The more time I have under my belt pursuing quality audio, the more I realize that high audio gear prices have some basis in their quality. Yet there is a limit. When you buy a Ferrari the cost is high, but you can see the money involved in the design and parts. Many would argue that high quality audio gear is similar to the quality and design of a hyper-car. But when you look a the sheer quantity an complexity of this kind of car, there is no piece of audio gear that compares. To me, a piece of audio gear that costs as much as even an inexpensive car is just a manufacturer cashing in because they can. Can you imagine what audio manufacturers would want to charge for a piece of audio gear that was the size and weight of a car? Like $100 million. I believe it just drives the whole market up and we end up getting a little bit suckered. This is all perhaps a little overstated. I guess I just want to shame audio manufacturers. I do understand that they are not charities, or here for the betterment of mankind. If you are not frustrated by this, good for you. Here is a quote from a book about marketing. The reference is a victim of link rot. Nevertheless it has common information.
"Premium Pricing
Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction . A premium pricing strategy involves setting the price of a product higher than similar products . This strategy is sometimes also called skim pricing because it is an attempt to "skim the cream" off the top of the market. It is used to maximize profit in areas where customers are happy to pay more, where there are no substitutes for the product, where there are barriers to entering the market, or when the seller cannot save on costs by producing at a high volume. It is also called image pricing or prestige pricing.
Luxury has a psychological association with price premium pricing. The implication for marketing is that consumers are willing to pay more for certain goods and not for others. To the marketer, it means creating a brand equity or value for which the consumer is willing to pay extra. Marketers view luxury as the main factor differentiating a brand in a product category."
I've heard that from the perspective of many high-end manufacturers and dealers, the best way to make a small fortune in audio is to start with a large fortune.
Yes, it is a horrible business. The very best most high end components are an incredibly small niche market. Their most desirable attributes are qualities no one has figured out how to measure. They can only be evaluated by listening, something that requires either significant retail demo space or else a lot of at-home auditions with all the damage and restocking costs. Either way an expensive proposition. No wonder they demand 60% margins. Even then they do not clear much after all expenses are accounted for.
No wonder so many wind up being pushy, or elitist- they simply cannot afford to waste time on lookers. They need buyers.
The internet is helping, but only the really good manufacturers. Tekton, Raven, Decware, and other direct sales manufacturers of quality products, the internet makes them work. Then instead of retailers/dealers pushing product the emphasis shifts to enthusiastic buyers and reviewers talking about it. And there you go.
If you follow Audio Research or Conrad Johnson pricing, you very much get the idea. Look at price rise for LS28 to LS28SE. Follows the stock market.
As an owner of an SP6B and MV75A-1, these companies used to offer similarly priced products not too long ago- think LS17 or Classic 2.
Thank God for Schiit and Rogue, etc. Schiit is really great. They take advantage of new technology (surface mounting and innovative cases), and make top notch gear for a reasonable amount. I have heard million dollar systems, I know what can be achieved. But I will put up my lowly Schiit Saga against many multi thousand dollar units, and my Yggdrasil will not be embarrassed by anything short of units with multiple $10’s of K price tags.
I've heard that from the perspective of many high-end manufacturers and dealers, the best way to make a small fortune in audio is to start with a large fortune.
I discovered hard way that in audio we pay for electronical design quality thinking that this equate to sound quality by itself...
Sorry this equation is false....
Vibration control, and electrical level noise control and especially acoustic control (no it is not passive material treatment) and acoustic treatment make more for S.Q, make more for increasing it, than upgrading to a higher price level for the gear....
If audio is a course to afford the best electronical design in the world, my observation is only relatively valid and limited by the possibility to upgrade from a 1000 bucks piece to a 100,000 bucks one...
If audio is the art to reach an optimal S.Q. with the lowest possible cost, my observation made complete sense without restriction....
You pay for what you get.
«But we pay more for what we do not»-Groucho Marx 🤓
I think that audio is somewhat like automobiles in some ways. To wit: I'll likely never buy a piece of high end kit brand new again. I'll let the original owner take the depreciation hit much like buying a new car and watching as the thing depreciates the moment you drive off the lot... Granted that doesn't apply to ALL cars. But the examples it doesn't apply to is vanishingly small compared to the general market. And even moreso with audio gear. Audio gear is a commodity much like anything else. Pay what you are comfy with and let the rest go IMHO.
So you saved a few million. Paying up for higher end audio is more likely when you have available funds, and these wealthy souls help support pricing. Frequency of very high priced speakers and amps is very limited. But this pricing serves to stretch lower end gear pricing. Its a marketing strategy and does stimulate interest.
many have no clue what they are buying, and cant perceive any incremental sound quality from their ultra high end purchase which many a time is not really discernable.
"...Consumption taxes on status-seeking spending, along with official and traditional sanctions on excess consumption and redistributive policies may lessen the negative impact of relative deprivation on well-being..."
Not for me. My well being would be negatively impacted if my hobby spending was taxed with consumption taxes. Nobody NEEDS a music system to survive but it does enhance my life, and it certainly doesn't need to be excessively taxed.
All Psychology, it is Status which makes you feel good. And the Profit range is necessary for Dealers to keep the ball rolling. Example: when the really best Tonearm would be 4k final, do you really think, it would get the same merits like one for 15k or more? I say, no. and even when you don’t want, but the next chapter will be opened - limited series - price will go up next month - i bought it because I got it for a good price - handmade
and so on
and then the next push - advertisement in mags etc. - proud owners in Forums - reviever X likes it - excellent finish - shiny, expensive optics
You gets what you pay for, mostly....although there are tons of more economical audio products, so called "bang for the buck" available, but I won't bore you.
Up through the early 70s hi fi was very much DYI. Then manufacturers caught on and started to offer hi end features in their products. I’m an engineer. I fell into the wrong crowd in the late 80s- hobbyists that were heavy into modded hifi. I enjoyed and took pride in learning and doing my own mods to gear to improve the sound for a decade or so. Our mantra was sound per dollar. Once I had the means I started buying newer high end gear and found that also very satisfying if not more so. I still have worked to make my room acoustically better and experiment with isolation methods but I do not use my soldering iron much these days. We all have our limitations. I have to appreciate the engineering work and effort that these hifi companies have made that by far surpass my capabilities or the time I can afford to invest in my own mods. It lets me enjoy the music.
"...Much of human happiness, for better or worse, is derived by one’s status relative to others in one’s perceived peer group..."
Only if you are susceptible to two deadly sins, pride and envy.
It is possible with the help of basic science and simple listenings experiments to create a more than good audio system that will not lag so far away from costly gear to give you total frustration...
It is the S.Q. /price ratio that is the ONLY indication of value in our hobby, never the price per se....
Anybody can buy the costlier system in the world and with money create the best room....Anybody....
Try this with 500 bucks all in all + extra peanuts ....
This is my hobby....
Frustration, envy, dont exist in my world...
But sorry pride survive more healthier than ever.....Especially when you succeed...
I dont say that to brag first but to help others who dont have money.... Be creative and trust yourself....
You will smile...
Why do i smile if my system is less good than many costly one?
Because it is possible to create a system that is not so far behind what is in the hand of those who can buy the best gear on the planet....
A piano filling your room with natural timbre and with each note a timbre hue associated is here.... Is there better ? Yes but i dont give a dam when listening Bach well tempered Klavier if the sound dont come from between my speaker at all and seems natural....
Be creative, read and think but let any audio magazine behind after picking your gear..... After picking the right gear create your own experiment in vibrations control, electrical noise floor control, and especially acoustic controls...
Call the rest superfluous...It is....
The goal is not the better, the goal is the optimal.....
The " better" is a chase to the moon....
"Upgrading" is a chase of your own tail....
Choose right first among all those pieces of gear available in a mature market for the last 50 years now at a low price , after that work through the 3 embeddings controls....
In general principal and spirit, I agree with the OP. The Premium Price theory is common in most industries. Although many of the subsequent responses had valid comments and thoughts, not all supported the theory that Premium Pricing is a negative. To each his own...
Speaking from personal experience, 46 years of Wholesale, Retail, Commercial and Construction Sales / Management taught me to charge what the local Market can afford, as long as the Service/Product provided is of commensurate value. Business 101.
I found value (to me) in better quality audio through a Hybrid Build process via having collected some vintage equipment (Zeta tonearm), as an example, marrying it with new equipment (ZYX cartridge) and a customizable kit (SunValley EQ-1616) phono pre-amp... Result, not a bad analog front end at reasonable (to me) cost. The rest of the System ... a similar mix of Luxman, Elekit (maxed out upgrades), Anti-Cables(new), Martin Logan (used)... you get the picture.
In the end ... a hyper-car (as referenced in the OP)... it might not be a New one, I may have to work on it myself and do a lot of research... but it is a hyper-car that I can afford and avoid Premium Pricing along the way.
I thought the post by ericrt was worth reading and makes a few good points. Overpricing to convince buyers that an item is top quality has been a marketing technique for a very long time. I now make it a habit on all products to read customer reviews, particularly as so much crap is coming out of China. Of course, this may not pertain to stereo equipment. I would think stereo equipment will get better and cheaper like most electronic items. I paid $900.00 for my first VCR.
What is stratospheric pricing to you? $150K? Most companies have flagship products that advance the art and have lots of top electrical designers time invested in it... few are sold. So costs are high when you load with the R&D. You price against the competition. Then the technology trickles down the substitute cheaper components and offer reduced price stuff.
I agree and think about it as: the people who buy the high-end stuff are essentially funding R&D for the industry. Those of us who can't spend that much benefit from their willingness to shell out so much for the cutting edge.
I once heard Bill Dudleston (Legacy) say that there are only 30,000 audiophiles at a given time, who all the manufacturers of boutique gear are competing for.
Not sure what the number is, but it's certainly pretty small, and boutique manufacturers can't be keeping the lights on by sales volume alone.
So it seems like high markups and prices are inevitable in the audiophile market. (Not to say there aren't conspicuously better and worse values).
I assume this is a common circumstance for artisanal goods of all kinds.
I suspect the irony in this is not lost on the artisans themselves: to develop their art as far as they can, they have to price most people, including people like themselves, out of the market. Not quite the simple life of a craftsperson, somehow.
If there were no objects to impress us we would remain a little stagnant. Therefore there is some value to any art object although most end up in people who value them differently from the reason they were made. Of course there will always be this market and most of us will just dream, so let's put our minds to work on how to achieve the best price-performance ratio.
Now that we all have been schooled in economics....
I look at it this way, lets say I spend $10k on a system. I keep it 20 years. Not too bad. If someone wants $100k speakers and can afford them, then go for it.
I think of the ultra high end in audio equipment more like hand made works of art than any potential benefit you may derive from improved audio quality. I don’t think you get the be all, end all performance you might get from a hyper car.
One thing that stands out to me, as a nerd, is that if it were simply about performance every audiophile would have 220-240 voltage behind their setup to take advantage of the potential benefits of utilizing both sides of the sine wave.
When we remodel the listening room this fall, I’m running a 240v, 40 amp line to my system that then gives me the ability to have two splits at 120-20 and a 240 to fiddle with. It also can save space in the electrical box.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5638129/ "People who are unable to maintain the same standard of living as others around them experience a sense of relative deprivation that has been shown to reduce feelings of well-being. Relative deprivation reflects conditions of worsening relative poverty despite striking reductions in absolute poverty. The effects of relative deprivation explain why average happiness has been stagnant over time despite sharp rises in income. Consumption taxes on status-seeking spending, along with official and traditional sanctions on excess consumption and redistributive policies may lessen the negative impact of relative deprivation on well-being."
If you look at prices over time, luxury items like high end watches, boats, esoteric audio gear and super cars increase in price about 3-5% per year while common appliance prices stay flat or even get cheaper. High end luxury isn’t about cost cutting or outsourcing to low cost countries. In 1990 ARC’s top of the line preamp was an astonishing $5800. Look at the price of their top of the line now. I bought a Stainless Steel Omega Seamaster Professional watch in 1994 for $1600. It’s a good watch. I still wear it. $6000 roughly to replace it today. It’s still just gears in a case with a sapphire crystal.
I suggest the OP just go buy a boat. It will cost more to purchase and maintain, and provide less personal enjoyment.
Not if it's equipped with a high end audio system. Mount the speakers on deck, take her out to open water, and you've got no worries about room effects, neighbors, or even the Wife Acceptance Factor.
I think in audio this is mostly true with speakers. But it is a choice. Some people don't mind spending 20 or 30k for speakers not just for the sound but because they have pretty cabinets. As opposed to tekton speakers where you can get just as good sound as the more expensive speakers but won't look as pretty for $4500. As an audiophile i don't care what it looks like as long as i like the sound.
Just stop whining OP. I get a feeling you are jealous of companies that can do this. But after all costs they probably make far less profit than you think. eg don't forget the dealer margin don't forget taxes
Clearly there are people on this thread who have no concept of retail pricing. I’ve managed hardware and jewelry stores, and spent 2 decades as a territory manager specializing in adjusting retail prices based on price sensitivity and turnover. The more expensive an item is generally, the lower percentage the markup is. The cheaper an item is the higher percentage the markup is, unless it’s a price sensitive item - good examples are milk, bananas, bread, etc. Most people know what that item should sell for and, as such, regardless of whether it’s cheap or pricey, there’s less margin in it.
Using diamonds as an example - a mall or chain store, due to higher overhead, 99 times out of a 100, cannot sell to you as cheaply as a source that has only one or zero retail outlets. Same holds true for audio stores. The same principles of price sensitivity and markups apply, but the brick and mortar stores have to factor their costs of multiple locations rented, more employee hours, etc into their prices - and either lower their markups to match the online sellers or be too high priced if they don’t.
You hit the nail on head One example is speaker cost is 39K different finish which is automotive paint is + 5K. One anecdote read in stereophile is a seller demanding to price in 80K for Retham Maarga which sells at 10K then only he can put it in his shop. Another is price keeps on increasing as the demand soars.
Pricing? Lets try a diamond from DeBeers. It retails for 200, your local jewelry store paid 25. They offer you a 75% discount, and you pay 50 for it. In the jewelry trade the markup is called Keystone. Even after the 75% discount they make a nice profit. Caveat emptor.
Thanks for your responses. I made the post partially because I ran across the text on premium pricing and thought it was relevant. It is odd, however, having ones $1,500 speakers or $1,000 DAC referred to as "budget" gear. It's no wonder the normies think we're crazy. Truth be told, if I was wealthy, I'd probably be obtaining high-end gear. For some reason, I am driven to hear that next level of clarity and transparency, among other things.
I totally agree the law of diminishing your turns how do you justify charging $75,000 for an amplifier or even worse like audio note 115,000 for a DAC when companies like wired for sound are using the same high quality parts like 1% vishay resistors which cost $30 a piece and they can still make one of the best sounding docs on the market for $4,500 as opposed to 115,000. Anybody that's a big enough sucker to pay that obviously has too much money and doesn't know what to do with it LOL. Same with water companies charging $50,000 for a piece of wire give your head a shake what can they do to a piece of wire to make it worth 50,000 or $85,000 biggest scam ever I've seen in audio. No amplifier or preamplifier should cost $40,000 or more that's just crazy. That's why I end audio is going down the tubes because working class people can't afford it anymore like it used to be in the old days. I'll give you an example the same audio w5 amplifier which is a phenomenal amplifier still was $5,000 when they bought out the w8 it went to $15,000 and their p8 preamp was 15,000 and when they brought out the 8:50 p it went to $25,000 and now with no changes it's gone to 40,000 give me a break. These people are just catering to the 1% good luck on that one.
There are now enough wealthy people to support this modus operandus. That is: selling expensive kit at a high margin to a few customers rather than many units at small margins to the rabble.
But when you look a the sheer quantity an complexity of this kind of car, there is no piece of audio gear that compares. To me, a piece of audio gear that costs as much as even an inexpensive car is just a manufacturer cashing in because they can.
You have much to learn, Grasshopper.
Can you imagine what audio manufacturers would want to charge for a piece of audio gear that was the size and weight of a car? Like $100 million.
So you think it has to do with size and weight. You have more to learn than even I thought. I am here to help. Can you clear you calendar for- let's see now, starting five miles from zero- say the rest of the year?
I don't know about all that. For 30K you can get yourself an audio system that you can be very very very happy with. What automobile can you get for that cash, a Honda Civic? I think it's a pretty good hobby price wise.
Have you ever built a product to sell? Probably not. That being said, you don't get rich in the audio business. I have a circle of friends and customers and when we get together, everyone has an opinion of what sound they like. For a manufacturer, you can never satisfy everyone. Plus the competition out there on most products varies and the price points of what people want to spend. Sometimes it does not even come down to the price but to the functionality. Plus taxes, rent, equipment, employees, health benefits, inventory, product changes all come into play. I probably have $20K just in parts (caps, resistors, transformers, chokes & tubes that we don't even use any longer), chassis designs, shipping boxes, etc.
Lets say a product all in parts, chassis, etc., all in without labor costs $2K. The average retail price is five times that or $10K. I guess that is too much for the average person on Audiogon to even consider.
Most of the esoteric high-end Audio manufacturers sell relatively few units compared to the mass market brands, so in addition to amortizing the R&D costs over a much smaller run, the production costs of buying small lots of highly specialized parts that require the highest quality means that the production runs can be very expensive. Many times, the challenge is that the quality CMs that are most capable of making the product also have high MOQs.
Something is only worth what someone is willing to pay. I guess that some folks are willing to pay for such products. I certainly can’t. That however,isn’t my decision how someone else spends their money.
What is stratospheric pricing to you? $150K? Most companies have flagship products that advance the art and have lots of top electrical designers time invested in it... few are sold. So costs are high when you load with the R&D. You price against the competition. Then the technology trickles down the substitute cheaper components and offer reduced price stuff. Maybe in the $20K range to sell many. What is the actual manufacturing cost? I wouldn’t be surprised if it was $3-4K... onverhead, selling and administrative costs. To the best of my knowledge none of these companies is incredibly profitable, they are sold all the time.
Well, the newest Rolls Royce Boat Tail is priced at $25,000,000 for the three lucky owners who will get one. So your pricing model assumptions aren't that far off.
Much of human happiness, for better or worse, is derived by one's status relative to others in one's perceived peer group. Expensive goods of all kinds is one way to try to raise one's social capital. Audio is just one of many ways to do this.
In other words, if there's a criticism to be levied here, it's definitely not specific to audio. Blame the human race!
Not sure why anyone would care what the price is if it's something you aren't going to buy? There is plenty of moderately priced equipment to fill anyone's needs. Luxury priced gear is fine but just like $500 dollar shoes, I'm not buying because I don't see the value in that. The market you are talking about is very small and doesn't represent the majority of this hobby.
You must have a verified phone number and physical address in order to post in the Audiogon Forums. Please return to Audiogon.com and complete this step. If you have any questions please contact Support.
