[PhilNYC]

On a somewhat tangent note:

I remember reading a few years ago that for a "typical consumer electronics business", manufacturer's pricing for products was based loosely on a 3-5x multiple of material and labor costs for making the product.  In other words, if a speaker cost $100 to build (including parts and labor), a typical manufacturer would price this speaker somewhere between $300-$500.  This pricing would satisfy the margin requirements of everyone along the distribution chain (distributor mark-up, retailer mark-up, etc).  This article was definitely focused a bit on more mass-market types of products (eg. Sony AV receivers, etc), but I think that even when you go to more boutique/specialty products, the ball-park of what multiple to use for pricing doesn't stray too far from that.

With this in mind, it's not hard to imagine that the parts and labor costs are higher for high-end audio gear...but it is hard to imagine that companies are paying an arm and a leg for labor costs of products that are largely made up of circuit boards, even if they are assembled into final products by hand.  And from there, it's hard to imagine that some of these products are extending into systems that cost $60K+ based purely on pricing of parts and labor.  So then what are the reasons why the pricing starts hitting the stratosphere like that?  Imho, I'm looking at these factors:

- Service: If I buy an expensive luxury car, I expect that when I take the car in for dealer service that I be treated extremely well...that drop-off and pick-up times are convenient for me, that my car comes back in tip-top shape with no hassles, that my car gets washed after the service, etc.  Part of what I'm buying is the "Luxury Experience".  In high-end audio, I would think that I would also get this treatment when buying an ultra-high-end system...that my dealer earns his margin by treating me extremely well with installation, follow-up, service (if needed), etc.
- Prestige:  If I buy an expensive high-end watch, I want people to notice it...a "ten table watch" that looks beautiful, sophisticated, refined...oh, and tells time reasonably well.  It should also have something unique about it that I can tell my friends something about it (eg. Swiss-made, hand-made, unique mechanism that started a watch design revolution, pedigree, etc).  It has nothing specifically to do with the accuracy of the time-keeping, but by owning it, I show my friends that I'm "in the know" about these things.  I think high-end audio at the scale that some of these things are playing at need to have this factor as well.

Obviously, performance needs to be there, but I'm making an assumption that the performance is on-par with what can be achieved given the parts and labor.  If a product can't even be "the best" in its' parts-and-labor class, then it needs to make it up in the above areas.  Bose is probably the best example of products that are priced higher because of the above points rather than the performance of the products relative to parts-and-labor.

If a company is able to achieve some combination of performance, service, and prestige that has people willing to pay the price they are asking for all of that, I'm 100% all for it.  That said, if they achieve any of these via unethical means (eg. marketing claims to boost a product's prestige that are intentionally fabricated), then that company should be penalized for it.

My two cents...

[davidrs]

The issue, however, is one of scale, economies, location of, and, research, design and production, and variable input costs.

There are just not enough units of a particular component sold, at the high end of our hobby.

Further, if you are doing this in, lets say Germany, your operational, labor and social costs are much higher than if you were doing the same in, say China.

Therefore the pricing has to be at a level to recoup the much, much higher per unit costs.

Also, some company's business models are solely focused on a certain slice of the market, and that is where they choose to focus their efforts.

The good news, if these companies remain viable, the research and development does trickle down to allow for more 'reasonable' priced products, over time.

[BobRex]

They (Stereophile) do some basic measurements,  but compared to Audio, they are lightweight by comparison.  For example, they rarely provide a impedance curve for speakers as a function of frequency, nor do they generally measure frequency response/distortion curves  They also do not go into the design of topology anywhere near the level like Audio did. 

Agree with the comment about what you are willing to spend.  You also have to make value judgments about how much to spend and where to spend it.

I just looked at a bunch of Stereophile speaker reviews and every single one of them had an impedance vs. frequency graph.  I will go so far as to say that for full reviews (as opposed to a commentary or follow-up) Stereophile ALWAYS provides this data (assuming the speaker isn't such a physical monster to make some of the measurements virtually impossible.  What they do not provide in the same manner as Audio is the polar plots.  The data is there, you just have to recognize it.  I tossed all of my Audios years ago, so I'm doing this from memory, but I don't recall Audio providing step response and cabinet spectral decay.

I also  seem to remember a number of eviews that dealt with topologies, when the product was unique enough to warrant it.

 I have to question if you have actually read the magazine (and therefore know what you are talking about) or not.

[srb]

John Atkinson in Sterephile usually provides so much measurement data that it's enough to send you reeling to the "numbers aren't everything" camp!
 
Steve

[Letitroll98]

To have a meaningful discuss of whether "Hi End" equipment is too expensive, we'd need the sales figures of the units in question.  If your pricing a product at $66k, but selling 27 of them, then we can't really say high end is too expensive relative to that product, it has no market penetration.  On the other hand if your high end product is priced at $899 and you're selling 1.5 million units, then we might say high end audio is quite a bargain.  Anecdotal information that, for example, Moon Audio's amp combo is $66k is meaningless.       

[werd]

To have a meaningful discuss of whether "Hi End" equipment is too expensive, we'd need the sales figures of the units in question.  If your pricing a product at $66k, but selling 27 of them, then we can't really say high end is too expensive relative to that product, it has no market penetration.  On the other hand if your high end product is priced at $899 and you're selling 1.5 million units, then we might say high end audio is quite a bargain.  Anecdotal information that, for example, Moon Audio's amp combo is $66k is meaningless.       

Its important to recognize the components in the Series. Does the top of the line justify the expense over their base product in the same line. Like if $66k amp's nearest brother was 30k. Is it worth 30k more? Here you can find examples of hi fi being a bit too expensive. The comparisons become relative also since the products sit in the same line. Or maybe not  idk

[dflee]

The audio industry is a lot like any other product market in which the sales of outlandish priced items are rarely sold or not sold at all. They are generated to show what that certain manufacturer is capable of producing and to compare the more reasonably priced items they manufacture. While not as great as their premier product, the lower items have the same or similar piece of electronics and delivers 90 percent of the top line. While reviewers are gushing over the premier product, you the consumer will spend an amount of money to get as close to that premier piece as you can or feel great that you have that whatever percent equivalent.

Later
Don

[werd]

The audio industry is a lot like any other product market in which the sales of outlandish priced items are rarely sold or not sold at all. They are generated to show what that certain manufacturer is capable of producing and to compare the more reasonably priced items they manufacture. While not as great as their premier product, the lower items have the same or similar piece of electronics and delivers 90 percent of the top line. While reviewers are gushing over the premier product, you the consumer will spend an amount of money to get as close to that premier piece as you can or feel great that you have that whatever percent equivalent.

Later
Don

Good point!!!

[Tone Depth]

I haven't seen much mention of the R&D expenses (design, prototyping, testing and evaluating, refining) that go into developing equipment. 

It seems that many just look at what is physically present within a component:  circuit boards, parts, wiring, aesthetics when making a judgement on the value of the finished product.

[Freo-1]

I just looked at a bunch of Stereophile speaker reviews and every single one of them had an impedance vs. frequency graph.  I will go so far as to say that for full reviews (as opposed to a commentary or follow-up) Stereophile ALWAYS provides this data (assuming the speaker isn't such a physical monster to make some of the measurements virtually impossible.  What they do not provide in the same manner as Audio is the polar plots.  The data is there, you just have to recognize it.  I tossed all of my Audios years ago, so I'm doing this from memory, but I don't recall Audio providing step response and cabinet spectral decay.

I also  seem to remember a number of eviews that dealt with topologies, when the product was unique enough to warrant it.

 I have to question if you have actually read the magazine (and therefore know what you are talking about) or not.

I subscribed to Stereophile for years. As time went by, the magazine started to provide less technical background and more subjective data (which is fine, as far as that goes.)   

Too bad you tossed your Audio mags, as it perhaps would jog you memory and the deltas would become more apparent (hence a more objective assessment, and less judgmental).   The last few years of Audio was (sadly) not as detailed orientated.   

Audio routinely would cover topology of amps, unique or not.  They had a high percentage of engineers conduct the reviews and assessments (less reliance on audiophiles).


I'll stand by the assertion that Audio (in its prime) provided a more objective/technical orientated approach of reviewing as compared to Stereophile.   There is nothing wrong with the different approaches, as I'm sure many folks prefer the Stereophile method.   When any audio reviewer evaluates a real high dollar item, it would be nice if more technical details were provided.

The points about R&D are very valid.  Surely there is a cost associated.  How much that cost factors int the overall equation is a good question. 

[PhilNYC]

The audio industry is a lot like any other product market in which the sales of outlandish priced items are rarely sold or not sold at all. They are generated to show what that certain manufacturer is capable of producing and to compare the more reasonably priced items they manufacture. While not as great as their premier product, the lower items have the same or similar piece of electronics and delivers 90 percent of the top line. While reviewers are gushing over the premier product, you the consumer will spend an amount of money to get as close to that premier piece as you can or feel great that you have that whatever percent equivalent.

Later
Don

What about the companies like Rockport, Halcro, Vitus, et al that *only* sell outlandish-priced products?

[Freo-1]

There is another thread about Bryston amps (SST 7b SST2) right now.  There is included in the threed a link to the Stereophile review on the amp.  The review runs seven pages, and NO information on the topology or measurements are included other than the advertising data supplied by the company. 

That's the point I was making about the deltas between the old Audio and Stereophile. (To BobRex).

[dflee]

Phil- I have never seen any of the brands you mentioned in any system sections of anyone here on AC or in person. Bet their numbers aren't flying out the door. But on the other hand I wish I lived close enough to see your systems you have in your home. They look great and I for one am a little miffed that one guy can have three really good looking set ups like that!!!

Later
Don

[mix4fix]

Observation on high end prices...
The notion that prices have to be due to customer overhead is bunk; because, the majority if items I ever purchased where not in stock and had to be ordered/special ordered.

Why should I pay the same price for something you don't even have in stock???

...in the time I have to wait for it, I could have bought it from somewhere else; who, could have it in stock and possibly on sale.

[BobRex]

There is another thread about Bryston amps (SST 7b SST2) right now.  There is included in the threed a link to the Stereophile review on the amp.  The review runs seven pages, and NO information on the topology or measurements are included other than the advertising data supplied by the company. 

That's the point I was making about the deltas between the old Audio and Stereophile. (To BobRex).

. 

So much for relying on the web, huh?  I have the magazine in front to me, pages 95 through 98 have all of the measurements and comments by JA.  If you bother to go to the bottom of the first page of the web report (assuming you read that far, and again that may be questionable) you will see a section titled "Article Contents".  In that section you will find a link to a section called "Measurements".  So there ARE measurements!  As far as topology explanation, again I have to wonder if you read the web article.  On the first page you will find the following paragraph:

"Search Stereophile's website and you'll find many glowing reviews of Bryston products, including Larry Greenhill's October 1996 report on the 7B ST, and his April 2003 Follow-Up on the 7B SST. LG also reviewed the top of the Bryston line, the 28B SST, in January 2008. (Bryston's nomenclature, like its engineering, is evolutionary, not revolutionary. "ST" are the initials of designer Stuart Taylor; the "SST" appended to the name of each upgrade stands for "Super Stuart Taylor.")

Read those reviews and Follow-Ups and you'll find exemplary measurements and listening evaluations praising Bryston products for their generally smooth midrange, extended and nonfatiguing high frequencies, and excellent low-frequency extension and control, with occasional mentions of sonic blandness. You'll also read excellent descriptions of the components' general topologies, including the dual-mono bridged circuitry, in which the two amplifier modules in each monoblock chassis are wired in series and driven by opposite-polarity signals. "

So Fremer, lazy bastard that he is, references prior explanations instead of retreading.

You kill me!  First you claim that Stereophile doesn't provide impedance vs. frequency data, which I prove you wrong.  Then you complain about no measurements regarding the Bryston, wrong again!  You also claim that you subscribed, but dropped out when the magazine went more subjective.  The magazine has ALWAYS been subjective, since day one, and became more objective (measurements and an attempt to correlate them to listening impressions) once Atkinson became editor.

Look, you miss Audio, I get that.  It's been gone for over ten years and was going downhill for at least 5 years before that.  Get over it!  There are valid complaints against Sterophile, but you are just pissing and moaning.

[Freo-1]

The Bryston products are first rate, and I have no issue with that.  They have great products and support.  I did overlook the measurement link on the review (my bad).  I saw the end of the article with the manufacture's spec sheet.   

I did subscribe to Stereophile for close to ten years.   The speaker review on the Acoustat 22 was one of the key reasons I subscribed, after buying it on newsstands for some years.  The way Stereophile measures speakers is quite different from the method Audio conducted them.   I get the fact that they (Stereophile) were always subjective.  That's why JGH started the mag for in the first place.  What I was trying to say was that over the years they seemed to have shifted away from the technical side and hired more guys who did not have any engineering background.  My apologies for not making that clear.

Nowadays the articles I've seen do not generally cover topology (although they used to attempt to cover more of that data when they had writers like Robert Harley on the staff).   That is the part I miss the most.  Oh well.  I'm sure I'll get over it. 

The larger point (to get back on topic) is that reviews of ultra expensive gear really can't provide the support information as to "why" the item costs as much as it does.

[HiFiSoundGuy]

  They are products on the market that give you very high bang for the buck like the new and improved BOSE 901 series 6 mk2 speakers. I think they are one of the most musical and least fatiguing speakers that I've ever heard !

[Delta Wave]

  They are products on the market that give you very high bang for the buck like the new and improved BOSE 901 series 6 mk2 speakers. I think they are one of the most musical and least fatiguing speakers that I've ever heard !

Dude, you are so right! I've never heard anything quite like Bose speakers. They're amazing, especially the ones that came in my dads 88' Chevy Celebrity, an astounding sound to say the least.

[Delta Wave]

   
Here is a funny thread: http://www.avguide.com/forums/the-new-and-improved-bose-901-series-6-mk2s

 

[Levi]

Excellent writeup Phil.  I shared your views and knowing your background in high-end boutique audio, price markup, post sale experience etc makes lots of sense.  If I may add market trends adds to the price of the equipment.  I see that manufacturers can dictate the price based on market trends.  It is just an observation which does not make me an expert on this matter. 

On a somewhat tangent note:

I remember reading a few years ago that for a "typical consumer electronics business", manufacturer's pricing for products was based loosely on a 3-5x multiple of material and labor costs for making the product.  In other words, if a speaker cost $100 to build (including parts and labor), a typical manufacturer would price this speaker somewhere between $300-$500.  This pricing would satisfy the margin requirements of everyone along the distribution chain (distributor mark-up, retailer mark-up, etc).  This article was definitely focused a bit on more mass-market types of products (eg. Sony AV receivers, etc), but I think that even when you go to more boutique/specialty products, the ball-park of what multiple to use for pricing doesn't stray too far from that.

With this in mind, it's not hard to imagine that the parts and labor costs are higher for high-end audio gear...but it is hard to imagine that companies are paying an arm and a leg for labor costs of products that are largely made up of circuit boards, even if they are assembled into final products by hand.  And from there, it's hard to imagine that some of these products are extending into systems that cost $60K+ based purely on pricing of parts and labor.  So then what are the reasons why the pricing starts hitting the stratosphere like that?  Imho, I'm looking at these factors:

- Service: If I buy an expensive luxury car, I expect that when I take the car in for dealer service that I be treated extremely well...that drop-off and pick-up times are convenient for me, that my car comes back in tip-top shape with no hassles, that my car gets washed after the service, etc.  Part of what I'm buying is the "Luxury Experience".  In high-end audio, I would think that I would also get this treatment when buying an ultra-high-end system...that my dealer earns his margin by treating me extremely well with installation, follow-up, service (if needed), etc.
- Prestige:  If I buy an expensive high-end watch, I want people to notice it...a "ten table watch" that looks beautiful, sophisticated, refined...oh, and tells time reasonably well.  It should also have something unique about it that I can tell my friends something about it (eg. Swiss-made, hand-made, unique mechanism that started a watch design revolution, pedigree, etc).  It has nothing specifically to do with the accuracy of the time-keeping, but by owning it, I show my friends that I'm "in the know" about these things.  I think high-end audio at the scale that some of these things are playing at need to have this factor as well.

Obviously, performance needs to be there, but I'm making an assumption that the performance is on-par with what can be achieved given the parts and labor.  If a product can't even be "the best" in its' parts-and-labor class, then it needs to make it up in the above areas.  Bose is probably the best example of products that are priced higher because of the above points rather than the performance of the products relative to parts-and-labor.

If a company is able to achieve some combination of performance, service, and prestige that has people willing to pay the price they are asking for all of that, I'm 100% all for it.  That said, if they achieve any of these via unethical means (eg. marketing claims to boost a product's prestige that are intentionally fabricated), then that company should be penalized for it.

My two cents...