Economics of small speaker manufacturers

Great topic and while I don't have answers, only more questions, I do look forward to reading what the better informed A'goners have to say.

Smaller "boutique" manufacturers emphasize the savings affected by eliminating layers of marketing and distribution. So, is Tyler's Woodmere II or Linbrook II actually better than comparably priced models from Spendor, Proac, B&W, etc?

OTOH, the other camp would point to "economy of scale" and perhaps cheaper production costs overseas. So, is Quad 22L, or LSA and DCM models, actually equal to more expensive boutique products from Tyler, Salk, GMA?

So, we have two competing effects, both real, and I don't knpw how they balance out.

One thing is sure: By going to a boutique, you can get personal attention and customization. People have been able to talk Tyler or Salk into modifying just about anything to accommodate their needs. However, I don't know how price/quality equations compare. Looking forward to the discussion. :)

Manufacters sell to distributors. The distributor marks up over 30%-100% Again dealer marks up 30-40%. So most factory direct loudspeakers would cost at least 3xs as much if purchased from a brick and mortor shop. Many manufacters produce items in large scale,mostly over seas this reduces costs per unit. A small factory direct manufacter has higher manufactering costs per unit than the big guys. The small manufacters do seem to offer more performance per $$ spent. Small manufacters can respond to market changes better than large, small also can provide designs that no large manufacter would dare touch due to hi-costs and limited markets.

Based on the readings so far - it is being assumed that, in this case of reference, Tyler isn't marking their product up the '30% to 100%' that the distributor would make and putting it in their own pockets.......Maybe the example used here, the $4,000 Linbrook should be more in the $2,500 range but is being marketed at $4,000 and Tyler shoves the $1,500 (distributor markup) in their pockets.

O.S.L.I.

Dan
OutSideLookingIn

isn’t the bottom line, what is the actual quality of the product? any piece of audio gear is more than the sum of it’s parts, i’ve heard pieces that had all the best components but did not have the sound. some large companies gear is well worth the price, yet with others you get the impression you are paying more for their marketing etc than for the sound quality. we could make arguments about economies of scale vs low overhead all day long and the bottom line is still how does it sound? i think Aktchi has summed it up pretty well and one of the real benefits of the small maker is the personal attention. this makes me think of guitar builders. i’ve been a boutique amp builder in the pro world for many years as well as a player, hence i personally know a lot of guitar builders and manufacturers. i can say that while the manufacturers do benefit from scale and resources, in general the best guitars are built in small shops and usually for comparable prices. but and here’s the big but, you have to know what you want.

in general the economies of scale and resources are pretty much offset by marketing costs and extra markup. few if any high end speaker companies are churning them out by the tens of thousands and CNC machine time is readily available to small manufacturers. and yes i’m sure some small builders are putting their prices at the same point as larger companies products which you can hear at a brick & motor store while others try to keep their prices as low as possible reflecting the lack of dealer/dist. markup. again bottom line is the actual sound and quality.

this brings up another facet of this issue that i occasionally hear. sometimes people talk about the cost of the parts that go into a unit as if that should be the sole determining factor of the final price. yes it should play a large part but there is also the cost of developing the product and often that entails many years of work and sacrifice. large companies include this as development costs and there is no reason for boutique builders to be expected to work for nothing. sometimes when prices jump that is precisely what has happened, the company had been charging based on costs and overhead and then realized they needed to recoup some of the development costs.

well, back to making sawdust ; )

lou

direct or not, big or small....calculate roughly 20% of the mslp to calculate the cost of goods. though big companies of course buy components for less, they in turn have other expenditures. if a company is spending more, ironically, growing their business could put them out of business.