Of course the sound quality of a stereo system is proportional to the cost of the components. But is is much more complicated than that. Factors outside of the speakers, the amp, preamp and source have as much or more impact on the sound than the components. The room, the floor, and the ambient noise level affect how we perceive the sound. Electrical noise, EMI and RFI affect the performance of the stereo gear. Just moving my bass traps around in the room affects the mid bass clarity.
The economics of stereo gear, just like about all products mass produced, is that for every $1 of material cost the selling price will be about $3.50- $4,00. Once labor, overhead, taxes, insurance, R&D, admin, etc and then the distributor and final sales outlets get their cut that is roughly the cost to purchase. So you see, we beat up a speaker manufacturer for using cheap capacitors but the reality is if they were to use say $400 worth of caps in their cross overs vs. $50 in caps, the selling price would end up being some $1400 higher which might price their speaker out of the market. So the savvy audiophile can buy the $400 set of caps and upgrade their speakers saving $1000.
Like it or not you pay $60k or more for a new car knowing that it has about $15k worth of parts in it. Thing is, most of us would not know what to do with a pile of auto-parts, sheet metal and 7 gallons of paint. And while the automaker pays $50 for a fuel pump module (they buy millions of units per year) the dealer will charge you over $500 for the same part. Maybe you can get a similar unit at the discount parts store for $250. Point is, you cannot cost effectively build your own car. The same goes for a stereo system.
Do everything you can to your room- seek professional help if need be (for the acoustics, I mean) and then do what you can to enhance the performance of your stereo components by using better power cords, power conditioners, cables, isolation and dampening devices. And then the hard core audiophiles go into their speakers, amps, preamps and sources and replace internal components such as caps, wiring and resistors for even more enhancements. This hobby really has no end and infinite permutations.
Still, it’s cool to see these million dollars systems and admire the art of it. They may or may not sound like a million dollars but I’ll never know.