Krell, MBL, Levinson, et al... What if 50% off?

I guess I was lucky to have a dealer located near me. When I heard something really amazingly good, I waited until I could afford it - or waited until a more well-off customer no longer wanted the component and I bought it then. I stuck to my saving's goals in the meanwhile since I still had music. My only long-term complaint was having to send things back for repairs, since I thought solidly built gear should have been more reliable. One piece actually had to be re-designed from scratch to work properly (the power supply) even though it sounded exceptional. Oh also, it wobbled on a flat surface. Maybe I was being too picky....

In order to stay in business a manufacturer has to multiply parts costs 5 to 6 times to cover engineering, labor, energy, advertising, etc. There is no doubt many high end products are over engineered but we mostly want them that way. Some CEOs make the mistake of spending above their means for flashy cars and the like.

Old new there @alb59 

@8th-note + 1

Checking the news, "German high-end audio manufacturer MBL Akustikgeräte has filed for bankruptcy."

I don't agree with the basic premise of your question. There is no evidence that high end audio is dying. Read the reports of the Munich or Chicago shows and tell me that high end is not healthy. There are new companies and ultra expensive components being introduced almost weekly. In fact, high end audio is booming. High end retailers are opening new stores and the prices of top level gear keep increasing. For each company that is closing, three more pop up to take their place.

It wouldn't matter much if Krell or MBL halved the prices of their gear. I have lusted after the MBL 101 E Mk II speakers for several years but if they were $45k instead of $90k I wouldn't buy them. If they were $20k I would still audition several alternatives before spending the money. Each manufacturer is aiming for a price niche that they feel gives them the best position.

There is a well reported story about VPI turntables. The owner designed a new direct drive turntable and priced it around $35k. His Japanese distributor told him that it was way too cheap and that if he doubled the price he would sell more of them. Customers at the ultra high end have unlimited funds to spend and they often would prefer to spend huge sums because they connect price with quality and exclusivity.

Clarisys introduced a $785,000 multi unit speaker system at Munich which was reported to be the best sound of the show. While the report didn't speculate on sales projections it is likely that they have a waiting list for these speakers. When D'Agostino introduced the Relentless amplifer he couldn't build them fast enough to meet demand.

Lastly, this is the golden age of affordable audio. Peruse a Music Direct catalogue and see how much incredibly awesome gear is available at reasonable prices. Next, go to Audiogon or USAM and see how much late model amazing gear is available. Everything I see indicates that this industry is very healthy.

jikson26

I cannot reply to private emails but am happy to share my dealer's name.  It is Len Wallis Audio in Sydney, so probably won't be much use if you are a continent away!  I started buying from Len when I lived in Melbourne which is about 10 hours away by car.  For some strange reason, down under we seem to measure distance in units of time.

Another high-end dealer in Sydney is Audio Connections.

The comments about necessity are misplaced. 

The OP’s question relates to the luxury goods market. 

Marketing 101 question: What category of goods does not adjust pricing in a recession?  

@yesiam_a_pirate 

When prodded he added that most customers are buying the dealer experience and support and that's how he gets his markup. Interesting. 

Not that interesting at all. Or new. They are called Value Added Resellers (VARs).

The ones that add little to no value die.

@richardbrand 

Boy oh boy do I wish there was a dealer like that anywhere near me!

My Krell dealer used to let me buy Krell items at a decent discount, and return them a month or two later if I did not get value from them, no penalty.  When the amp blew some capacitors. the dealer's technicians fixed it in his workshop.  But that dealer is pretty special, rated in the top five worldwide.

@jijoh123 - if you live in a city with good public transportation, cars are not a necessity. I've lived quite happily without one since 1973. 

Young folks are consuming audio in a very different way than their parents, and grandparents, do. I do not see a broad acceptance of component audio coming back into vogue. It will remain a diminishing niche market.

And IMHO ARC is no longer a proxy for the high-end, they have been bounced around by owners, on again, off again. Many perceive them as damaged goods at this point, rightly or wrongly.

No, it's not just about price. It's about priorties IMHO. As @jijoh123 points out there's lots of other things competing for one's financial attention. Necessities...

Additionally younger listeners have smaller spaces and are more mobile than older generations. Personal music appliances (headphones, digital players) are more and more popular. Smaller homes don't support big floor standers. And there's the fact that younger audiences prefer to enjoy experiences (travel, camping, etc) than to have "stuff". We've had younger dinner guests and they marvel at my modest rig.

Happy listening.

Unfortunately, these days, price does matter to the vast majority of consumers, especially when it comes to non necessities. Cars are a necessity, homes are a necessity,  food is a necessity,  but audio, as much as I/we love it, is not. Treasonous I know, but a reality today. 

I your buying because of price only?

That does not make sense unless you know those components will work in your system to your satisfaction.  

Here's an interesting fact:  Many ultra high priced components won't sell for 50% of retail while still new in box.  I have a close relationship with my local dealer who told me his ARC product line which he pays 60% of MSRP for will only sell online direct for 40% of MSRP while in unopened boxes!  Imagine that- the dealer buys things that are worth less than the wholesale that they pay for them!  When prodded he added that most customers are buying the dealer experience and support and that's how he gets his markup. Interesting. 

My Krell dealer used to let me buy Krell items at a decent discount, and return them a month or two later if I did not get value from them, no penalty.  When the amp blew some capacitors. the dealer's technicians fixed it in his workshop.  But that dealer is pretty special, rated in the top five worldwide.

These days he still operates the same expensive listening rooms, but his bread and butter comes from home theatre.

The market is highly competitive.  Those manufacturers best placed to survive, in my opinion, have volume mass-market offerings plus flagship high-end products.  Sony and KEF spring to my mind.

Price is rarely the most important factor in any buying decision.  Just look at the variety of cars people buy.

I should add that this might require a direct to consumer model - the dealer network costs these firms 40-50% of their prospective margin...  Would you buy Krell equipment from the manufacturer directly, if still supported and installed, if you could only listen at hifi shows, or a handful of regaional listening studios?