Law Of Diminishing Returns?

I'm a big fan of 80/20 rule and 20% improvement of something is pretty good.

I believe it's important to appreciate the hear and now.

Some people are ecstatic with a Bose lantern and good for them.

What you can afford.  At the end it plays music.  People like to catergorize EQ as hifi, midfi, lowfi.  

I hear you @coltrane1 I find myself using the the demo Innous Zenith I bought on the cheap more and more. 

@jeffstrick , yes extremely content. In fact I’m done. Now, if I can only clean and play vinyl as often as I’d like to!

@coltrane1 love your post, also the key is you are content (for now?) with your system. Great job!

The cost/value curve starts turning sharply upward at a point slightly greater than the amount that I’ve spent on my own audio system. 😏😆

theaudioatticvinylsundays.com

I have an excellent sounding system. I don’t have $20k invested. Most would believe that I must have more invested. Here it is

Martin Logan Spire loudspeakers-used for $3300

Primaluna Prologue 6 tube monoblocks-used for $1800

Dennis Had Inspire LP3.1 preamplifier - used $1150

PSAudio PerfectWave dac-new $1600

Marantz TT15S1 turntable- new $1200

Benz Micro MC cartridge- used $500

PSAudio phono stage- used $450

Threshold T3i preamplifier-used $1200

Pass ACM monoblocks 25 watts Class A amplifiers -used $600

CambridgeAudio CXC transport-new $600

Nordost Purple Flare speaker cables 3Meter-used $500

Total $12,450

It’s a very decent sounding system. And I didn’t need to spend an additional $2k for a SS preamplifier and SS mono’s to gain the joy of the tube mono’s. So a very conservative system that plays way above its weight. But of course, buying used definitely helps. Instead of spending $9k for new speakers I purchased the identical speakers used @ $3300. Same for the tube mono’s at half off. 
 

So basically $10k for an entire system. But it helps buying the speakers locally as I did to avoid shipping costs and avoiding shipping damage. So yeah, it can be done by a normal Joe Blow working stiff. 

If you can’t hear the difference between two totally different set ups...you don’t really have a discerning ear...

Buy and assemble what you love and can afford, hell with diminishing returns. Some people will base the change in equipment for the simple reason they love the way a pair of Sonus Faber speaker looks and not necessarily because it sounded better than their previous speaker. Someone may switch from solid state to tubes again for the same reason. Others may change because the new piece of equipment has more features they require. The concept of diminishing returns does not matter if what you changed to brings you more enjoyment and satisfaction.

With all that said, certainly as you spend more for pieces of equipment the next one right above it in the product line may not sound significantly better however if you switch to the higher end line and jump up in models you are going to hear a much more pronounced improvement the majority of time. So once you hit really expensive equipment more than likely to easily hear a big difference means you need to spend a lot more money where if you are in the entry level area the jump in dollars to hear a significant difference is not going to cost you as great a spread in the amount of money required. All this assumes that you have the correct synergy already going with your equipment and your room has been worked on so your equipment is properly placed, particularly the speakers and the corners and walls have been treated.

A better room with treatment is going to make a bigger difference than spending a five hundred to a thousand dollars for a new pair of speakers.

The concept of diminishing returns does apply to the audio world.  However, "hifi sound" is entirely subjective.  Most people will tell you they're getting it for < $1000.  A few people will tell you that you can't get it for $100,000.  They're both right - they just have different standards, and there's nothing wrong with that.

I think what sets my threshold for diminishing returns lower than many other audiophiles on this forum has to do with unrealistic expectations on my part. Just to throw out a number, I’ll say that an affordable system for me will get me 65% towards what my mind might idealize as the ultimate in reproduced sound. I expect a very high end system in an excellent room to get me to 95%. It instead gets me to 75%. Some of the major shortcomings of 2 channel audio recordings, which are what I listen to mostly, are still plainly evident to me, even on the best recordings. It’s like I’m expecting a $1,000,000 supercar to be able to silently hover and fly me across oceans at supersonic speeds. Instead, it just rolls along on the ground like my Nissan, faster and a lot classier but no where near as fast as I’d really like to go, or expect to go for $1M. A car is a car, not an anti-gravity flying machine. The truth is, $1M isn’t really all that much money in the grand scheme of things. I just don’t have that much so my expectations are inflated. 

Third post nailed it (mulveling). Is that $10k cartridge THAT much better? Only if the rest of your system is.

I had a friend that went through a similar process at great expense.

I took him to a local shop that has a heritage system consisting of original Quad ESL speakers and amplification. The owner played some acoustic music and my friend jusy said "Fzck!" because the reproduction of strings was so amazingly realistic - better than his megabuck system.

Diminishing returns is a term of art in economics originating with Jeremy Bentham. A classic example is that for most people, the fifth ice cream cone they consume today will have less value than the first or second. it is not linear, and it does not kick in from the first dollar spent. Someone who upgrades from the IEMs that come with a Samsung phone to a $200 pair of IEMs might gain a net higher return from that additional investment. Where diminishing returns begin to be felt is subjective. We might hypothesize that they begin to kick in at the point where someone is 75% satisfied with all parts of her $10K audio system, and is considering an upgrade to gain an extra 20% of satisfaction. Generally speaking, an economist would say that if she has to spend $20K to gain that extra 20% of satisfaction, returns to investment are objectively diminishing. That certainly does not mean, however, that she shouldn't spend the extra money to improve her system. That depends on her bank balance, her subjective valuation of the additional 20% in satisfaction, and her opportunity cost (what else she might do with that amount of money instead of spending it to improve her audio system).  

In the '70s I started with a Kenwood integrated (which I still have) and Large Advents.  In the '90s I moved up to a big Adcom amp and Proac 2.5s.  In the '10s it was McIntosh and used Avalon Eidolons.  And now I have a dedicated room with Esoteric electronics and Audio Physic Avanteras.  Most of these upgrades have made me happy.  And I can't wait for Axpona to begin exploring what my next moves will be.  I guess I'm just a dumb happy guy.

As you can see there are many "opinions" related to your question.  Personally I think the best advise is never pay retail for something you can buy used.  It is true that the latest and greatest is hard to find used but that may not be an issue on certain components as you may not need the latest and greatest.  I have a combination of new and used for instance my Thorens TD-124 was built in 1961 and restored this year, I will never sell it.  My speakers are Klipsch Cornwall IV's that I purchased new and absolutely love (no listening fatigue ever) there are those on this forum who will speak critically of them but they are the perfect speakers "for me".  From someone who has always had issues finding balance, I simply suggest that you enjoy your journey and the love of music.

Agree with most above.

I built what I call a mid-fi room with a $15,000 budget (and was able to buybthriugh a local dealer at about 60% of internet retail which I think is normal).

Since that point my top end budget has changed. But I really have little interest in upgrading. It’s a great room for me. Instead I have scratched the upgradis itch by building two new setup in my office and in my formal living room against a WAF.

This is an industry of light assembly, tried and true engineering, and heavy markting.

@dadawada

Ok, on Wagyu beef. I was somewhat skeptical on how much better it could be… then I spent a lot of time in Japan… wow… only the Japanese could create something so over the top and incredibly delicious. Makes our best steaks tastes like “Sizzler steaks”.

Makes me think I should put together a Shinto system somewhere.

The expectations curve keeps rising. Where does your friend go after spending $100K, and the old restlessness returns? $500K for that next 20% of satisfaction?

Perhaps climbing the cost/benefit ladder rung by rung would be wiser.

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

To each his own...enjoy the music, don't buy "trinkets" that you cannot afford.

And yes, there is a point of diminishing returns, although it happens on a personal level!

Regards,

barts

I think most everything we do in life involves the concept of "diminishing returns". 

I love cigars. And happily I've found that I don't have to break the bank to buy, say, Cuban puros over other less expensive smokes.

Same goes for wine, cars and yes, audio.

Do I begrudge the OP's friend who spent all that cash? Not a bit. Have at it and enjoy, I say. But I have to wonder were I in his well-heeled shoes if I would make the same call. Fun to think about! 😉

Happy listening...

@henry53  Focal Clear headphones never sold for $2200. Both the original model and the later Mg model came on the market for $1500.

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.

very well said @hickamore

this is a very nice articulation of my own journey over the many many years in this wonderful pursuit

to the other comments made, i would remind everyone that there are plenty of people in society with more money than sense, with more money than good taste, with more money than time, with more money than good values -- this is hardly news... maybe the news is that some hifi manufacturers are more overtly profiting from this age-old reality

the presumption in this thread, and in this forum, i think, is to have well meaning discussions and assistance provided to help people interested in doing the smart thing, make wise purchases, to maximize enjoyment for the effort and resources expended in this field of home hifi music production...

@jjss49

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

Sorta agree and disagree as this is mostly personal.  If I would have known the last few percent improvement cost 6 times more than my first system, I wouldn't do it. Yup, it's my fault as I pulled the trigger without carefully evaluate "what kind of volume I want to listen to most of the time".  While my new system gives me better clarity but I really need to crank up the volume to enjoy it. At low/normal volume, I would prefer my old system as it is way cheaper. I guess there's that word..synergy when you've found it.

There is an assumption on the part of the OP and others that audiophiles spend more money based mainly on sound quality. I would challenge this basic assumption.

This hobby has morphed into a luxury pursuit where there is no longer any practical limit on the cost of gear. There are speakers, for example, that retail for over $1 million. Burmester released mono amps that cost $350,000 a pair. I could go on. At the same time there are dozens of documented blind tests that show that listeners can't tell most gear apart on sound quality. Therefore, I think the question of diminishing returns is mostly irrelevant.

We buy and upgrade our gear because it makes us feel good to do so. We get an emotional response to the story behind the product, the design and aesthetics, input from members of our tribe, and the brand identity. Confirmation bias will insure that it sounds better than the previous stuff and there's nothing wrong with that. If it makes us happy then it was money well spent.

In my direct experience I have tried to determine if upgrading will bring a worthwhile benefit. The core of my system is about 25 years old (Thiel CS6, Krell KSA300s, etc.). I could afford to buy some fairly expensive new stuff if I really wanted it. I've been to 3 audio shows and I have heard a bunch of 6 figure systems that didn't sound better than my setup and some that sounded considerably worse. I have also heard a few systems that I would love to audition in my home; MBL 101 E Mk II, for example. But if I spend the money it will be as much for the pride of ownership as the improvement in sound quality. I would simply love to have a pair of 101 E's plus a pair of those beautiful black MBL monoblocks in my listening room. You can bet they would sound glorious.

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.

@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.

+1 for @russ69

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.

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 .

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.

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. 

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

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 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.

@audioguy85 

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

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.

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.

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.

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.

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' 

;)

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. 

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 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.

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

More of a law of incremental improvement.

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.