What makes an expensive speaker expensive

This is a very interesting thread.  I don't know much about expensive speakers but I do know about low to mid cost speakers and how lucrative sales can be.  

My wife used to work at Fry's Electronics where they sold low to mid grade speakers and carry brands like Klipsch and Velodyne subs.  There is about a 70 to 80% profit margin on them for Fry's.  Any employee can look them up because of their employee discount.  Now if those companies can sell a $1000 speaker to Frys for $200 and still make good profits after covering their expenses, then you can imagine what goes into the materials, design, etc.

I actually stopped buying expensive audio gear at MSRP when I found out that a high end cd player which I was about to purchase and cost $4000 - well the online authorized retailer was going to pocket $1200 for running my credit card, printing a label, and pulling the box from storage for Fedex to ship.  If my money was getting back to the manufacturer it would mean one thing, but for the store to make $1200 for less than 10 minutes of work was the ultimate deal breaker.  

Now with more expensive speakers and any other expensive gear, the market is even smaller that can make the purchase so there is much more of a risk involved.  Higher risks warrant a higher rate of return of investment. Companies are started every day and fail everyday and lose lots of money but those that do make it are making considerable profits. They wouldn't be in business if the rate of return wasn't high enough for them in the first place. 

Speaking of crossover parts, it is easy to take an inexpensive low and mid grade speaker to a much higher level by just replacing the caps, resistors, and inductors to higher quality ones.  I've done this to 4 sets of speakers over the years and have had wow reactions afterwards.  

Speaker companies have relationships with capacitor manufacturers for their supply chain.  For example a high end capacitor manufacturer such as Mundorf supplies all the caps for their entire line. The top product could use their oil/silver/gold caps that would cost a normal person like you and me $100 each but are sold to the speaker manufacturer for a little over cost at $20 each but the manufacturer also buys the cheapest Mundorf without any branding for their lower products in much larger volumes.  These relationships are made over years and even decades.

timlub - I completely agree!!  Resistances need to be compensated for the inductors.  There are plenty of crossover calculators online and measurements are always useful if changing the inductors.  If there is a drastic change in the crossover point, it could damage the drivers.  

A friend of mine has a pair of some vintage Sonus Faber's and the tweeter was using an electrolytic cap for filtering!!!!  We changed it out to a low end and inexpensive  film ClairtyCap (~$5 each) and his eyes nearly popped out of his head and realized the full capability of the tweeters.  It was like a switch was finally turned on!