end products is has been obliterated by another company (thank you!) so their products appear to be a more reasonable cost/performance value. So, they would feel justified in raising the price, not just 20%, but 40% and still be very much in line with the perception of high performance AND high value. So, yes, a market distortion could follow the introduction of steep pricing into the marketplace.

A little about the luxury market: Centi-millionaires, traditionally, don’t loose sleep agonizing over whether or not they received strong price/performance when making a purchase.. They are primarily concerned with owning something that really IS something worth owning. Sure, they’ll brag about the "guts" or "workmanship", but their true motivators may be the intangibles that can’t be measured. What is the prestige in owning the best of the best actually worth? And, if it IS expensive, wouldn’t it be viewed as a badge of honor rather than a shockingly high-priced trophy?

Customers are also different. Many who engage in the ultra highend of a product category are true enthusiasts who love what they are doing and appreciate every nuiance their extraordinarily expense product does for THEM. They ARE getting great value from something they have heavily invested in.

Back to the marketing considerations, I think we could look at various price ranges to see if a significant and meaningful gap exists whereby a segment of the buying public is being ignored, or has been abandoned altogether. As a result of that 2x product introduction, is there still a healthy market for legitimate high-value products at 1/2 that price, and somewhere in between? IF that 2x product negatively impacted the viability and availability of those other (lower) price ranges, then some measurable damage has been done.

@hilde45

"hyperbolic price increases"

When the "market" determined that a $4 cup of coffee could actually be enthusiastically adopted when the "norm" was 99 cents -- with free refills, it may have been a good example of a game changer? It might be interesting to take a granular approach and determine how consumers prioritized the elements of that $4 cup of coffee at the time: "the coffee"- 99 cents, "being actively involved in the coffee culture"-99 cents, "looking good while I’m drinking coffee"-99 cents, "an affluent, unique experience"- 99 cents, "free wifi" - 4 cents?

Now take those numbers and project a straight line out to 100,000 times that investment ($400k) while removing the word "coffee". Is there some level of consistency in the motiviators?

Good discussion, guys.

To the OP’s point, I think the answer is "yes" that high end manufacturers CAN overprice their goods. In the cost/performance metric of mere mortals (like us) the math just doesn’t work. And we feel a bit frustrated when folks inject their own value component into the mix that is clearly above our paygrades -- and didn’t ask OUR opinion about whether the sonic (or otherwise) value is there. How dare they!!

"Messaging" is an important element and could negatively impact current and future hobbyists. The question becomes WHERE are those messages being placed and HOW are they effected by them? Or is it just "noise."

I sold decent Hi-fi gear for decades. We had a speaker line whose market positioning statement included “owning 50% market share of speakers over $10k a pair.” When presenting this to customers, the vast majority were shocked that there were speakers over $10k a pair on the market. After allowing them a few seconds to "recover", I’d inject: "You’d be surprised by the number of speakers out there over $100k a pair." The point here is there are still virgin ears out there who can be introduced (properly) to high performance audio -- with an emphasis on sound-for-the-buck.

As @hilde45  suggested: "We must keep morality contained, or it might take hold."

I think there may be a valid (and, useful) point here that, perhaps, we have a higher purpose than being “audiophiles” in the grand scheme of things. I’m sure, more than once, someone (knowing our obsession with high performance audio) has asked our opinions. We’ve straightened people out more than once. Sometimes avoiding disaster (or divorce?). A helping hand (and, brain) can go a long way in separating “noise” from useful information, fact from fiction. As one professional contributor stated (I’m paraphrasing): “A high resolution audio system can be bought for under $5k.”. I agree with that statement provided the person can keep their ego in check.

I’ve spent quite a bit of time identifying elements that connect us and developed some materials to help illustrate the relative group size vs our level of intimacy. We, in this forum, fall into the “Shared Indulgences” group where we share things we are passionate about (music and the stuff that makes it happen). Above that group is a smaller (and, more intimate group) I refer to as “Purposeful Bonds” where there is some level of higher purpose in what we are doing. As you can see, there is the aspect of migration UP where some may seek a higher, more purposeful (and, yes, more ethical) involvement. Above that level is “Heartstrings” where deep friendships can develop as a result, and we become like family. The group below “us” (speaking purely of involvement in audio, not intellectually or other component) is the “Navigating Complexity” group. So, they are there just like us moving about trying to get things done when, all of sudden, we discover we share an interest. So, up the ladder we go. Or, not?

Here’s the link, if you want to check it out. You’ll need to scroll near the bottom to get to the pyramid.

https://youniteusa.com/connections

It’s also been said that "people spend money on what their attention is on." So, keeping this group and it’s influences on high performance audio helps insure the health of the industry -- and, the hobby.

I agree that the introduction of over-the-top, outrageous (and, often ugly) "statement" pieces accompanied by their various "key talking points" can find their way to more mainstream products. I recall a very weird-looking, very expensive speaker from B&W (Nautilus) that introduced their isolated reverse tear drop pod speaker enclosure technology to reduce the effects of rear wave colouration. This technology found it’s way to their most affordable, entry-level bookshelf speakers.

IMHO, being "over-priced" does not exclude the prospect of commerical success in the marketplace. There are customers out there that will adopt a product for a variety of reasons. Strong performance/value not being one of them. This seems to push back against "common sense" which would imply that an "over-priced" items would be strongly rejected in the marketplace. So, it appears that we may have to redefine or, atleast, redirect the phrase "over-priced" to encompass poor market performance?