They know we will pay anything they can think of

@waytoomuchstuff

 

+1

Each component sale must pay for the below (just a quick list off the top of my head).

Cost of Research and development

Design (Includes hundreds of hours of listening and swapping out different parts and breaking them in). By very talented and expensive engineers.

Manufacturing set-up: Setting up a line, developing testing stations along the way.

Design packaging —- pay for set up

 

Cost of Manufacturing:
Cost of Materials

Cost of ordering dozens or hundreds of parts with different lead times (this takes time and if you are missing one piece… your dead in the water).

Cost of holding the inventoried parts and finished goods

Cost of holding large quantities of repair sub components for sometimes decades.

Cost of packaging

Manufacturing Costs

Labor (health insurance, time off, taxes)

Utilities: Rent, electricity, warehousing

Cost of IT. Computers, software to run the business, networking.

Returns / repair processing

Cost of selling:

Sales force… if even only one or two .

Advertising - pages in mags, Google searches… etc.

Coordinating add purchasing,

Developing and managing a global network of retailers.

Road trips to manage retailers / distributors. Pressesce at Audio Show all over the world.

Order entry, inventory management.

 

Customer support line / technical support.

 

Finance:

 

Accounts payable

Accounts receivable

Manage cash

manage accounts that do not pay, make sure accounts receivable do not grow faster than accounts payable or you go bankrupt.

Cost of Manage employees and operation

Periodic accounting cycles, annual tax returns… W2 for all employees

Employee relations

Taxes

 

The above must be paid for by the sale of each high end component. The higher the price, the lower the sales number… the more each unit must cover it’s development, manufacturing cost and the cost of ongoing operations.

 

@invalid I really didn't want to say this at all but what made me think of it was that the preamp didn't sound good and I was wondering if the rep thought he could get that kind of money for a preamp that wasn't very good. There is also a much advertised speaker that is along the same lines.... doesn't sound very good but asking price is nose bleed high. They have been in business for years so I guess that strategy may work. Again could be my opinion and also because someone is buying them I guess.

The other way to look at this is maybe the prices and performance are fine and your ears/taste are what’s off here.  Just because you don’t think they sound good doesn’t make it so.  The free market takes care of these things, not your individual ears and personal tastes.  Frankly, your assertions come across as both ignorant and arrogant. 

I wonder what speakers the OP is referring to above?  The ones that don't sound too good.  

Also would be good to know where you heard them to form the conclusion.  Why not warn us about them by giving some details?  Thanks.

@frankmc195

Good morning/afternoon.

I think we often overlook an element that is a critical element of the true "cost" of an item. The intellectual component. It seems we agonize over the price of "raw components" as the true "cost" of an item and dismiss the engineering, design and talent required to bring something from a sketch on a napkin to finished form -- ready for public consumption. This is flawed logic in my opinion. We are quite used to paying for "opinions" and "expertise" in purely intellectual fields such as medicine, financial planning, law, and others. There are zero material costs attached to the total price of those services in many cases. Yet, we expect similar (and, perhaps even rarer talent) in the field of high performance audio to be served to us at no (or, little) cost.

To be reasonable and pragmatic about this, let’s just set a number for the "financial burden" of a top audio engineer at $200k as a cost basis. (May be low, may be high?). If a manufacturer builds 1M of an item, that’s 20 cents per item for engineering. If they build 10, that’s $20k per unit for engineering. This is a REAL cost of production, not a massive eqo attached to the piece. IF we want to drill down a little deeper, this represents the COST to the manufacturer with no consideration for profit for the manfacturer OR the dealer. Doing the math and factoring in manufacturer wholesale "mark up" to dealer, and "standard" dealer gross profit, this may represent something closer to $38k addtitional price of the item at "retail" for engineering.

Successful manufacturers look at the market BEFORE they throw considerable resources (and money) at it to determine if there is a good chance of success before throwing a "dart" at the market to see if they get close to a bullseye. There is no "luck" attached here. Just smart business planning, with minimal risk. The point being, if we see "finished goods" out there at a price (even those well above our pay grades) it’s more likely than not that it represents "fair market value" and will appeal to the right (target) customer.. We may not agree with that value. But, it’s up to us to adopt or reject it.

To keep this specific to the 22k preamp that the OP brought up, I have a Luxman C900u (one can buy it new in the US for between 15 to 20k) and a Yamaha C5000 (10k new). I was able to get the Luxman for  half the cost (couldn't pass that up)  and was lucky enough to snag the Yamaha for less than msrp. I would put either one of them up against any SS preamp at any price.

You open either unit and it is a work of art, i.e. if a guy understands anything about analog circuit design. It is has always been its own type of black art, that a considerable number of electrical engineers should be able to tackle (no problem there). The catch is....the sonics of circuitry which no electrical engineering coursework would ever talk about. This is empirical information w.r.t iterative design acquired over decades of dedicated listening by engineers who are also "sound experts".  Am i willing to pay that guy in Yamaha and Luxman that much, a guy who is willing to slash his wrists if he did a poor job at work? Sure...that level of competence and work ethic needs to be rewarded.

But, there are certain "elusive" brands in the "high end" who get it designed/fab'd completely in China. Am i willing to pay that poor Chinese engineer that much for his pain? Sure.....But, am i willing to pay the deadbeat dude who brought it over here for pennies on the dollar, put his brand name on it and suddenly managed to charge 50k? I sure as flip have no intention of paying that deadbeat anywhere close to that amount.

On a similar note, brands like Luxman, Accuphase, etc need to go manufacturer direct and cut the middleman unscrupulous dealer completely out. The product sold itself, sells itself and will continue to sell itself on its own!! I am willing to pay that class of manufacturer for his hard work and expertise. Am i willing to pay that dealer who sent an email, answered a phone call here in God's own land and claimed 50% of msrp (He sits there and sucks on that 50% like a leach while doing a whole lotta nothing)....lol, not only no, but, hell no!

Pay the guy who's worth your hard earned cash. Don't pay the scoundrels and deadbeats.

 

Once again all these are my opinions only and may not conform to yours.