What makes an expensive speaker expensive

Great topic.  Some folks don't want to hear the truth, but marketing is a huge reason so many speakers cost over 60k.  Folks like to make big cabinets and there are people with plenty to spend, who want the biggest and the best.  They feel that both walk side by side.  Most of us who listen don't believe that.  Too many of the 100k plus speakers just aren't as coherent or musical as many of their little brothers/or sisters IMHO.  Many shop owners I've spoken with have said the same thing.  The larger the cabinet, the more problems you incur.  That's why so many feel the monitors are the best at getting out of the way of the mid bass on up.  

As for R&D, of course that factors in, however the problem then occurs that if the R&D was a lot of wasted money, the price/value proposition may not be there either.  Maybe it just took that long and so many iterations to get it right, but to what expense in the end?  I have never liked (X brand) speakers (one of the most well known brands) for my tastes, but the owner and now his son are great marketers.  Not saying they don't make a nice speaker, but I personally can't listen for long periods of time and yes, I've heard them at their best many times in many places from the the 250k-15K and all were run on the best amps the store sells.  I had a lengthy conversation with a dealer that I've known and done business with since he opened in the 70's.  We were talking about X brand and why they cost so much.  He laughed and said that the replacement costs of all the drivers in their 50k speaker wouldn't cost the owner more than 1k to replace/repair.  They have off the shelf tweeters that only use a slight mod and the other cones are poly and paper.  Not the cheapest drivers, but not expensive and easy to get if you are a DIY'r.  The cost is in the cabinets.  The R&D and cabinets are the cost along with a ton of high end marketing.  Even the cost to produce the cabinets isn't outrageous, but the demand is there and the cost is in line with demand.

This is just one example, however so many of the expensive speakers are priced that way, because too many folks feel that if it's that expensive, it must be great.

To get a top paint job, or a top veneer job is very expensive.  We are going to pay for the cabinet and finish and the larger the speaker, but more costly.  That doesn't make it a better sounding speaker though.  

Most of the speakers I've heard in the high end of the spectrum are nice, but most aren't great by any means and they could be.  Why do they sell us a speaker that has paper or poly cones at that price? 

When I was looking for new speakers after many many years using various Proac's, I did some homework.  Vandersteen was one speaker that wasn't on my radar as they looked generic and I didn't see why they were so expensive.  I visited a local Proac dealer as I thought I'd just get their new D series speaker and be done with it.  I hadn't liked most of the speakers I was hearing and I had auditioned well over 20 different brands (various models) and that also includes many of the 'garage' brands that sell from people's homes.  There's a long story as to why Vandersteen, but the more I dug, the more I realized that his speakers were packed with not just R&D, but technology.  His drivers are very expensive to make. The carbon ones specifically.  He used room EQ for his bass and has built in subs.  If integrated properly, I love built in subs with room eq.  Cabinets inside a cabinet isn't cheap either and the finishes are as good as it gets, but I was able to chose nearly whatever veneer I wanted.  Being a woodworker for fun, I love to play with veneer.  

I think most of us on here really appreciate all of these things and are willing to pay for them IF the speakers sound great to our ears.  There are a few top named companies who do spend a lot to make a pair of speakers, however I feel that way too many don't.  Heck, most of us could build a pair of speakers that cost 25k off the shelf and with some reading and help, make them sound decent.  To me there are some price points that make sense if you have the cash.

I've heard speakers at 14k that blow me away.  A few have dedicated subs with eq and dig really deep and still keep a smaller footprint with a beautifully finished cabinet.  At 30K things open up big time depending on your tastes, however I've heard too many speakers at the 14k-20k range that better many of the speakers that cost more.  

at 50k-70k you can get some of the best sounding speakers you can possibly get.  Any speaker will have compromises regardless of price.  I just haven't heard big differences in sound from the 70k on up range than you can get at 50-70k.  Vandersteen isn't the only brand I like either.  There are others out there that are very nice and also use a lot of technology in their drivers as well as their cabinets.  You don't always get what you pay for.  Personally I just couldn't ever justify spending over 7k on a speaker that used paper and poly drivers or even off the shelf ones that use just a little modification.  

As for the market, it's a strange one in that the more expensive gear is and has been where the money is.  It does sell very well and is keeping many manufacturers in business.  Many have had to go from the 5k and down range and open up the 5k- unlimited range in order to grown.

"something tells me a lot of mass market gear and plasma tv’s underwrote some of that"

Maybe the mass market stuff did, but Pioneer stopped making their Kuro plasma TVs in 2009 - they lost money on them despite being the best plasma TV on the market, bar none.

There is a lot that can go into making a good speaker. Both the sound and the aesthetics. Also the reliability. In the end willingness of customers to pay for whatever reason is mostly what determines how expensive a product is, including speakers. Values differ by person so anything is possible. The goal of marketing is to help make people more willing to pay for advertised benefits by appealing to the values of the target market segment. The more one is willing to pay the more profit per unit. Thus high end audio was conceived, a boutique industry where units are fewer and  prices generally higher.

"What makes an expensive speaker expensive..."

=>Expensive parts plus Greed, Ego of the manufacturer (or its followers stoking the fires....), higher marketing costs than others and further excessive mark-up...

(Noone has ever truly accounted for the price of many of these speakers in terms of materials cost, cost of construction, etc... versus their more responsibly priced brethren (I'm talking facts and figures not marketing speak). All that happens is we keep hearing the product name and how that must make it worth it just because it starts with certain letters of the alphabet....not saying these speakers are not worth more but seriously, $100K, $125K and more all the way up to $225K, $250K and above???

"Would you be surprised to see $30,000 speakers "outperform" $150,000 speakers?"

=>No I would not as I've heard it from a few speakers (not just the brand I own) at shows and other listening environments and every day I hit play at home with a $20K speaker with a good system behind it :-)

MartyKL and others state a lot of good economic/market-pricing fact above but if you look at the analogies, the difference between a Lexus and a Toyota (fully configured in both cases) or Acura versus Honda (Accord fully blown out...), Nissan and an Infiniti (or other myriad examples) is "X"% in the single or low double-digits whereas high-end audio and speaker markup in particular is usually in the higher double digits (IMHO don't shoot the messenger) or more! High-end audio manufacturers should follow more traditional and conservative market-pricing models and apply a reasonable markup for premium quality; they might very well sell more :-)

...but what makes the price what it is? 

Marketing

Jafant I suspect you may have heard them in a non optimal set up. Also they can image narrower than other speaker setups, due to being coincident point source.   I remember when the q1 was introduced going to hear the demo on some unfamiliar spectacular audiophile tracks and thinking wow my CR’s don’t image like this. But then I asked for 2 standard tracks (a bill Evans and a Rickie Lee jones) and was surprised they didn’t sound very good. On my system and hour later those same tracks had so much inner detail they sounded like audiophile recording.

That being said, after hearing a few Raidho’s at a show 2 or 3 years ago I felt they had more upper frequency air than the TAD’s. Rather than ditch them I added ’stat supertweeters and subs. (which I do now sell as well, BTW)
I hear live acoustic music from up close often (and even a friend singing along to my system). On good recordings it can be shockingly close, even though my system may not tick every audiophile box, and may not be the system of choice for large scale orchestral works.

I was not impressed w/ TAD.

For openers, the use of real wood, specifically, Maple.
Then comes the finishes and layers of it.

The price of anything is what the producer accepts to provide that item in quantities the market demands at any point in time. 

It's not whether a $100k speaker is ten times better than a $10k speaker. If Magico priced the Q5 at $10k they would not be able to produce them to meet the demand --  but at $59k you can buy as many as you want when you want.

In most cases, expensive examples of products generate higher gross margins than inexpensive examples.  A Chanel handbag may feature top quality materials and use skilled manual labor which drive up costs relative to mass market handbags, but the portion of the wholesale price representing margin is higher, too.  This also applies, to cars, cameras, and wristwatches. So, there's usually some element of higher price tags that can't be assigned to "substantial" differences.  However,....

Brand equity generates a return, too.  As a rule, people will pay more for brands they want.  A Lexus ES and a Toyota Camry aren't identical, but they are very close mechanically.  The interior appointments, Lexus buying experience and brand value all increase the price of the Lexus.  When aggregated, Toyota still makes more on each ES they sell than each Camry.

Bottom line, in almost all cases, it's a combination of things, including higher mark-up.

As to the likelihood of a $30k speaker outperforming a $150k speaker, there is little question in my mind that that is exactly the case.  Line up every $30k model on the market against every $150k model (blind) and I'll guess that most listeners will prefer one of the cheaper speakers to one of the more costly models.  On average, I may prefer the more expensive guys, but I'm pretty sure that the performance variations within each price range are pretty significant.  Significant enough that I can build a case for a cheaper model on some measurable basis - bass extension, on-axis response, power response, uniformity of dispersion, etc. - that it's fair to say it outperforms the more expensive competitor.  All you need to do is to prioritize that one performance parameter where the cheaper guy is better.  And, in the real world, measurable or not, most listeners do tend to prioritize some parameters over others.

Personally, if offered my choice of any speaker, I highly doubt that I'd choose a six figure model.  

The difference between a very good expensive speaker versus a very good inexpensive speaker is usually size and ability to go full range in larger rooms.

Quality of drivers,crossover and cabinet as well as were it is made and markup.

Money make an expensive speaker more expensive. 

But for every TAD, Wilson. Magico, and other six-figure speaker, there are 3- and 4-figure speakers that satisfy the listener to the same extent.

until they experience TAD, Wilson, Magico ...

To quote from Wiki:

"Adam Smith recognized that commodities may have an exchange-value but may satisfy no use-value, such as diamonds, while a commodity with a very high use-value may have a very low exchange-value, such as water."

But if Magico, et al, started marketing a speaker "under 15 grand", it would be labeled as "entry-level" and thus raise the price of the other products. @emailists is right insofar as the R&D and production put into these high-end products, much like a McLaren car or a Patek Phillipe watch - they are technically advantageous and, when paired with the right equipment, gorgeous sounding.

But for every TAD, Wilson. Magico, and other six-figure speaker, there are 3- and 4-figure speakers that satisfy the listener to the same extent.   

 You raise an interesting and valid question.  I think basic business economics plays a very large role in determining price, especially when factors like R&D, product development,  and the very small number of potential sales  of ultra premium products are factored in. Top-of-the-line Wilson or Rockport speakers, costing 6 figures,  weren't just imagined and built.  They are the product of years of  development, a team of people,  and a cutting-edge facility.   Imagine if an Apple laptop would only be sold 100 times before the model was discontinued. Diminishing returns is a common theme in the audio world,  and chasing ever higher  performance requires more and more resources, time, and money.  I would be surprised to hear a $30,000 speaker outperform a $150,000 speaker. However, if you narrow that gulf a little bit,  it does hold water.   I would not be surprised to hear a $20,000 speaker outperforming a $40,000 speaker.  At that point it may just be the less expensive speaker is made by a company that made better business decisions, could afford it,  and perhaps sees a higher number of sales to justify it.   Sonus Faber now makes entry level speakers that are sold at Best Buy.  They also make a 6 figure  behemoth.   Wilson, Rockport, and Magico don't make a product under 15 grand.   Perhaps they should! 

Well I do know a little about TAD, which at over $40k for a floor stander seems expensive . I believe TAD/pioneer spent over 3 million in r&d on the reference speaker line, so that must be factored in, but something tells me a lot of mass market gear and plasma tv’s underwrote some of that.

but I do see pricing on some speaker lines where a slightly larger cabinet and 1 extra driver of another model doubles the price, which makes me wonder.  Or a driver upgrade that raises the price 20 or 30k

Sales of $150k speakers are extremely low. Production in very small quantities is very expensive, especially with exotic technologies.  In addition there is very expensive research and equipment involved, that has to be folded into the price.  Do you think that manufacturer is still in business only because of stupid/snobbish people buying their $150k speakers?