Why the huge increase in the price of Sonus Farber Amanti G5 speakers.

I spoke with a friend of mine who is in the industry and he said it is crazy with some companies announcing price increases, some just doing it without warning, some slowing shipments. This is not a highly profitable / low asset business.  High end audio manufactures often design and manufacture their own products and hence have  large overhead and fixed costs. Getting caught on the wrong side of 20% price increase can destroy the company. For those owned by larger companies, they may require certain profit margins and are less concerned with the volume or long - term viability. 

Price gouging. Even for things that aren't affected at all by tariff issues. But everyone wants to join the 'jack up the price tariff party'. Because profit margins.

One word... greed.

Three words: Because They Can. 

Does anything here really matter.
Your ears, your money, your choice.

+1 on tariffs.  What cave have you been hiding in?

All of you guys saying price gouging, greed etc.. are way off.  Tariff pricing is just starting to hit .  So if you want products wherever it comes from there is a universal tariff affect that will be passed along unless its an exempt country.  Additionally Logistics and component costs have increased as the world economy figures out US Tariffs.   Like the previous poster I am actually in the business myself and increases are just starting from many brands.  If you want a product don't wait chances are prices are going up shortly.  Of course, Trump could wake up and take all tariffs off or he could raise them 100% on Italy because some radio host said Italy was bad, who knows.

As someone intimately involved with manufacturers in Audio , CE and computing the conversations every day are how to navigate this disaster. 

I purchased my Sonus Faber Olympica Nova V speakers about eight months ago, before the Trump tarrifs. When I looked at reviews, everyone said that they cost $16,500. Yet all the dealers I could find were selling them at $18,000. Clearly, the speakers had gone up in price. I also purchased at Moon 280D at the same time. The reviews said that it cost $3,000. All dealers were selling them at $4,000. They too had gone up. I think it's the nature of the beast, and tarrifs don't help.

In regards to @bigtwin saying that manufacturer, wholeseller, and retailer all doubling the price, that doesn't make sense to me. I was never in audio retail before, but I spent many years in other types of retail. The first thing that is obvious to me is that all dealers list the same price on Sonus Faber. I see no discounts online. The only thing my audio dealer could do to give me a lower price was give me a good trade in on my old system. 

If I am correct and Sonus Faber sets the retail price on their products, I doubt that they would set a price that doubles their cost price. BTW, I don't think my dealer dealt with a wholeseller. My speakers were on a ship from Italy when I purchased them. I had to wait about a month to receive them. Back to Sonus Faber setting their retailer's price, it would make no sense for them to set a high retail price. 

Also, we have to make the distinction between gross margin and net margin, after all costs are paid. That involves the cost of selling an item. Retailers need showrooms, product to show, etc. But I would guess they work on less than a 50% gross margin, which means that 50% of the retail price is gross profit. They're not like a shoe retailer that keeps backstop of every size of shoe. My Sonus Faber retailer didn't even have the Olympica Nova V to show me. I listened to the Nova III and decided I wanted the extra woofer. I would think a $5,000 to $10,000 gross profit on a pair of $18,000 speakers would be plenty. Many car dealers don't make that much on a much more expensive car. 

Many car dealers don't make that much on a much more expensive car.

Yeah but car dealers sell 5 - 10 cars in a day? Maybe in a week. How many SF speakers does one dealer sell in a month? Big differences.

Dealers get them for half that so I bet they would discount for a serious buyer

Glad I bought my Novas in April!!

Glad I bought my Novas in April!!

Many reasons - the Euro has risen against a falling dollar, Trump tariffs on European goods, new ownership by Bose, inflation, transportation. You will likely see more price increases if Trump tariffs continue to be added, manufacturers will try to absorb the sudden rise in prices but eventually, they can no longer do this.

I don’t know.  Something’s changed.  Long ago and far away I had a small gaming store ( when D&D was at its peak).  The markup on the things we sold ranged from 20%-37%. I also managed a restaurant when I was in college and the margins there were similar, except for drinks.  If it wasn’t for that cup of coffee or glass of Pepsi, we probably would have gone under.  We started selling wine and beer later on and the profit was crazy good, but not 100%!  I have seen dealer price sheets on hifi gear and the profit margins on some items are as much as 200%!
They’re saying that there’s fewer and fewer young people coming into this hobby.  I bet I can guess one good reason why. ☹️

A 27% standard increase across all SF products in Australia since 1 June.

Couldn't possibly be tariffs (they're unchanged), and the levels of inflation in Italy (1.6%) and Australia (2.4%) are far below stated increases.

However, if we challenge the surface-level explanations - which are speculatory at best, and we strip away the typical PR justifications and focus on a realistic, business-driven interpretation, I believe we would end up with a combination of 1) premium branding strategy - off the back of increased competition in the high-end market; 2) they’re raising prices because they can, and assume the risk of pushback to be minimal. 

Hence, this isn't about inflation (or tariffs). It's about deliberate market strategy.

@1bitsoul if you are right about that, and what you say makes sense, it will be interesting to see if this strategy works. I can’t imagine their dealers are all that thrilled. That price increase is enough to push them into a range of speakers that are likely in a little different category than the competition they have traditionally faced. The big brains at Bose obviously have studied this, but so did the folks who brought us “new Coke.“

Without a doubt the Covid thing opened the door to price gouging. There was disruptions in all areas but many opportunistic gouging mother ……s were born. Covid is long gone few if any reversed their excessive charges. SF is no different except in my opinion they weren’t worth the money in the first place. Outside the Uber pretty woodwork the sound quality was achieved by many for far less. Outside of pompous bragging rights for a select view there isn’t an endless list of younger folks willing to drop the coin for priceless end tables. Enter the reason for company selling in the first place, make the product develop a following watch the market and get out before the pendulum swings away. Companies like Bose control the market if they own the line share, not really caring about the old farts that bran boast. 

@1971gto455ho 

You sure are cynical. 

While there are a few companies that attempt and get away with charging "excessive" prices for their products, they are far between. Certainly not in tiny markets in highly discretionary markets. If folks don’t think the speakers are worth it, then they don’t buy them. Also, folks buying speakers in the $30K - $100k range are smarter than the average population, not dumber. 

I would think it more likely that a marketing person(s) from Sonus Faber / Bose did a complete analysis of the SF product lines and of the competitions. Considered the sonic characteristics, craftsmanship, global demographics, production costs and forecasted costs, and probably the Bose guidelines for profitability. They would have got together the COO, CFO, VP of Sales... probably the entire executive staff. The marketing team would have spent several hours explaining their findings and recommendations. The VP of Sales would complain endlessly about how they would not longer be able to sell the volumes they had committed to in the annual plan with these price increases. Everyone would look to purchasing to get long term contracts on raw materials to stabilize the material input costs. Anyway, I can go on and on. This is how it works. A huge amount of research and heated discussion by very savvy people trying to make sure they stay in business and make some money. 

Price gouging only works with commodities that are mandatory. Health care, food, water, power. 

@ghdprentice 

Cynical ? Certainly you’re not suggesting people that choose not to purchase a product are dumb. I would think a hearing preference would play a role, whether having the funds or not is a moot point. I am sure that selling a company does require the input from many but I’m also sure that the sale such as SF was a lucrative deal, satisfying most. Price gouging only works with commodities that are mandatory ?? That would cut out a huge percentage of the supposedly smarter population, unless one lives in a bubble the evidence is everywhere. 

? What does some supposedly heartmelting story about Audio Research have to do with sonus famrber jacking up the rates on their speaker? 

That the product is different but the principle is the same?

@ghdprentice is the only person in this thread or anyone else on this forum who has the slightest clue about how things actually work.  Without profits businesses fold, private entities in niche markets especially. The biggest overhead in any business is labor and benefits. The people who build SF speakers are extremely skilled craftsmen that are for the most part impossible to replace. Perhaps you’d want them built by robots which after the initial investment and those costs were amortized over several years doing so, would make them cheaper and more profitable which would provide more individuals for the unemployment lines and more burden on their fellow taxpayers.

So many of you have this sense idealism and entitlement that only concerns your own wallets that inevitably results in a decline of your quality of life not to mention all of you who don’t want to pay for music appreciation in their local schools because they consider it a needless expense and they don’t want their taxes to go up. Remember crap rolls downhill!

You sure are cynical. 

While there are a few companies that attempt and get away with charging "excessive" prices for their products, they are far between. Certainly not in tiny markets in highly discretionary markets. If folks don’t think the speakers are worth it, then they don’t buy them. Also, folks buying speakers in the $30K - $100k range are smarter than the average population, not dumber. 

I would think it more likely that a marketing person(s) from Sonus Faber / Bose did a complete analysis of the SF product lines and of the competitions. Considered the sonic characteristics, craftsmanship, global demographics, production costs and forecasted costs, and probably the Bose guidelines for profitability. They would have got together the COO, CFO, VP of Sales... probably the entire executive staff. The marketing team would have spent several hours explaining their findings and recommendations. The VP of Sales would complain endlessly about how they would not longer be able to sell the volumes they had committed to in the annual plan with these price increases. Everyone would look to purchasing to get long term contracts on raw materials to stabilize the material input costs. Anyway, I can go on and on. This is how it works. A huge amount of research and heated discussion by very savvy people trying to make sure they stay in business and make some money. 

Price gouging only works with commodities that are mandatory. Health care, food, water, power. 

 

.

+1 @ghdprentice 

@1971gto455ho Sure. SF speakers are woefully overpriced and that’s why nobody has purchased them. Just another pretty box.

They are pretty. Very much so. While I get that they might not be your cup of tea, the performance of the speaker is fully competitive with the others in their price range - even after the increase. I bought into the brand because i liked the sound. They’re more musical and easier on my ears than my previous, very highly rated and accurate speaker. They’re more musical than the other higher end brands sold by my local dealers to which I directly compared them. 

Why is it not possible for some people to accept that we all have different tastes and biases - which is a good thing - as it’s made the industry adapt and provide increasingly competitive choices. You shouldn’t need me to like what you like to validate your purchase. And you shouldn’t need to denigrate a brand and those who’ve purchased their products just because it’s not what you would have done. Millions of people around the world have disagreed with their wallet.

On the business case - I’ll just defer to ghdprentice as he covers it well.

@ghdprentice + 1

@faustuss yes  very true. He knows what he is talking about, while other are mostly guessing. 

Unless you are about to buy a Sonus Faber loudspeaker, then why do you even care what the MSRP is?  How does it effect you?  While I found this thread interesting I really don't care what a Sonus Faber loudspeaker costs.  My interest in the thread was piqued by the vitriol and quasi-conspiracy undertones of some of the comments.  Plus there were several comments about better loudspeakers at much lower prices.  I wish they had named those loudspeakers.

Anybody know the prices of the new Rolex lineup?  I haven't worn a watch in 35 years and plan to die that way, but I think I can muster some faux outrage on the subject.

@gano 

yes  very true. He knows what he is talking about, while other are mostly guessing. 

Actually, there are quite a few on these forums who know what he's talking about. Sales and Operations Planning is not a novel concept. However, corporate history tells us that, despite all the savvy people analyzing the markets, gathering important data, going through an elaborate decision making process, etc., many companies still managed to go out of business due to the boneheaded or shortsighted decisions made by their leadership in these very meetings. Otherwise, Blockbuster, Radio Shack, Kodak, ToysRUs, Enron, etc. would still be kicking ass, no? 

apologize but what do you mean @arafiq they know what @ghdprentice is talking about?

@gano I was responding to you about assuming that only he knows what he’s talking about while others are just guessing. What he described is a typical process in business called sales and operations planning or integrated business planning. It’s standard fare in the business world. Lots of people on this forum are quite familiar with how that works :)

His rebuttal to @1971gto455ho was that he was being cynical because a lot of very smart and savvy people sit in important meetings making important decisions like this, so how can they be wrong. I’m just saying that it is not necessarily a slam dunk as evident by so many once-successful corporations that failed despite all the brilliant leadership. Now, I’m not suggesting that SF will necessarily fail due to this, but it is not being ’cynical’ to question their strategy or motives.

@arafiq Understood. What I meant was that @ghdprentice has extensive knowledge about the production process. I regularly read his comments about China, tariffs, prices, "how it's made", etc. I have not read anyone else commenting about the subject with such insight. That does not mean that he is the only one with said expertise on this forum, just my limited following what people say.

On the subject - nothing. I know nothing. People could sell me sand in the desert for water and I would brag about what a great deal I made. 

"Wait until you see the prices when magnets can’t be sourced."

Just found out that my fav headphone manufacturer put a hold on building at least 1 phone because of the Chinese governments' restrictions of raw metals exports. In this case, magnets.

@arafiq 

"Sales and operations planning" and "integrated business planning", yes and then there’s material requirements planning (MRP) that starts with a concept then an engineer’s drawing and the countless the individual pieces that will be required that go into the recipe which will require a bill of materials (BOM) which will be used in every step of manufacture but firstly, for the purchasing department to procure parts and supplies "just in time" to reach receiving dock and to receiving inspection. Then before the parts go into inventory they have to be reviewed for compliance which involves vendor certificates, verification of nomenclature, measurements, functional testing and material review board (MRB) with the quality control manager, the engineers involved in the design the buyers to ultimately determine "except or reject". It can be determined use the parts as is or return to vendor (RTV) which requires a return authorization (RA) for rework etc. long before any of it can go into stores waiting for the pickers to assemble the various pieces into kits which are either sent to the shop floor or maybe to a contract vendor for sub assembly and then returned to the receiving department for more of the above which part of  WPI or work in process.

I hope you get the picture but this doesn’t even scratch the surface of what is to come in the process of bringing a marketing concept to fruition and all the steps and people involved to make it happen. The variables are endless and all factor into the costs and what you can reasonably charge for a product that the market will support.

I was responding to you about assuming that only he knows what he’s talking about while others are just guessing. What he described is a typical process in business called sales and operations planning or integrated business planning. It’s standard fare in the business world. Lots of people on this forum are quite familiar with how that works :)

 

Soon after the "end" of covid, I went to a JL dealer checking on the price of an F113V2.  It was $4000.  But the dealer, AA, saw the price increase on their computer and bumped it up to 5K, regardless of the stock in hand.  One month later it went up to $6K.  I found 1 new and 1 lightly used for 4K and 3.5K respectively.  Ridiculous.

@arafiq - No, Blockbuster would not still be kicking anything but the bucket, as this new thing called streaming came along and totally obsoleted the entire CD/VHS rental business model. 

I have heard two versions of the Blockbuster saga. One was that Netflix's founder was on the board begging to change their business model and he was laughed out of the room. The other is that Blockbuster was already planning for become Netflix but they had too much debt due to aggressive expansion that they couldn't finance it.

I can understand magnets getting more expensive in the states (Tariffs), but Italy has no beef with China.

When the size of your market shrinks you have to reduce the volume of your output which consequently increases the production cost per unit. Supply and demand.

I can understand magnets getting more expensive in the states (Tariffs), but Italy has no beef with China.

 

The price increases are due to a single word: Tariffs!
 

I currently work in the A/V business & just recently, Speakers & receivers from all brands have gone up $100 to $2000 dollars: To name a few, Denon, Audio Technica, & Bowers and Wilkins. So I don’t see why Sonus Farber would be any different.

Somehow, televisions have avoided these huge increases. I fear that these huge increases will nail the coffin shut on audio because someone who might have afforded the investment a few years ago is now priced out of the market.

that word is banned here. "You bring politics into discussions"

@gano 

I hate politics!

 And you will never see me post about politics, but tariffs are sometimes non political and have been around for decades. What’s happening in the US today is not political.  It’s one man’s view of taxation being used to control other countries with the benefit of potential income for the US government.  There are people on both sides that love/hate them.  For me so far, they made my car more expensive ( but not 20%) and a few of my groceries more expensive. But if I was in the market for a new pair of speakers, that big of an increase would definitely make me look elsewhere.
Getting back to my original post, I could be wrong, but I don’t believe the US has enacted 20% tariffs on the EU yet and Italy is still status quo with China, so rare earths are not the problem.  So why did Sonus Farber raise their prices so much? Someone from Australia ( forgive me for not remembering who) said that SF  prices went up 27% across the board. Here it’s almost 20%. Someone else suggested it was the new owners being greedy and sadly that might be the correct answer, but it surely can’t be good for their business.

It was asked as a non political question.

@curiousjim I am sorry I didn't mean to annoy you. My comment was thinly veiled irony. The mods often tell me that if I say it's raining outside, it was political and must be deleted. (Someone flagged it>must be political>must be deleted)

In this environment, when companies are forbidden to be honest about what raises the prices, we must call everything out, otherwise we will soon be in a regime even the other side would hate to live in. I think we will soon find out.

Here's something to get  some people's dander up, https://www.youtube.com/watch?v=HLtzSSOexw0&t=308s Danny at GR Research and Sonus Faber.

@sns 

I did see that video and I even commented on it.  I don’t think I said exactly what I wanted to say, but he was doing his schtick on speakers from 2018 and that there have been updates to that speaker since that model was released, two I believe.  
It is kinda funny watching him when he finds something Ferris anywhere in or on a speaker. I see Chicken Little every time he points it out.

@gano 

No worries, you did not annoy me in any way.  I really don’t like where politics have gone in the last few decades. So I do my darn best to stay as far away from them. That’s why I repeated that my question was not politically motivated.

Enjoy the music.