- 58 posts total
@ghdprentice If I had been a man of the world, I wouldn't be as misinformed... however I do have someone like yourself to point me in the right direction. I should mention that I've lived in more countries than you can possibly imagine but I must have missed something when I was there. Thank you for your input.... you do understand that this is my opinion only and I understand that it is much different than yours.
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.
- 58 posts total