@waytoomuchstuff I like the way you laid out those factors and how they need to be considered when people "shoot from the hip," here, about whether a product is "worth it."
You write,
"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."
For me, this statement raises the question, "How many services are critical for a piece of audio gear?" It's clear how complicated this gear can become -- internally, but also with the elaborate casework, etc.
Then I think back to the very simple and massive pleasure I got from listening to, for example, a Quicksilver amp connected with Fritz speakers. Here, the overhead is so minimal compared to many other products, so the bang for buck value here -- sound quality per dollar spent -- seems very very high. Do these sound as good as other products costing 5x the price? Maybe not, but then those products very likely include a bunch of costs that Fritz and QS do not. Whether that's worth it to the buyer is their decision, but they have to realize that they are spending more on people who have nothing to do with the sound quality.
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It is also possible to under price an expensive product. Many audiophiles feel if a product seems to cheap for what it does there must be something wrong and won't buy it. I know that about 20 years ago the now defunct company Melos produced triode tube monoblocks rated at 400 watts(they did more) for $10,000 a pair. The dealers told the manufacturer to put a new thicker front plate on and call it a Mark II version because they could sell more amps at the higher price than the lower one. Melos kept the price the same.
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@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.
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My daughter is a freshman business student. I am a physicist. She called me for help with calculus. She was doing the standard first calculus problems for first and second level integration and differentiation. In physics we do x, v, and a (position, velocity, and acceleration). In business they have a similar set of equations that we used to calculate the price point that maximized revenues. Of course we had to have a demand vs price curve. So in business theory, the price point where revenue will be maximized based on unit sales and price is easy to calculate.
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Follow the yellow brick road
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This industry may be the exception to the rule, but in most sales based industries, if one prices the product too high, the result is simply a no sale situation. I believe this applies to luxury items, but perhaps there are exceptions to this rule…and maybe high end gear falls under that category. Do we believe this?
Certainly it would seem that there are a number of folks in the high end industry that do.
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I think you are answering your own question: are there people out there who will pay more than the company thinks people will pay for its product? As long as diamonds and designer bags sell, men will pay for their own toys stupid sums.
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Solution- stop reading the rags.
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@8th-note Some excellent points. Which is why I asked the OP, when is the price simply too high? Perhaps the answer is at a far higher price point than has been entertained by the industry so far. Question becomes what that price point is..and for what product? This led to my thread about some very pricey cables on the cable forum..and which segues into this thread.
@whart while it is true to say I have not heard the Orion speakers, I doubt many have, I don’t think this is a requirement to have an opinion on my OP. Even if these speakers are as RH reported in his review in The Absolute Sound, with all of the hyperbole being justified, the question can still be asked, and that is…at what price ( to some there may not be a price, although I have a somewhat hard time believing this, given the size and impression that the speaker makes) is a product priced out of the market…and the result will be an absolute failure for the manufacturer and dealer network. For example, if we use the Orion again, the price is set at $133k…which to most folks is not going to be palatable. But, and here’s the thing, what if the same speaker was priced at say ten times this number…does that do the trick and now result in essentially zero sales, or is it twenty times ( hopefully by now you are getting my drift). Or, is it that there is someone out there that just has to have this product..and the price (any price) is irrelevant.
My point is can the ability of the product ( in this case, my example of the Orion, as it had a rave up review) always justify its pricing, regardless of whatever that price is? A matter of value, but is it to some?
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@8th-note no doubt, lots of big spenders out there. I don't see a lot of new hifi stores in my town, but a lot of new record stores and I assume hifi stores will follow.
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@grislybutter Good point - "millionaires" may not be a good measure of the disposable wealth in our society.
I was trying to make a point about the market for ultra high end luxury goods being very deep and I would make the same point by saying that there seems to be a race in the high end audio industry to introduce extremely expensive products. All of the evidence I see indicates that there is no limit to what people will pay for ultra expensive stereo gear.
Is seems that every month a company introduces a new six-figure audio component. There must be a selection of at least 50 speaker models that cost over $100k and dozens of other components that cost over $50k. The anecdotal evidence is that wealthy audiophiles wait in line to buy this stuff. In an interview with Dan D'Agostino he said that he is selling his Relentless $250,000 amplifiers as fast as he can make them. There are other similar anecdotes from manufacturers including Wilson regarding their top end speakers. They sell out their entire production run shortly after the model is announced.
The other piece of evidence is the number of new high end audio stores that have opened in the last decade. They seem to be thriving. To go along with this, the two surviving audio publications seem to be very healthy with each issue getting thicker with more advertising.
So I guess my answer to the original question is to say that boutique audio companies haven't found the upper limit to how much money some people will pay for audio gear. I don't know how many people have $1 million+ in disposable income but there sure seems to be a lot of them.
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@mitch2 that's why some (more practical) definitions exclude the primary residence because you have to live somewhere. Audio-spending-wise, your salary and liquid assets will matter infinitely more than what your house is worth.
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remember too, we are looking at worldwide sales, and Rockport has a significant presence in Asia and elsewhere..,.probably most won't be sold in USA...and again, we are discussing their second most expensive speaker, and many companies make much more expensive ones...so Yeah, how do they sound...seems no one commenting has ever actually heard one.
..
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@daveyf - I don't know how you can judge price/value without listening to the thing. That price point is not even close to the top these days --not justifying high prices but my limited experience with Rockport gear- both table and speakers- was top notch. Look at the competition- Wilson, Magico, YG, all the other big inert boxed dynamics, let alone some of the more esoteric systems from MBL, various new horn manufacturers.
If the question is why anyone would spend X on a piece of gear, I think that's all relative, not only to the person's wealth, but their degree of passion/insanity whatever you want to call it. A lot of the uber high end stuff owned by some of the folks here is well past that mark and while they may have money, they aren't super rich. The folks I've known that fit into the crazy money crowd for the most part aren't hi-fi nuts. They may have a good system, but nothing over the top. And often, have lots of other passions, collecting art, cars, whatever.
I just don't see an argument here- if you told me you heard it and it sucked for 130k dollars, that would be a different story.
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"these people are not millionaires in any sense"
Uh, assuming their houses are mostly paid off, actually they are millionaires, based on the commonly used definition:
a person whose assets are worth one million dollars or more
More interesting information:
As of Apr 12, 2023, the average annual pay for the Millionaire jobs category in the United States is $76,071 a year, or approximately $36.57 an hour.
and,
The nearly 22 million Americans with a net worth of over $1,000,000, account for 8.8% of the country’s adult population and over 39% of millionaires worldwide. Feb 24, 2023
Of course, as you observed, being a millionaire based on assets is different from having a million dollars.
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@8th-note what is a "household worth a million"? The house is worth a million? With the mortgage paid off? Or they have 1 million in assets? Liquid assets? Otherwise it’s worth ZERO as far as disposable income - they can’t buy speakers from their 401K.
I live in a city of 2 million people where a third of the houses are valued over 1 million and these people are not millionaires in any sense. They can’t afford a 10K system let along 2K. They are happy to pay their bills and late fees by the end of the month.
... and so I looked it up.
https://www.census.gov/content/dam/Census/library/publications/2022/demo/p70br-181.pdf
Net worth includes equity in the home. By that definition 4 out 5 of my neighbors are millionaires. Yet they can't afford dental work and new tires on their 15 year old Corolla. Let alone a pair of decent speakers.
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@tomcarr Yes, I've seen the 22 million millionaire figure also. I believe that the 5.3 million represents the number of households worth a $1+ million and 22 million is the total number of people in those households. Since each household would probably have a maximum of 1 ultra expensive stereo system I used the lower number.
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Hard to answer this one; my first response was, "Is it possible NOT to overprice high-end gear?"
A former business associate used to RAISE the prices of stuff that did not sell, and heavens to mercy, he was successful in many items. Some people judge items by their price, so he played on that situation and it worked. Nutty.
After spaking with Bill Johnson in the 1970's when we sold his products, I learned what it took to do what he wanted to do. It was one thing to build an amp for a few friends (See McIntosh beginnings) and another to build a product to sell worldwide. What I learned is that aiming for perfection is expensive. One example he gave me: He spec'd the top 10% of an item from a manufacturer. When 100 came in, he had to measure each one (a PERSON on the payroll does this). He told me that even though he spec'd top 10%, he RETURNED 20+% of each order since they did not meet his high standards.
SO, if you are building a car by hand or an audio piece spec'd a certain way, it costs more than it would if you were building mass-produced stuff.
As for the silly prices I see today on some things, I always wonder how they could possibly be any better than, for example, in speakers, Magnepan. I realize their best stuff ain't cheap, but I have no idea what could be more accurate no matter how much money you spend.
Finally, since YOUR ROOM is the most important part of ANY system, it seems odd that speakers, for example, could cost that much (regardless of the cost of making them) since even Maggies are not good for EVERY room.
As almost everyone on here preaches, you have to take the gear HOME to see if it is good for YOUR ROOM, regardless of the price.
Cheers!
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As an example, Samsung, like most manufacturers, does not price televisions based on their internal parts, manufacturing, marketing, and shipping costs. Many items, and particularly luxury items, are priced (at least in part) based on what the market will bear. This should not come as a shock to this group given that audiophiles are being sold fuses for hundreds to thousands of dollars, and stuff like this ground-breaking game-changer for many thousands of dollars.
BTW, it appears Tweak Geek has taken down their QSA products.
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Overpricing can occurs at every price point.
There are multiple ways to price products and when pricing 'premium' products in a portfolio with a "good/better/best" stratification some manufacturers look to recoup R&D costs as soon as possible.
The true value of something is better measured by actual sales. Products where there's no sales indicate the market doesn't believe its worth it. I also believe most of the folks in this forum have limited discretionary income and some folks concentrate that on 1 or 2 hobbies and others may have spread the funds over more activites.
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No. It's completely impossible. Never happens.
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I’ve read of two examples from completely separate sources that were so similar they must be indicative.
A speaker manufacturer and an amplifier manufacturer both told virtually an identical story:
‘The ‘bean counters’ looked over the business and said, ‘You’re selling this for $3000.00 dollars? Price it at 10 (thousand dollars.)’
And then there was a story I read from a salesman about customers who are their own worst enemy, who think high price means best quality:
‘People would ask, ‘What’s the best pair of speakers you have? And I’d show them the $3000 pair, the best I had. Then, they’d see the $8000 pair and lose interest in the ones I was showing them. What are these?, they’d ask; tell me about these (the $8K pair.)
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and btw I wonder if the Lamborghini comparison is appropriate for most audio products. Lamborghini - whoever owns it - does not claim that their car is x times better than other cars. It's VW plastic in large part. But you can drive it to the mall to impress people, which is where the price is justified. Audio does not have that feature.
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I would comment but it would get removed - as before
making fun of the wealthy and their justification of why they *need* and *deserve* to buy x and y.
Reading this forum is an amazing social experiment about how delusional rich people are.
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If they charge enough and sell just 1 that might be all they need for easy money and a big profit. Some might call it a scam. But It’s attempted here all the time (sell something for absolute top dollar that can be finagled). It’s something agon is designed to do ie facilitate sales of one-off hyped up items only here on the “high end” site….the Ultimate hifi boutique shop. Complete with free forum for marketing efforts. See the occasional ad for a 10k power cord from a total unknown, for example. High end means more expensive and elaborate. Things few others are likely to own or want. Duh! Get a clue hombre! All else is subjective. So nope, no price is too high. The sky is the limit. All you may need is a buyer. So just factor in expense of hiring a few good shills perhaps. You know, the usual story just with expensive hifi things. Have at it!
Then you have the reputable vendors who have to be concerned about maintaining a good reputation. Different story !
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@8th-note "There are 5.3 million millionaires and 770 billionaires living in the US. The market for ultra luxury goods is bigger than you think."
I thought 5.3 million seemed like a low number so I did some checking. You're correct, depending on the source. Other sources doing a Google search listed that number around 22 million.
Regardless, your statement that the market for ultra luxury goods is bigger than you think is certainly correct!
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Part of my OP came from a recent discussion that I had with a very very well heeled friend who can easily afford anything in high end audio. To this gent, a multi million dollar system is no strain on the pocketbook. What interested me was his comment that he will not spend any money on a product that he sees as having a minimum value to cost ratio. We discussed several speakers ( not Rockport’s, and certainly not the Orion), but others that we all know and would respect, but few here can acquire. My friend commented that one of the reasons he is able to actually afford all of these products is also because he has the discriminatory ability to not get ’taken’, as he put it. Just to add another perspective to the narrative here.
Don’t get me wrong, this gent has a system that most would envy, but it has been put together with some considerable thought, and he always bought used or at a considerable discount, as far as I know.
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In discussions with a retailer I respect, and talking about Focal speakers, he told be the mark-up was 100% at every step. Focal Sopra 2 cost $6500 to build. His cost from Focal was $13,000. His list price (CDN) was $26,000. Expected discount off list was 20% leaving him with a 30% margin on the sale. I have no reason to believe this formula does not prevail regardless of the cost. Bottom line, the higher you climb up the MSRP, the bigger the profits are built in at every step. It's just a fact of life and no one is forcing any of us to buy anything we don't want.
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I have always wondered what some of the really high end manufacturers expectations are w/ the really pricey stuff in terms of actual number of units sold.
I suspect some of these products are intended to create or maintain a manufacturer's reputation so they can sell their more reasonably priced offerings & not really intended to sell well themselves. The hope for many of us is that the technology & concepts they develop in creating these outstanding products is that some it can trickle down to more reasonably priced things & more people can benefit from them.
As for the actual price of things, it's all a matter of point of view. I suspect the general public would think that spending even $5K on a pair of loudspeakers is crazy & would not ever consider it but to many here on this forum, that's basically the bare bones starting point for anything decent. The same goes for cars, bicycles, cameras whatever. For some, part of the fun is trying to get close to the sound quality of a top system for a lot less $ using our experience w/ tweeking, set up, room acoustics & used gear as well.
If you work hard for your money, you deserve to spend it anyway you enjoy. If that means donating to charities or buying a $100K sound system, to each their own.
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@mihorn The only Hi-end audio company is the Wavetouch audio. Everything else are Hi-Fi. They all are simply unlistenable to me. I watched few 2023 Axpona videos and my ears are in serious pain. My ears are much better after I listen WTPC video for few minutes. Alex/Wavetouch”
ohh my that made me laugh after a rough night !! 😃😃😃😃😃
WT audio sounds the most natural and closest to the original music than any other audio system. There is a big gap between WT audio sound and 2nd best audio sound. WT is just a different league from every other sound systems. Until somebody makes the better sound, only Hi-end audio in the world is WT audio. Alex/Wavetouch audio
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@russ69 Thanks for pushing me!
@8th-note
If you have $50 million in Microsoft stock spending 7 figures for a stereo is reasonable in your world. What else are you going to do with your money? Give it to the homeless?
Well-placed irony. That said, one thing which is true about the wealthy, and non-wealthy to a large degree, is that happiness is largely measure in relative social position, not material riches. People buy eye candy and expensive things in large part to position themselves with others in their stratum. Part of the audio market is serving that need, while also throwing in a lot of nice audio parts and research in the process.
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Thorstein Veblen coined the concepts of 'conspicuous consumption'.
Look him up. His theories read like a copy of Absolute Sound.
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Like beauty, art, and a good movie, isn’t overpricing in the eye if the beholder?
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Obviously, it is possible. Even the most expensive items are made of components that cost relatively little (thank goodness there is little place for precious metals and gemstones in hi-fi!) Does the manufacturer add enough design know-how, or design beauty to justify the exorbitant price? Looked at objectively, not often. Evidently it makes a difference as to whether the price is a big deal to you, or a trivial throwaway. But it makes no difference to the sound, does it?
I guess I'm saying we should only praise or recommend components on their sound, not on their appearance or their price. An unobjectionable principle. What a shame it so rarely seems to apply.
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@hilde45 Thanks for the well reasoned response.
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A few points on the OP;
There are 5.3 million millionaires and 770 billionaires living in the US. The market for ultra luxury goods is bigger than you think.
We are in the situation now that extremely high prices for products are a feature not a bug. In other words, exclusivity is a selling point. If you have $50 million in Microsoft stock spending 7 figures for a stereo is reasonable in your world. What else are you going to do with your money? Give it to the homeless?
To reinforce a point made above, volume and mass production is critical in the pricing of any complex product. I don't think anyone would argue that a Toyota Venza is magnitudes more costly to design and manufacture than a Rockport Orion yet the Venza sells for less than half the price. If Rockport could sell hundreds of thousands of Orions they would be a lot cheaper.
A $100k speaker or amp is not just an appliance, it is a work of art with a story behind it. It has the advantage of reproducing musical works of art as its purpose. People pay over $100k for paintings all the time. Why not buy a nice stereo?
I've been to a few audio shows and it's thrilling to hear some of these ultra expensive systems even though I will never own one. The sound they achieve gives me a target to shoot for and has allowed me to enjoy this hobby even more. I've been able to put together an affordable system that was state of the art 25 years ago and it holds up to the modern ultra expensive systems surprisingly well. I'm glad the ultra expensive stuff is out there and I hope that it brings joy to its owners.
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It's also possible for a manufacturer to under price a product. If someone were to manufacture a power amplifier and sell it for a profit at $1,500 no audiophile putting together an upscale system would buy it, regardless of how it sounds. Too much cognitive dissonance to match that with a $20k plus loudspeaker. If you doubt me, consider how most audiophiles view powered loudspeakers.
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There are no laws for pricing products. Manufacturers must establish what they think they need to run the business, and then what kind of profit the product might drive. Do these products have some type of exclusive patented technology? Maybe sometimes? Hype? Bet your life on it. There is always a market for products marketed toward super high-end customers who have so much money that the price is irrelevant and those same customers are the least likely to be customers who do a lot of technical research or get too deep into learning the nuances of a hobby such as audio. It might be a hard pill to swallow but in many cases all that matters to this demographic is that they have something extremely rare and expensive, no matter what the thing in question might be, and that they can show it off simply for the fact that it costs an obscene amount of money. Price is not always a great measure of performance or quality, especially when you leave the reasonable bounds of high-end-high-quality to the level of ridiculous-price-no-added-performance.
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IMHO, once you have established what the law of diminishing returns is on a piece of audio equipment, any money spent above that price becomes questionable.
Of course, I am basing this on common sense. For instance, does a $200,000 audio system sound ten times better than a $20,000 system? For that matter, does a $20,000 system sound 10 times better than a $2000 system?
It's all relative to how much money you have to spend and how good your hearing is.
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@daveyf
Do a search one million dollar speakers, there’s a bunch of them! Over priced? Well they are for me, but…
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Someone is buying a $133k speaker while someone else is living in a cardboard box.
And some are eating fillet mignon and others are eating a hot dog. So what does that have to do with the topic?
@russ49 -- It has to do with one construal of the OP’s question, as to whether the speakers are overpriced. Clearly, one reaction to the price is moral revulsion; we
read this all the time on Audiogon -- "How dare they ask that much for X?" We all understand that there are no *laws* against pricing things as they wish, so there are a couple other ways to explain why this question gets asked.
(a) Is the price justified by the economic inputs (parts, labor, research, etc.)? Here the answer is hard to gauge, because every company adds in their "margin" and it’s hard to question what kind of margin is "correct."
(b) Is the price justified by the wider social conditions? Here the answer is often "no," either because of what people themselves can afford or what they see around them (hence the cardboard box comment). Many people get angry at this question because it brings up issues of injustice and how dare we talk about that. This is supposed to be a happy occasion!
(c) Is the price creating a distortion in the audio market? Here, people divide up. Some see the pricing as part of a trend which is distorting the hobby into an ultra rich guy thing. That makes regular hobbyists feel priced out. Others look to the opportunity to buy this ultra-gear at used prices or hope that there is trickle-down from the technology (the way the Apollo program lead to all kinds of innovation.)
In short, the OP’s question is a kind of Rorschach test, and this leads to a fun but chaotic, cross-purposes thread.
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It's like asking is there any greed in man. Answer yes!
I have the 22K Aurender W22SE, I can imagine the markup is less than jewelry on high end audio, but I expect Aurender took 10K profit from the 22k. Worth it? Absolutely yes! Greedy? a little. But also good business, it's a fine line between greed and good business, few walk it.
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One definition of 'overpricing' is that in the revenue (quantity x price) drops.
This is the case in an 'efficient' market with full 'price elasticity' (the cheaper you make it the more you sell) with full working supply and demand balance.
None of these 'laws' apply to the nutty 'high end audio' market. It may actually be the opposite. In this case: they may sell MORE at $133k than at $20k (the full manufacturing cost (including overhead, development, material, labor, etc may be $5k for such a speaker) since 'nutty price' is actually a sales attribute that buyers crave and desire in the realm where a negative cost/benefit ratio starts.
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Get what you can afford...or can stretch for. Visit a handful of dealers or at least get into communication with a few. Explain your situation and how many bucks you can part with. Tell 'em what you listen to, i.e., what you like. Only play Led Zep? Only hip-hop? Only Miles Davis? Only Maria Callas mono recordings? Tell 'em how much space you got for your high-fi set-up, and how many dB's you like to bathe in. To be sure, you don't need to ignore magazine rave reviews. But a good dealer is a wonderful thing.
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