Why Is Hi Fi Gear So Darn Expensive?

In High End Audio, price is not as important as intention.

However, parts, development time and labor costs do, mostly, dictate cost.

However, most companies use a 5 or 6 times multiplier.

However, many companies have gone to direct to consumer sales.

However, most of those companies continue to use that same multiplier.

$$$

Quad 57s were mentioned. And there are many other affordable speakers that one can joyfully live with. Certainly, the same can be said for many components.

However, IME, a $13K cartridge is certainly $10K more amazing than a $3K one.

"I recently heard a small 2-way stand mount speaker at a show. The sound was excellent. The product was priced at $50,000 or thereabouts, per pair. Allowing for distribution and marketing leaves about $25,000.  Add management and cost of capital, that leaves maybe $12,500 per pair for parts and assembly and engineering. Say the cost of parts was $5000 and assembly was $2500. Could engineering realistically cost $5,000 per pair? "

$25,000 for marketing and distribution of every pair of speakers? What do they do? Fly them to your house on a private jet? Seems to me that that cost would be amortized over whatever number of units were manufactured. Same with the rest of his justifications.

@temporal_dissident I don’t particularly disagree w/ your lusting after gear theory.

I built a fairly nice system when I was married to the mother of my kids, which gave me a taste of good sound. Years later when I decided to build another system I decided to implement a little bit of a strategy, because I had learned about how expensive the upgrade bug can be.

So glad I decided to just go ahead and do things right the first time around.

Also thankful I had already learned about how important synergy in a system is, including having a complete loom of whatever cables/wires you use. I’ve learned some really valuable things from reading these silly posts.

It’s a good feeling to be completely content with what you have and not be the least bit envious of what others have. Like others have mentioned, relatively good sound can be had for a fairly reasonable amount of dough. I would consider our buddy @mahgister to be sort of a master of that particular domain.

They asked what they want and that's the only thing. I can built an amp good looking finish sounds pretty good and van asked 20.000dollars.

You should do that then... 

Wealthy people want it.

Poor people have it.

If you eat it you will die.

What is it?

This is one my daughter hit me with when she was 6. 

Price has anything to do with consumer products.

You pay you get. Miracles do not happen. Since a preamp comparison was mentioned, one costing 2k and the other 20k, which one is better? Easy the more expensive one, because in an accompanying system of relative value it would show less limitations compared to the more economic one. That does not limit the quality of the 2k one, which in turn could be better than a 3k preamp, making it a an excellent choice for the right system and most likely above that.

One of the issues is who can bring lower pricing on a statement product, my answer would be the big guns, you know the ones that produce mass market goods also, have the resources and the ability, and care to see in the end a profitable category and not product alone. Unfortunately snobbish behaviours apply to this hobby as elsewhere. Reasons for not succeeding has nothing to do with sound quality or construction but rather distribution, lower margins and not so perfect after sales service. Back to square one.

@bluorion

Regarding the how much does high fidelity have to cost I will throw out the example of Grado SR80i headphones as a lowest cost entry point. Use these with any good quality streaming app on a smartphone and viola…..really good sound!

Or Vanatoo active speakers. $600 + a smart phone source and you are good to go in many rooms.

+1 @thyname Why are so many budget conscious Audiophiles(?) so concerned about what others spend? I think there is a mind set(fear=snake oil) in them to beat the "Pay to Play" theory which unfortunately exits Another meaningless cliche is "The Law Of Diminishing Returns" It does not apply to a subjective hobby. A $20K amp must sound/measure 10x better then a $2k amp, which is a foolish formula. A 20k amp can sound a million times(subjective) better then a 2k amp. IMO the 20k amp would clearly be the better value. There is no need/want or desire for ’Gatekeepers" in this hobby.

I never understood $100K amps, $250K speakers, $50K streamers.. Yet, I am totally ok with it. It's called capitalism..  The market will sort itself out in the long run !

Again, Price has nothing to do with sound.  Can someone make something as good or better for less, why sure.  There a differences though depending on who makes the product.

I imagine no body here has tried to manufacturer anything and sell it in a competitive market.  It is not so easy.  Everyone has an opinion on everything and most likely, no body has had the opportunity to do extensive comparisons using different components,

Try designing something, marketing something, getting parts, boxes, reviews, etc.  What do you think that costs?  No one in audio is getting rich, at least not many.  That is why some of the favorite manufacturers are out of business today.

BUT there are high priced components that actually do sound much better.  That I can prove. Our listening room is open in Northern New Jersey if anyone wants to come a play.

Happy Listening.

@chocaholic : my analogy VW vs. a Ferrari had nothing to do with performance. Only cost / price. In other words, Ferrari is unaffordable to me, therefore, I don’t test drive it, because I simply cannot afford to buy it. I only look at the car makes and models I can afford.

Many (including me) would say the difference between a $2k amp and a $20k amp is very subtle and indistinguishable by many, save for the aesthetics. So, not a realistic analogy IMHO.

Then what’s the problem? If you are so sure about the indistinguishable difference between a $2,000 and a $20,000 amp, obviously buy the $2,000 amp and call it a day. Problem solved. No reason to sweat about the price / value of the $20,000 amp

Thyname…the difference between a VW and a Ferrari is profound and obvious via all senses. Many (including me) would say the difference between a $2k amp and a $20k amp is very subtle and indistinguishable by many, save for the aesthetics. So, not a realistic analogy IMHO.

Here’s an odd analogy, but one that hits close to home. We use an old school veterinarian who argues that most vets prices prevent people from properly caring for their animals. Charge a reasonable price for appropriate and effective service and people will care for their pets. The analogy?  Extreme high margins restrict the public from a hobby that might otherwise attract a much larger audience who will buy equipment to further be exposed to an even larger audience. But alas…I doubt that’s the objective. 

My take is with the growing number of multi millionaires/billionaires, high end products of any kind, not just in audio, can be priced at whatever that market will pay. The end result is the masses are losing, the real high tech stuff is now out of their reach. Bottom line is the rich is killing it for the average folks without even realizing it. But all is not lost, there is still enough worthy audio equipment out there that can satisfy our thirst for sound without spending six figures or more. In my experience, don't buy for the name, the hype or the fancy designs, rather look purely for value, it still exists as my system proves.

Tom Martin’s blog post is off base. 

Warning: this is a rant.
 

This article captures much of what is so obnoxious to me about the audiophile community.
 

Tom Martin applies reductionist thinking to readers asking a legitimate question. Is he a psychologist now? Or, like too many audiophiles, is he viewing the world through the narrow, overly confident perspective of an engineer?

It is the same type of reductionism that makes so much of the audiophile media unappealing. Audio is a potentially wonderful enthusiast hobby, but too often it comes off as an exclusive club of consumer-level electrical engineering hobbyists. 

Of course there should be a place for people to debate the oxygen level of $10k interconnects (or whatever), but there is SO MUCH to talk about that is more important, interesting, and relevant. 
 

We live in an absolutely fascinating age in the history of audio technology. Never before has music been more available, affordable, or convenient. But it is also a time when public/consumer level appreciation for sound quality has sunk to incredible depths (a frog, slowly boiling after 30+ years of unconsciously trading sound quality for convenience).
 

There is such a fantastic opportunity for audio enthusiasts to apply their interest and insight to help elevate sound quality everywhere: the restaurant, the vehicle, the commute, the back patio, the kitchen, etc. There are so many simple, easy, affordable tools at our disposal. There is such a compelling case to be made that can improve quality of life for everyone. An example of a community member applying his expertise towards this noble end is Steve Guttenberg’s consistent series of YouTube videos about how to build affordable systems. I salute Chris Connaker for nurturing a tone on this site which is consistently accessible and inclusive. I love that “my dealer,” with whom I’ve spent more money than I should have, is quick to tell me some of the most transcendent moments he has had with music have been on cheap, crappy systems.
 

But these are exceptions. More often I see arbitrarily limiting comments from the audiophile community like “car systems are not HiFi.” From the audio media we say way too much fascination with engineering and technology, diving deeply into esoterica that seems almost willfully designed to be separate the enthusiast from the lowly public.
 

Why is HiFi gear so expensive? Because  audiophiles fixate on the technology and lust after the gear. You know the old trope about how audiophiles listen to equipment, rather than music? Well, it’s an enduring trope for a reason. We spend more attention and focus on getting our lonely “listening rooms” from 96% to 98% than we do on helping the world around us get from 30% to 80%. Because we reward manufacturers who build use rare materials to build sculptural art objects that have more in common - psychologically - with art, luxury watches, and other finery than they do with professional tools designed to optimize performance. Because the major media outlets are really just advertising-driven product showcases. 
 

So, NO, Mr. Martin, I do not think a legitimate answer to the question “Why is HiFi gear so expensive?” is to question the premise of the question or the motivation of the questioner. Frankly, I think it is rude and snobby as hell. And I think it is a prime example of how audiophiles are isolating themselves in crystal towers rather than engaging productively in a world that could benefit tremendously from their insight and advocacy. 

A better answer to this very fair question? 

“A lot of it is so pricey because it is jewelry, but great HiFi sound does NOT have to be so expensive. You’d be forgiven for thinking otherwise based on how the audiophile media covers the topic.”

I often read comments that include terms like low-fi and mid-fi. What prices of gear would be in these ranges? Low-fi: less that $2500? Mid-fi: $2500-$5000, Hi-fi: >$5000?? 

Depends.  With a company I know about, the face plates were impossible to get made properly without spending WAY more than the owner wanted.  The internal components were picked BY HAND from boxes of the "TOP 5%" of the manufacturer's output--already expensive--and about 30% of THOSE were rejected as being inferior to the desired quality, etc. 

Labor to do this is expensive, boards ordered in less than 100,000 copies are expensive, etc., etc., etc.

If you decide to invent and make a truly super-high-end product that has little chance of failure, you spend a lot of money doing so.  Since the customer wants the company to last, and since you are not running a charity, you charge what it takes to keep in business.  Two of the best from the 1970's are still around; their stuff is WAY expensive today in my opinion, but it ain't 1975 any more.  Cars are WAY expensive today as well--5 to 10 times more than they were back then.  

SO, if you want the best, buy used like I do or settle for less-than-the-best if you can't afford new.

Cheers!

@emrofsemanon ​​​: I agree! Expensive audio gear is a status marker! The same sound quality can be had for considerably less!

When I worked at a high-end store back in the late 70's the profit margin on most gear was 40% - which left some room for a customer discount to close a sale. I expect it is about the same today.

Modern advertising has convinced people that things must cost more to be better! 

Hi-end hi-fi is all about creating a demand.  This has to be done with advertising and marketing, which are very costly.  That's where a lot of sales revenue disappears; the $25,000 or 50% of revenue in @mapman 's post.

Then you have all the overhead, employment on-costs, health & safety, taxes, compliance costs, legals etc etc.

As well as the R&D costs.

Truth is, it would be surprising if even 15% of revenues go into the hard components contained in the equipment being sold.

That's the fact of life on doing business in an advanced western economy.  Everything is on-costs.

My dad (and he was an accountant) used to say 'why should I pay $5 for a bowl of soup in a restaurant when I can buy a can of soup for 30c?'.   This, essentially, is the answer to mapman's dilemma.

What’s amazing is the sheer  number of ‘cottage’ hi fi manufacturers who create products north of £30000. Given research and manufacture costs for what is probably a small number of sales, I’m not surprised at the price for such high end gear, even with the huge mark ups in price. I guess the more established manufacturers can afford, and need to, to create a flagship product for competitive reasons, benefiting from the trickle-down effect into mid-range products. But for smaller manufacturers, not sure how they make a profit if they just product a couple of high end items.

They asked what they want and that's the only thing. I can built an amp good looking finish sounds pretty good and van asked 20.000dollars.

multiple reasons surrounding the central [greedy] reason of "just because it is what the market will bear." your effortless ability to afford exorbitantly-priced luxury hi-fi gear is one of those symbolic things that tells potential mates that you have enough cognitive and physical prowess that you can take care of yourself and a mate/children with no problem, that you have no trouble earning lots of $$$$$$ in a short amount of time, disposable income in general is one sign of this quasi-genetic fitness for mating. 

I’ve been looking at speakers lately and noticed the grilles for Magico speakers cost $850 or something.  The grilles!  There is nothing fancy or special to make them cost that much.  This is just one of many, many examples.

On one hand it seems like manufacturers are taking the piss.  But on the other hand, wouldn’t that leave an opening in the market for some upstart to go for massive volume sales at lower margins, by creating top performing gear at a fraction of the cost?

@mapman 
We are talking about hi-fi pricing per your original post. No one here is talking about advances in technology. It’s a given that we are moving forward, thank God. 

I drive a truck and have a German Integrated. Go figure.

I also love being the most expensive in my industry. 

@thyname 

The beauty of simplicity. Excellent

@ghdprentice 

Many years back on Audio Asylum, there was a thread about the cars audiophiles drive. Most were transportation and little more. None were new.

@gdnrbob 

Good post.  I always came in at the upper 1/3 of the prices and generally told my perspective customers that I would be in the upper third price wise. But I always went the extra mile with service and the expertise to give a quality product. I always laughed at those who told me how "busy" they stayed. Staying busy is easy.I stay busy now even though I am retired.

Well I can’t agree with the nothing has changed perspective. Technology and its application has improved immensely and continues to do so. That does make a big difference.  Old stuff has less and less appeal to me these days I find. It can be done much better for less these days. Digital in particular. Analog….that’s different …. niche high end. New vinyl has managed to lure more customers in recent years.

Yes Jerry

The puzzle is now complete. 

@thyname 

+1

In addition you can work very hard (or more for the purpose of making money) in order to afford more or you can due without and concentrate your buying power on one thing. 
 

I drove ancient used cars until I was forty. I funneled most discretionary capital into audio. Focus. Also, I always pursued a career in what interested me, and one compatible with my disabled partners well-being, and income was always tertiary concern. But eventually I still was able to make a fair amount of money… hence I have a nice system.

This is pretty simple:

• I cannot afford a Ferrari
• I can, however, afford a Volkswagen
• I drive a Volkswagen
• I do not complain about how expensive the Ferrari is

Bottom line for me: I buy the car I can afford. Ignore the cars I cannot afford

Just to throw another different stick into the fire.... on youtube Danny at GR Research often takes apart big name speakers to show audiophiles and really anyone else what you get for the money you spend on high dollar speakers. He has done this with companies like Paradigm and others and the results are often very illuminating to say the least. Often big cash doesn’t even buy the best capacitors, or better made crossovers or even drivers themselves. Many companies don’t make their own drivers.... Also Jays Audio also revealed that Magico's $75k speakers don't come with grills and the replacement tweeter costs $1,700.00 and you have have a pay freight to send these monster speakers back to Magico. Once the speakers are fixed they don't pay to ship them back to you, the owner has to pick them up!!! One really needs to scratch their head and ask important questions about the real aim of spending large amounts on money on audio equipment. What is it that one is trying to do?

The best sounding gear is priced beyond the means of most people.  They are luxury items and audio equipment is no different than other consumer product categories.  Fortunately, there's just tons of good to great sounding equipment at non-stratospheric prices.  As a thought experiment put together a single source system at different price levels.  Start at $1k, then $10k and finally $100k.  The more expensive system will be better, but the middle system is quite good and even the cheap system can put a smile on your face.

As a gardener, I am constantly hearing the same- 'But, it's so expensive', or 'Why do you charge more than the other guy?'

Let me tell you knowledge, quality and self-respect must be factored into making a functional, viable business.

I can't speak for stereo manufacturers, but for me, I factor in my decades of knowledge/experience, ability to conform to different styles, and a need to get paid enough so that I don't have to chase my tail.

For 97% of the people out there, I am overpriced. To the remaining 3%, I provide quality service that they can't get anywhere else. I manage to make a living.

B

@noromance  Brian : my Dad said “ soon parted “… ha. So right….

No swiss bank accounts in the gig in the ground, at least spend some of it now….

Jim

@noromance She was a wise lady. 

My Grandma used to say, "A fool and his money are easily parted."

That said, there are some superb cost no object components designed to sell to the ever-increasing number of folks with very large disposable incomes.

Part of it is also reflected in the coming of retirement age where older audiophiles are cashing in their chips before the great gig in the ground.

@spenav    +1

@dayglow is absolutely right, nothing has changed except for our own perspective. We are older and hopefully with God’s grace can afford more than we could then but nothing is different. 

As someone who has made their own speakers and has worked for small companies that make things, I can see the where the cost comes from in a lot of high end products. The materials they work with, the complexity of design, and the level of finish they produce requires a lot of up-front investment. And then they sell small quantities relative to a larger company. For me personally the value isn’t there, but I don’t try to impose that on others. As with high end cars, I can see how they are better in a number of ways, but I’m really attracted to designs that are more universally available, partly because things that can be mass produced can be more heavily engineered and can be in a lot of ways better than any specialty item. I like video games, and I own a Nintendo Switch. If I were a billionaire I would still prefer a Nintendo Switch - stock, no mods. The software available for it is what I’m looking for and I couldn’t pay to have custom high zoot stuff developed that would have the same richness of content so optimized for specific hardware. With high end audio items livability and ease of use are often serious compromises made along with cost. They can be a pain to use, and not comfortable for most people to live with. The sound quality differences are typically dealing with extreme subtleties while the major flaws of the 2 channel playback format are still plainly evident to the more casual listener, hence their bewilderment about the excesses of the high end. I am one who appreciates subtle improvements even though I always hear the major flaws. While I may show skepticism of some assertions, I don't doubt people's perceptions, and I appreciate those who can afford to and are willing to go through the expense and effort of dealing with the necessary equipment to make those improvements because I’m an audio reproduction nut. Because of that I honestly don’t know what I’d do in terms of buying audio equipment if I suddenly had vast amounts of cash available to me. It doesn’t matter really because I don’t dream of owning that stuff or envy those who do. I’m fascinated with it though, and when something is perceived by many to be an improvement worthy of large amounts of cash and effort I’d like to know more technically about what makes that sound more desirable than the more run of the mill equipment that measures quite accurately. I often get told it’s a trade secret, but some measurements are available and in time we can start to recognize patterns. I want the most people possible to get the best enjoyment possible out of their sound systems, and I think scientific study of human audio perception is the way forward. I’m for sharing information and competing on quality of implementation.

I agree with @gs5556 case in point I have a Class A Integrated as an everyday driver I purchased New for $1200.00 and it sounds fantastic. A few member her have this same Integrated and yet not many stores Boutique or Big Box carry the line?

Get rave reviews on PTA and Sterophile.

It is the price point, I bought it so that I am not running my $10,000.00 Tube integrated all day.

Audio gear has always been expensive because audiophiles associate price with sound quality. Even dealers are reluctant to carry lower price items because they know it's a hard sell (unless it gets a Stereophile Class A rating) and they won't score a high margin on the sale.

@tablejockey is right everything has foreign content. 

" The cabinets and parts are Chinese sourced what % not sure we will ever know."

dayglow-

Perhaps you are aware, much of all audio products have China attached to it. Especially many of those nice black lacquer boxes for those hi digit "USA" speakers.

Some of the crowd here for some reason seems to be adverse to reality.

If it were not for China, we would be either staring at empty boxes or paying  even MORE for the "made in USA with 100% USA parts INCLUDING nuts, bolts and zip ties and solder!  

Never gonna happen. I enjoy all my China made products.

Buy something vintage from the 60's and earlier for USA product.

There are few of them here for sure. 

There are ways around the high cost of audio equipment by finding an exceptionally gifted modder that can take a used piece of reputable equipment ; speaker crossovers, amps, preamps, phono stages, audio cartridges, etc. and bring it up to a level that competes with the latest highly-touted products appearing in the market. Remember that older products, like the Quad ESL-57, introduced in the late '50's, are often voted #1 on the lists of best speakers of all time. Western Electric gear from the '30's is sought after and commands astronomical prices. Point being- older (cheaper) stuff can be reworked into amazing gear in the right hands.

 

There are ways around the high cost of audio equipment by finding an exceptionally gifted modder that can take a used piece of reputable equipment ; speaker crossovers, amps, preamps, phono stages, audio cartridges, etc. and bring it up to a level that competes with the latest highly-touted products appearing in the market. Remember that older products, like the Quad ESL-57, introduced in the late '50's, are often voted #1 on the lists of best speakers of all time. Western Electric gear from the '30's is sought after and commands astronomical prices. Point being- older (cheaper) stuff can be reworked into amazing gear in the right hands.

@yogiboy +1 I do have issues with CHI-FI. Since Hegel and Denafrips appear to be accepted by the majority of Audiophiles why not a speaker? From what I have read the final assembly of Aerial speakers is done in MA. The cabinets and parts are Chinese sourced what % not sure we will ever know.