What makes an expensive speaker expensive

The hi-fi market doesn't seem broken to me at all, and it's been pretty much a niche market all along. I'm not sure why you think it should be otherwise... Why does that trouble you?

I wasn't expecting a serious question to my satirical story.  I ran with it simply in hopes someone else would also be amused.  The jeans analogy is way too silly to really make a point, but car analogies are quite popular--so I'll try again, same idea, different angle, no attempts at humor.

   Many years ago, when shopping for a slightly sporty but mostly cheap & fuel efficient car, no one at the dealership--or even online--suggested I test drive a Ferrari so I could understand what driving was really like. There weren't even Ferraris in the lot to test drive, simply slightly nicer, newer Hondas.

  Shopping for stereo at anywhere other than BB, you're presented with those Ferraris in person, and as an ideal to aspire to, if not attain. After all things aren't that bad once you've saved up for the Boxter. Perhaps I'm just too cynical to realize that people are just being friendly, sharing their passion, realizing I'll likely never get to experience the same at home. Regardless, the marketing in hi-fi certainly reinforces the idea that you're not getting truly close to the recording without a serious investment. Perhaps I'm too gullible that way.

  In real life Hondas & Toyotas are exceedingly common and well-regarded.  But what would be the audio equivalent of a Honda? Bryston maybe? No one I know in has anything like that--they have the stereo equivalents of old beat up Yugos, SmartCars, scooters & bicycles. Perhaps I need better friends.

  I don't begrudge the well off; but outside of this hobby I don't exactly mingle in the same circles. Perhaps I'm just too socially isolated--yet I've never found the need to go to an exclusive restaurant just get a better burger than McDonald's.  

  Conversely, I do remember a time, when I tip-toed past $1000 bottles of wine to the sad back aisle of an upscale wine shop just to get something better than a Budweiser. Now, thankfully, its not difficult at all to find a good craft beer.

   I think that's it: I'm troubled because I feel like there could be more of a market. Yes, the audiophilia merry-go-round of gear changing will always be niche; old-fashioned room-filling multi-component monolith based systems will always be niche.  But does that really mean an investment in a good stereo has to also be niche?

  If properly priced (complete system under $10k) & marketed (think Beats/Tidal) couldn't something along the lines of the wireless Goldmund speakers or the Avant-Garde Zeros be successful? They're both a bit more, of course, but with a few tweaks & enough sales, the profit would be there. Or perhaps something like a Spatial M3S with built-in dac/amp, optimized for corner placement like an AudioNote for under $5k (maybe not exactly possible as open baffle, but hopefully you get the idea--I'm just trying to stick with products I've recently heard).  

  But almost no one is designing products at that level of quality & refinement with the accessibility required for a new audience (though Devialet comes to mind). That's what keeps it niche.* And the lack of mainstream adoption of anything related to good stereo sound is what keeps the pricing--if not broken--too often far too inflated. At least for me.

Kirk

*Not the only thing of course.

Good question. I believe most of the cost is attributable to the time involved with getting the speaker to sound 'right' to the designer. This 'sound' is a product of the drivers, crossovers (if any,) cabinet materials, internal cabinet bracing, baffling, shapes to reduce cabinet resonances, etc.  In short, it's a helluva lot more than building a box and mounting some speakers. But don't take my word for it, build a box, get a crossover, mount some speakers and listen to it...nothing like walking a mile is somebody else's shoes to get an idea of what they go thru.

After writing all that, it turns out I totally missed the Kii 3's at Axpona--last product on the page here:
http://www.stereomojo.com/AXPONA%202016%20CHICAGO%20AUDIO%20SHOW%20REPORT%20PART%201/Axpona2016Audio...

I think Darko mentioned them before too.

This is a very interesting thread.  I don't know much about expensive speakers but I do know about low to mid cost speakers and how lucrative sales can be.  

My wife used to work at Fry's Electronics where they sold low to mid grade speakers and carry brands like Klipsch and Velodyne subs.  There is about a 70 to 80% profit margin on them for Fry's.  Any employee can look them up because of their employee discount.  Now if those companies can sell a $1000 speaker to Frys for $200 and still make good profits after covering their expenses, then you can imagine what goes into the materials, design, etc.

I actually stopped buying expensive audio gear at MSRP when I found out that a high end cd player which I was about to purchase and cost $4000 - well the online authorized retailer was going to pocket $1200 for running my credit card, printing a label, and pulling the box from storage for Fedex to ship.  If my money was getting back to the manufacturer it would mean one thing, but for the store to make $1200 for less than 10 minutes of work was the ultimate deal breaker.  

Now with more expensive speakers and any other expensive gear, the market is even smaller that can make the purchase so there is much more of a risk involved.  Higher risks warrant a higher rate of return of investment. Companies are started every day and fail everyday and lose lots of money but those that do make it are making considerable profits. They wouldn't be in business if the rate of return wasn't high enough for them in the first place. 

What most folks don't realize is that the mark up on high end speakers will range from 50% for a Wilson to only 33% for some other top brands.  Folks don't always realize how much money some of these folks have to pay for their components since they aren't buying huge numbers at a time.  Some of the caps alone can cost these guys over$100 each (or more).  That adds a lot of money to a speaker when you figure they need at least one or more per speaker and they will use the business model of marking it up 100%.  That alone has just added $400 to the cost of a speaker.  That's why you often see 'special' 'signature' additions costing so much.  When I found out what Vandersteen is putting into his crossovers, I then realized who much we don't see in a speaker.  In a really good speaker there are so many 'hidden' costs that we don't see and that's in addition to the overhead a company has to go along with the R&D we've all been talking about.  

Yes, these folks can make a nice living, but only if they are smart business people who give you more than you expect for the money as each of their price points.  Very few companies have been able to pull that off.  That's why you only have a handful of companies who have been around since the 80's or earlier who are still around and most of those don't even have the same owner and have changed their sound so greatly that their loyal customers don't even like the new offerings.