Why are Harbeth speakers expensive while its drivers are not.

As a former engineer, I worked on my share of proposals writing both tech sections and working on the cost bidding.

The price for a 'thing' needs to include the time to pay for the design, prototyping, testing, quality assurance, documentation- all this time is a cost to pay all the people working on just getting the 'specs' completed.

Then there is the time in setting up the plant to do the manufacturing run, and the time in plant to then start making the item.  Everyone on the line has to be paid.

And the plant has to be paid for -usually a lease to be paid to the actual property owner.  Then there are the utilities for the plant (lighting, electricity, water, maintenance).

Then benefits for the workers - they should have benefits, right?  Health Care, a savings or profit sharing plan, etc.

And then the actual profit for the company - that is why they are in business.

Don't forget advertising costs, travel to shows, meeting with distributors.

All those costs then get prorated into how many units the company thinks they can sell (along with all the other products the company makes).

The cost of a 'thing' has to factor in ALL those other costs - not just the parts.  

Thanks ekikt. That's an excellent breakdown. We tend to forget all that is involved.

Thank you everyone for your info. I learned a lot today. I have a small pair of Harbeth, I love its sound - the BBC sound, but somehow feel that it is too expensive for its performance.  

In the future, possibly, I will buy drivers, especially, full range ones to build 'my speakers' . I guess fullrange is the easiest because you dont have to build the crossover. 

The simple answer is if they sold it at a lower (or higher) price, the decrease in revenue would not make it economically feasible to produce the speaker.

Selling at a lower price decreases revenue and creates a higher demand. Selling at a higher price decreases demand and can result in lower sales, especially if there are competing products at that price point. As an example, if you sell 100 widgets for a dollar, the revenue stream is $100.00 which covers labor, overhead and profit. If you decide to increase profit by raising the price 10 cents, that may result in selling, say, 90 widgets and the total revenue is $99 which means a loss of a dollar. Or your sales can collapse completely if there are multiple widget competitors who kept their price lower.

Setting the price to cover expenses and make it worthwhile to produce a product is tricky, especially when there is fierce competition for the consumer's dollar.