Seems like Wilson is answering a question that was not asked. That's usually a sign of guilt. |
The market speaks with precision when evaluating essential commodities unless it is deliberately altered by successful manipulation. Current fuel prices might be an example.
In the case of non-essentials, pricing is driven to a great extent by perception which, in turn, is driven by advertising. Reviews are advertising.
Wilson was innovative in design and extremely well connected to the primary arbiter of value at the time, when he started making the Wilson Audio Tiny Tot nearly 30 years ago.
Harry Pearson helped his friend achieve primacy in the premium speaker realm alongside his other buddy Arnie Nudell and both guys made a ton of money off of the illusion that their products provided something unavailable elsewhere.
Arnie wasn't as adept as Dave at keeping his balls in the air so Wilsom emerged as the ne plus ultra for many of you Chivas Regal drinkers.
I agree with Warren that Wilson is entitled to every nickel he can scam from you guys. Why not? This is how our free enterprise system is supposed to work. You pay your money and you buy "the best" and you don't need anybody who can't afford them to tell you otherwise.
Dave just keeps changing the product a little here, a little there and keeps changing the Model designation and keeps raising the price and you keep buying them and all is well.
Why should anyone object?
Now and then some pipsqueeck like me comes along and suggests that you are being duped and that there are better products for less money. Stupid of me. I'm so sorry. Listen, can I borrow your Cadillac? It's the best, right? |
Holenneck - Say what you will, the X-2 is still only a pair of speakers and he's got them priced like an S-Class Mercedes. I get a big disconnect when I look at that comparison. Consider what goes into that car compared to what is in the Wilson speakers. Sure volume is a factor but so is the difference in tooling and parts count and labor. Talk about man hours, the Benz must be 100 times as labor intensive with 100 times as many parts and a reputation for quality that outstrips Wilson by many years and several orders of magnitude.
For these reasons I continue to ignore justifications for his pricing. He charges that much because people will pay it, not because his cost of manufacturing requires it. That argument is illogical. |
Holleneck - I also thought the show was silly. You are right that it could have been about farm equipment and it probably was the following week. It could have been about the upcoming fireworks display or the Prom 2 weeks ago. It was a poorly executed puff piece put on by a local news show. Dave probably helped to write the script, telling the emcee dude what questions to ask. For a company that markets itself to the rich and famous, it was embarrassingly provincial. Dave came across to me like Donald Trump.
And to stay on point, I don't think there is any real justification for speakers to cost so much. Hence, I do not see them as a good value. I would say the same about a $1000 bottle of wine. It is just so far beyond the point of diminishing returns that it cannot be commensurately better than other options available for a fraction of the cost.
Unlike some others, I do not feel a crime is being committed in the sale of these items though I would not choose them at one tenth of the price. Timex is just as good as Rolex. And they're both better than my ex. |
Holenneck -
I chose to use Wilson speakers in my analogy for two reasons.
First - I believe they are the highest profile offender although you are right about there being others. Secondly, Wilson is the topic of this thread.
You say there are cars that are more expensive than $125,000 and that makes my analogy "not even close". Illogical again.
The topic was prestige or pride of ownership or status. Mercedes wrote the book on that topic. Walk out your front door and start asking people what they think of when you say Wilson. Then try the same thing with Mercedes. This is where "not even close" will show up. |
I thought this discussion was about value, perceived or real, and not about economic class distinctions. Whether or not anyone choses to spend their money on a $300,000 bicycle does not prove that the bicycle is worth that much, or isn't. The determinant I would use has more to do with whether people who need to think about how they spend their money can justify such a purchase. As someone pointed out to me earlier, all of this stuff is ridiculously priced. I agree. What we pay for even modest audio equipment is hard to justify relative to what most things in your household cost. What I meant to indicate by referring to Wilson as "one of the worst offenders, is that they move the needle way up on the exploitometer. Their products are priced so far beyond the cost of parts and labor that you can't see them both at the same time because of the curvature of the earth. Think about what it can possibly cost. I just replaced all of my kichen counters with slab granite. The work was done by the premier granite fabricator in our area with numerous upgrade features that added to the cost. I paid $6000 for that. Do you imagine that a pair of X-2 cabinets cost more? Add in the crossover, drivers and binding posts and remember that all these items cost much less in the volume that Wilson purchases than they would if you bought a few. I assure you that cost of parts and materials on those $125,000 speakers does not exceed 10% of the asking price. The normal markup for speaker manufactures is 4 to 5 times the cost of parts and assembly and packaging labor. Does it really cost Wilson $25,000 to $30,000 to build a pair of those? |
Whether or not someone or many people like their speakers does not address the topic of this thread. I'm glad that they are happy and enjoy pride of ownership. That's nice. Nice.
The matter up for discussion has to do with Mr Wilson's public claim that his company operates with a smaller profit margin than most other manufacturers. Because I have some experience on the inside of this game, I see a likelihood that his claim is bogus.
Typically speaker manufacturers who sell through a dealer network price the finished product at about 5 times the actual cost to manufacture and package the goods for delivery. Back office expenses are not included in the base figure for this calculation and neither is advertising or insurance.
Knowing this we will take the model for our conversation to be the $30,000 pair of speakers. If his markup is normal, then he would have $6000 involved in the parts and labor for one, uno (1) pair of speakers. Is this even imaginable? Now consider the model around a $125,000 pair and picture $25,000 in parts and labor for a single pair of speakers. Did you know that you can have someone build you an oversized two car garage with automatic door opener and insulation and sheetrock on a concrete pad for about that much money? I wonder if that could be as labor intensive as a pair of speakers.
I'm not jealous, I'm incredulous. I don't care if we're talking about Wilson or Goldmund or Sigmund or Freud. Dave Wilson is the one who opened this can of worms and aolmrd 1241 asked the question. I think his query is reasonable and I'm amazed that so many of you behave as if you are being personally attacked.
And remember that the numbers I used are for industry standard pricing. If Dave is to be believed, his costs are even higher than those I posited.
If you take the $30,000 model and parse the take, your dealer gets 40 points or $12,000 for selling the speakers at reatail. He may (probably will) discount them but that comes out of his share. Wilson is unaffected. Ole Dave gets the remaining $18,000 from which we deduct the original $6000 cost of production. That leaves $12,000 to pay the front office and the rest of the enumerated costs. Suppose he sells 20 pairs of this model ( probably a very conservative estimate) per month. WOW. That's $240,000. WOW.
What about the $125,000 speaker pair? Well, as the model stands, that speaker generates $50,000 in profit for the dealer and for Wilson. That's per pair. We have to guess that there are few pairs of these sold and that one a month would be an exaggeration. So anyway I believe that Wilson is showing a gross profit on the order of a half a million per month. Good for him. That's the old American success story in a nutshell. He's been at this for nearly 30 years and he's pulled it off as well as Polk or Bose or Infinity. Maybe better.
The only problem arises when he comes to us and asks us to believe he's taking a beating. It just isn't believable. |
883dave-
The post immediately preceeding yours would indicate that I responded in the manner sought by the original poster. That, however, is the only comment you offer with which I disagree.
But, while you are factually accurate, in your cable comparison, I'm pretty sure the analogy wasn't quite parallel.
Radio Shack is selling some sort of raw cable and the Zu product is terminated. I don't know what this means in precise numbers but it seems to equate to a comparison between the price of raw drivers from company A and the price of finished speakers from company Z.
How Wilson's company is structured addresses what happens to the profits more than how great they were.
OVER..... |
Drubin-
Shipping is typically born by the purchaser. The other points you raise are post production and not considered part of the production cost so they don't alter the model as I presented it.
The ads in question seemed to state that Wilson enjoys a smaller margin than other manufacturers. My figures represent an educated guess as to how that might not be true. I don't claim to know any facts and figures. However, even if the margin is any smaller than any number of other manufacturers, the volume and unit price still land him among the gentry.
None of the realities of Dave's finances really matter here as long as the assertion in the ads is correct. The numbers as I see them probably contradict that claim. |
Boa2-
That's conclusive enough for me. What's your mailing address? |
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