What makes an expensive speaker expensive

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. 

I have been searching and researching speakers for the last few months to replace my Paradigm 5Se's, which I've had for something like 25 years.

I probably don't watch my dollars as closely as I should, and when I was looking at some Triton's in the $2,000 (CDN) range, it didn't take long for the salesman to start talking "deal".

Price is important, but I like to think of price as a flexible range and understand what my options are within that range.

I also find that "marketing" encompasses many different things. Sure there's the hyperbole but the information presented can sometimes be helpful. What I find most frustrating are speaker companies that have so many different products, all priced very close together, and provide no clear idea of how they differ except for their price point.

Speaking of crossover parts, it is easy to take an inexpensive low and mid grade speaker to a much higher level by just replacing the caps, resistors, and inductors to higher quality ones.  I've done this to 4 sets of speakers over the years and have had wow reactions afterwards.  

Speaker companies have relationships with capacitor manufacturers for their supply chain.  For example a high end capacitor manufacturer such as Mundorf supplies all the caps for their entire line. The top product could use their oil/silver/gold caps that would cost a normal person like you and me $100 each but are sold to the speaker manufacturer for a little over cost at $20 each but the manufacturer also buys the cheapest Mundorf without any branding for their lower products in much larger volumes.  These relationships are made over years and even decades.

"Speaking of crossover parts, it is easy to take an inexpensive low and mid grade speaker to a much higher level by just replacing the caps, resistors, and inductors to higher quality ones"
While I agree 100% with audioman2015,  I want to caution anyone about replacing Inductors.... Each inductor, yes has a inductance rating in henry or millihenry, they also have a resistance rating... For those that don't know,  a speaker may be crossed at 6db per octave at 2500hz,  but when you change the inductor,  if you do not compensate for the impedance change in the inductor itself,  you have effectively changed the crossover slope or point or both.  So for those that want upgrade,  that's fine, but unless you are capable of these measurements, I would recommend against inductor changes..... ESPECIALLY going from a cheap steel, iron or ferrite core to an air core... these resistive values can be dramatically different. I hope that this is helpful. 
Tim