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Stratospheric audio gear prices

The more time I have under my belt pursuing quality audio, the more I realize that high audio gear prices have some basis in their quality. Yet there is a limit. When you buy a Ferrari the cost is high, but you can see the money involved in the design and parts. Many would argue that high quality audio gear is similar to the quality and design of a hyper-car. But when you look a the sheer quantity an complexity of this kind of car, there is no piece of audio gear that compares. To me, a piece of audio gear that costs as much as even an inexpensive car is just a manufacturer cashing in because they can. Can you imagine what audio manufacturers would want to charge for a piece of audio gear that was the size and weight of a car? Like $100 million.  I believe it just drives the whole market up and we end up getting a little bit suckered. This is all perhaps a little overstated. I guess I just want to shame audio manufacturers. I do understand that they are not charities, or here for the betterment of mankind. If you are not frustrated by this, good for you.  Here is a quote from a book about marketing. The reference is a victim of link rot. Nevertheless it has common information. 
  

"Premium Pricing

Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction . A premium pricing strategy involves setting the price of a product higher than similar products . This strategy is sometimes also called skim pricing because it is an attempt to "skim the cream" off the top of the market. It is used to maximize profit in areas where customers are happy to pay more, where there are no substitutes for the product, where there are barriers to entering the market, or when the seller cannot save on costs by producing at a high volume. It is also called image pricing or prestige pricing.

 

Luxury has a psychological association with price premium pricing. The implication for marketing is that consumers are willing to pay more for certain goods and not for others. To the marketer, it means creating a brand equity or value for which the consumer is willing to pay extra. Marketers view luxury as the main factor differentiating a brand in a product category."

Source: Boundless. “Market Share.” Boundless Business Boundless, 26 May. 2016. Retrieved 07 Feb. 2017 from https://www.boundless.com/business/textbooks/boundless-business-textbook/product-and-pricing-strateg...

ericrt
patrickorlando
17 posts
 
Hi, If you make something, who would you rather sell to, poor people or rich people ? 
roxy54's avatar
roxy54
7,756 posts
 
havocman,
Slow down, and you might not make so many spelling mistakes.
dwmaggie
222 posts
 
Pricing? Lets try a diamond from DeBeers. It retails for 200, your local jewelry store paid 25. They offer you a 75% discount, and you pay 50 for it. In the jewelry trade the markup is called Keystone. Even after the 75% discount they make a nice profit. Caveat emptor.
ashoka
83 posts
 
You hit the nail on head
One example is speaker cost is 39K different finish which is automotive paint is + 5K.
One anecdote read in stereophile is a seller demanding to price in 80K for Retham Maarga which sells at 10K then only he can put it in his shop. Another is price keeps on increasing as the demand soars.
orgillian197
119 posts
 
Clearly there are people on this thread who have no concept of retail pricing. I’ve managed hardware and jewelry stores, and spent 2 decades as a territory manager specializing in adjusting retail prices based on price sensitivity and turnover. The more expensive an item is generally, the lower percentage the markup is. The cheaper an item is the higher percentage the markup is, unless it’s a price sensitive item - good examples are milk, bananas, bread, etc. Most people know what that item should sell for and, as such, regardless of whether it’s cheap or pricey, there’s less margin in it.

Using diamonds as an example - a mall or chain store, due to higher overhead, 99 times out of a 100, cannot sell to you as cheaply as a source that has only one or zero retail outlets. Same holds true for audio stores. The same principles of price sensitivity and markups apply, but the brick and mortar stores have to factor their costs of multiple locations rented, more employee hours, etc into their prices - and either lower their markups to match the online sellers or be too high priced if they don’t.
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