Law Of Diminishing Returns?

The law of diminishing returns was practically CREATED for the audio folks.

acerbic, smart ass comments aside, i would remind everyone that value and ’returns’ is seen and held in the eye of the beholder

diminishing returns does not mean lack of positive returns, that last few percent improvement may well be worth it for those who choose to pay for it - this applies for many many fine things in life, not just hifi

is a wagyu ribeye 4x better than a choice ribeye, it is 4x the cost, and both fill your tummy, right? ... well if you can afford it, want and appreciate the difference in the pleasure of enjoying the wagyu, then it is well worth it

is an opus one red 10x better than your supermarket yellow tail cab?

is a first class transcontinental flight worth 20x the cost of an economy seat on the same plane?

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to answer the op’s query about where a sweet spot might be in putting together a very good sounding system in a typical listening room, i would say US$5-10 grand if one purchased used gear smartly

The "value" curve may not be linear, but neither is our perception of pleasure. Many try to approach 2ch system building like they’re choosing car insurance. Not me. I get too excited by the nuances of different gear, and what unique sonic perspectives they provide, compounded by their complex interactions with other components.

A few of my most expensive purchases have busted the "pleasure" curve, thereby rendering arbitrary percentages and diminishing returns meaningless. They also tend to stick around a lot longer here than most budget "giant killer" components.

+1 @jjss49 

Perhaps, OP, your rich buddy got rich because he mainly likes spending money, not seeking quality.

I can take a swag at it. A good $12,000 loudspeaker system, a good integrated and decent music player will get you pretty far down the road. Perfect placement, a good room, and picking the right gear, is a darn good start. So just under 20K. 

For me, diminishing returns has as much to do with my check book balance as anything. If there is a surplus in the checkbook it easy for me to fanaticize about the potential aural rewards of getting  a more expensive piece of equipment. If, after acquisition, I can't hear the increase/improvement of sound quality and I have correctly chosen the component,  I still have the bragging rights of ownership and can fib about the improvement it brought. Impress the hell out of the poor folks! :-)

For me, diminishing returns has as much to do with my check book balance as anything.

absolutely... well said, and should never be forgotten

all things hi end hifi are luxuries in life... take care of all the basics and essentials first -- family, kids, home, education, personal and professional development, security, meet all obligations for those whom depend on us... happiness and success in life is about careful prioritization

@mulveling  Some beautiful equipment  has cycled through your virtual system. Interesting the Tannoy has remained while so much else has changed.  Strong endorsement for those speakers.

@newbee I bet not many are honest enough to admit there's no difference in gear when there is none.

For many, this whole audio thing is like living Zeno's paradox

My opinion - you need to spend $8K-$10K retail (maybe half that with smart used purchases) to get a decent sounding system.

Twice that can achieve an excellent sounding system in a decent room, but still with some compromises. 

I wouldn't go so far as to say this is 80% of the best available though. A high end system ($50K+ IMO) that is set up well in a good (well treated) room can sound very compelling and systems > $200K even more so. 

This all assumes spending the money wisely. It's easy to spend a lot of money and get mediocre sound.

There are obviously diminishing returns though. The step from $10K to $20K is more significant than the step from $20K to $40K, which again is more (probably much more) significant than the step to $80K. 

It is entirely individual dependent. By definition an audiophile has an incredibly steep reward curve. Like I had a friend that was a marathon runner… endorphins would flood his system after running about five minutes… me, a tiny squirt after four hours of heavy exercise long after I wanted to collapse and die. An audiophile gets tremendous happiness from listening to well reproduced music.

It also depends on your income level. An audiophile will always choose a very high percentage of disposable income to audio… typically levels most people consider crazy. “Audio Dollars” (as my partner calls it)… $1,000 is equivalent to $10 normal dollars. I balk at spending on Charmin TP… but. $2,000 interconnect… a screaming deal… no hesitation.

To an audiophile the value of experiencing exquisite sound quality is of incredible value.

Old audiophiles like myself and many here have developed listening skill far beyond your average listener. When we listen, we hear so much more than just punch and details. This comes with experience and passion over long periods of time.

"The law of diminishing returns was practically CREATED for the audio folks."

Plus 1 for secretguy.  In 2007 I purchased the Focal 1027 Electra speakers with a berrilyium (sp?) tweeter for $5,000.  They served me well including my new home with hardwood floors.  Thinking  that the technology must have improved tremendously since then, I purchased the Focal Sopra 2's in 2022 for $19K  after I demoed them in the store. I thought the Kanta's were a lateral move so I stepped up to the Sopra's which struck me as more open. When I got them home, they sounded perceptively better than the Electras but only slightly so. Was the slight improvement worth 19K in 2022 vs the Electras in 2000 for 5K?  Nice to have but an expensive Lesson One

In the 1990's I purchased Tannoy standmount speakers - the D-100's.  They sounded damn good. I just purchased on Audiogon a used pair of Dynaudio Special Forty speakers for $2k..  I A-B'd them with the Tannoys.  While the Dunaudio speakers sound very good, the old Tannoys sounded more "open" to my ears. Lesson Two learned.  One almost needs a 12-step program  to break this cycle.

If you hav3 the $$ there are audio systems that are substantially better say between. $50k and a $100 k. Rule of thumb on average ,  having owned a Audio store I know very well what’s under the hood and quality.

25% of a product including packaging is what goes into most products between R&D  packaging and markup, this is where $$ comes into play ,the parts quality is a substantial magnitude of better quality and that’s where the sonics become much more refined. Detailed and realism , knowing and matching system electronics for system synergies is equally important ,that’s why you see likeDCS  digital creating statement $100 k digital setups if you can afford it go for it .I personally used to own $100 k + retail systems getting 50%+ off why not , I am now semi retired and I feel for $50k minus discounts is plenty good enough. As a Audiophile you are never done purchasing .

There is a guy on here that likes tweaks and said he spent maybe 500 bucks on entire system and it sounds great, at least to him. I don't remember his handle....anyhow, it goes to show it is all relative...

The law of diminishing returns is absolutely real. But for many audiophiles there is a kind of reverse curve. We become more and mor perceptive of seemingly small changes. And if that's true of you then the small changes become more and more significant and if you know they are there you miss them. So in a way small changes become more and more important and therefore valuable dollar wise.

Whenever I see the use of the phrase, the law of diminishing returns, it's usually in a review and meant to assuage the reader that he need not buy the item under review as it's really not much  better than what he already has or is willing to spend.

Apparently, it doesn't work.

All the best,
Nonoise

@newbee +1

@secretguy +1

+1  newbee and the support provided by jjss49.. 

It is a moving point, based on discretionary income.

I'll never be pulled into the diminished returns tango. Refurbished classic vintage  gear gets me close. There is no need to spend a fortune to get great music.. 

@ghdprentice +1 An entirely personal thing. The original post is a perfect case in point. No audible difference between the two mentioned systems?!?! No way! Of course there is, and that difference may be very significant to someone else. No disrespect intended, but we are not always as discerning as we think we are. 

@nonoise post rings so true. I do not have the resources to get to the point of DR, so when I make an investment, it usually is a net, net gain for me. Meaning it is well thought out and researched.

Whenever I see the use of the phrase, the law of diminishing returns, it’s usually in a review and meant to assuage the reader that he need not buy the item under review as it’s really not much better than what he already has or is willing to spend.

Apparently, it doesn’t work.

"is a wagyu ribeye 4x better than a choice ribeye"?

Yes.

Audio equipment?...To me...not so much after you reach a certain level...

Don’t ever buy a new car, its value drops 30% the second you drive it off the lot! Same thing with hifi, but if you want new and exciting with a full warranty, you’ll buy new. 

Certainly buy runout gear, examples Focal Clear phones $2200, bought for $800, Audio Physic Speakers $5700 bought for $2900, Cayin tube amp $3600 bought for $1900 there are plenty out there. I rarely pay more than 60% for anything. 

For someone who's never had anything but a clock radio or boom box, an Acoustimass 5 system would probably sound sublime. For someone who is well off, a $30,000 amp may be the starting point. In other words, there is no magic dollar level where the sound improves in a largely noticeable manner. 

Over the years, I have replaced gear with more expensive gear a number of times and have always gotten a rewarding improvement in sound quality.  I always keep the gear being replaced until I'm sure the new gear is a worthwhile upgrade. I'd bet I could keep on doing this all the way into top of the line gear. 

We really shouldn't worry about what other people are spending.  You buy what you want and let others buy what they want.  It works out well that way.

More of a law of incremental improvement.

https://youtu.be/_8wc25tnbH8

posted this in another thread as well, but this is also quite relevant to this discussion

pointed, on target, well articulated, imo

At a certain point it is not about the cost of the electronic circuitry or materials used anymore, it's about making a luxury statement similar to why someone would buy an overly expensive wrist watch.

As stated, aesthetics can play a roll for many of us but where sound quality is concerned my room has always dictated what gear worked best not the cost. That said, the choices you make in your acquisitions matter more than the price. I used generous upgrade policies and a few used items to get to a place I otherwise could not afford. Money is great but common sense and patience can really deliver.

At the lower end of decent hifi there most certainly is a law of diminishing returns in my opinion. To get a decent sounding set of speakers you need to pay around 1k GBP second hand and probably half that per each other component. Above that you experience relatively minor sonic improvements and below that it can be the opposite and major depending on component match/mismatch. I've owned a lot of low end hifi over the years due to being skint for the most part, but I would never spend 50k on a sound system unless I was absolutely filthy rich and money no object.

Currently I have a modest set up of 2 x Roksan M2 power amps with a rotel rc1550 pre amp, arcam cd21(now fixed!), rotel rcd 12, ifi audio zen one, monitor audio rs8's, monitor audio silver rx2's, Sony mds jb980(I hear you laughing!), 2 x technics 1200's with ortofon club 2 carts, 2 x denon sc6000's with x1850 mixer. Wharfedale sub(cant remember the model). This is my downstairs listening room.

Upstairs I have a rotel ra1520 integrated amp with another ifi zen one, bowers n wilkins 685 s2 speakers, arcam cd21, bowers n wilkins asw600 sub. Plus focal alpha 80 studio monitors with a motu m4 soundcard and rme baby face pro fs. 

With the exception of the sc6000's none of this equipment cost more than 1k per component so you can achieve a good level of sound reproduction without a huge price tag. OK if you put all this together it would amount to a lot of money but obviously a lot of this was bought second hand over a number of years.

I like to think I've built a great sounding system on a budget and there is probably only the minidisc player that isn't really hifi, although it's still good for what it is-it was bought for recording mixes before computer audio technology took over the mantle so to speak.

What I will say is coming from an electronic audio background a prefer a more clinical sound which is possibly the opposite to most hifi buffs but each to their own eh. I think the monitor audio and bowers and wilkins speakers do a fine job of taming the sharp end and smoothing out the overall presentation. 

Recently, I had the opportunity to have wagyu beef.  And, yes, it's delicious.

Now....having it everyday?

No.

Not that I wouldn't enjoy it, but it potentially ruin the enjoyment of nearly anything beneath its' qualities....

...and I've no need to impress or distress anyone with my preferences.

Enjoy the weekend...

And April Fools' 

;)

If the term satisfies then have it. Otherwise continue to seek improvement. After a point even the small ones are more costly but we already know that. 

Wisdom brings balance.

I've been saying that for years and many posts here seem to agree wiht me that starting with some really good speakers and some basically competent components added in with 'The Law of Diminishing Returns' as stated here, yo can enjoy the best part of best music. I would never want to deprive someone from spending a $100k + for a system, but would not desire a (#&$*% to talk trash about MY system. and I do continue to improve my system as time goes by and opportunities present themself.

Around $50k for a full range single source system - source, amplification, speakers and cables. For these purposes full range covers dynamics and bandwidth capable of generating adequate spl's in a medium/large room.

It's true in any category of goods & services.   The 80/20 rule definitely applies here.   80% of the improvement comes with the first 20% spent.

@audioguy85 

That was @magister who said that. I miss his posts a lot. 

I used to own a Porsche and a 1936 Ford (at the same time).  Drove them on nice weekends.  Not daily drivers.

I have no right to criticize what someone spends on audio.  An old Chevette would have been as useful.

My diminishing returns are about there for me.  My audio gear is a joke to most folks here, but that's OK.  I spent my career around a lot of loud, spinning, machinery.  I choose to not spend more than I can hear.

I consider myself a stereo enthusiast vs being an audiophile. The main difference? Budget. I've been in this hobby since the early 70's and have had many different components over the years. I had to sell my prized stereo during a contentious divorce (in the 90's) and never bought to that level again. 

I now find that I like used and carefully researched mid-fi equipment. My personal rule of thumb is never to pay over $1K for any single piece of equipment. Cable prices are based on no more than 10% of the price of the equipment being hooked to them. These are arbitrary numbers based on what I am willing to invest in audio at this point in my life, the quality of my 68 year old hearing and my audio compromised listening space. 

I did manage to buy one Stereophile Class B rated component, for my humble system. 

I hit the law of diminishing returns within every upgrade! +1 @secretguy

Interesting post. Thinking about my own Gear Journey, I’ve only bought two components new- a turntable to go with the used Fisher integrated bought in 1970, and a Hsu subwoofer bought in the mid 2000s. My systems have improved incrementally over time and IMO always punched above their weight in terms of cost. New purchases followed an increase in listening skills, discernment, knowledge of acoustics, and opportunity (finding a pair of JBL 4430s in a pawn shop, for instance).

Am close to the end of my gear journey now, listening to speakers I couldn’t even think about buying new and a lightly-used, great sounding preamp. Total between the two last year was just under $12k. That is magnitudes more than I’ve spent on my stereo at one time … ever. 

Agreed on the 80/20 rule and think the cost-quality curve is exponential. There’s probably better sound out there. But I get stuck listening to music for hours now. I’d rather listen to music than watch TV or movies. 

Finding a "happy medium" is hard but worth the effort. The old saying to "never buy an entry level or top of the line" item is good advice. Be patient, enjoy the process and hopefully you'll achieve an end game audio system faster than many of us did.

I spent a lot in the past 2 years but the goal was my "End Game" system. My biggest purchase was my amp. I revamped my system in reverse. I bought speakers that will serve me well for a while , but still knowing they probably would not be my last.

I spent on my amp and am having a preamp built by the same manufacturer to compliment it. Those two pieces will definitely be end game.

At some point I will upgrade my speakers , the electronics ( amp & pre) will not be outclassed by a "better " speaker .

Another element of the audio journey which both OP and respondents have left out is the pleasure of the journey itself. As with travel, often the voyage is as important as the destination. With every equipment upgrade, and slow adoption of every new technology, I have found the process of adaptation and expansion just simply a Fun Activity. When upgrading components I focus on ONE at a time (including cables) so all other variables are kept constant. Is the $5k amp 2x better than the $2500 amp? Not even close. But is it noticeably better? Sure. I find the degree of improvement best tested by moving backward: once the ears have embraced the $5k amp, backshift to the $2500 amp now in your secondary system. The downgrade is more noticeable than the upgrade. And there is great enjoyment in Learning Experiences such as this one.

+1 for @russ69

@curiousjim 

Don’t ever buy a new car, its value drops 30% the second you drive it off the lot! Same thing with hifi, but if you want new and exciting with a full warranty, you’ll buy new. 

I always enjoyed buying a new auto from a dealership.  I enjoyed the testing of different brands and models, discussing the variations,  finding one that fit my needs and desires that was within my budget, closing the deal, and leaving with my brand new status symbol.  A few months later this euphoria was tempered by the high monthly payments and, after a while, the discomfort caused by knowing how long it would take for me to be out of debt.  This cycle repeated itself for about 30 years.  
I finally realized that I could purchase autos that originally cost more than I could ever afford, eg. Lexus and Mercedes Benz, for half or more off of MRSP.  I now have both of those brands in my garage each purchased by a check which eliminated the dreaded monthly payments.
The first paragraph above also describes my audio journey.  Audio retail stores, shows, videos, and magazines fulfill my exploratory needs. Purchasing everything used, except speakers, satisfies my audio desires.  My enjoyment level stays high.  My monetary discomfort never surfaces.  A perfect balance for me.

Over and Over and Over again Money has nothing to do with sound quality.

Why do you people keep positing this?

It is design and parts quality that make the sound.

I can modify any audio component to be as good as or better than another audio component at any price point.  Been doing this for 20 plus year now.  Most, if not all audio components are built to a price point so they are mostly all compromised to begin with.

This is easy to understand - pop the lid - look at the parts inside a $5K unit and compare to a $50K unit.  Not much of a difference in general terms.

Happy Listening.