How do you determine how much to spend on speakers

A good rule of thumb would be 10 to 15 percent of your net worth. At least. Maybe more.

Krazeeyk,

IMHO there is no set point as to what to spend on what. With 5K to spend. You can put together a sweet system SS or tubes. There are a few speakers in the 750-1500 (DynAudio) range that would easlilly foot the bill. That leaves 3500-4250 for an Integrated, a Digital front end and cables. Let your ears choose.

If I were to suggest a system in your budget:

Musical Fidelity X-80 or X-150 Integrated $1000.00
Musical Fidelity X-RAY CDP $1000.00
B&W Signature 805 $2500.00 (Maby less with the 805S out)
Synergistic Research Alpha Active IC 1M $200.00
Synergistic Research Signature 10 Active 10' is $800.00

Ok I am over by 500.00 but I am a firm believer in cables and that does not include stands.

Michael

I think Douglas Schroeder is using the "DeBeers Equation", heheh.

Personally, it's not the loudspeakers as much as the equipment behind them. I've heard reasonably priced speakers, (4K a pair), THAT I didn't care much for, sound superb with $22K of preamp, mono blocks, and CD player. My own experience proved that. I spent most on speakers, not front end. Consequently, not only did it become frustrating, it was costly.
Front end first, as much as is your budget to do. That is the priority.
Loudspeakers second - and here you can start low and move up with almost a new system each time there after.

The only other point to consider is synergy. Throughout a system, it is important. Details like sensitivity, size, price, resale, cosmetics, (not a high priority but important) should not be discounted.
I like the idea of powering less efficient speakers with big power amps. . . but it's costly. The 22K & 4K system I heard that blew me away was top of the line THOR preamp, blocks, and Shan Lings top CD player, p[utting out 30 wpc into a pair of von Schweigert VR 4JR's. pretty impressive sound came out of those little 2K a copy loudspeakers. (audience & HT wires)

Personally I start with speakers. Whatever does it for me that I can afford.
And then I build a system around them that works as best it can as funds permit.
This way you end up with a good front end that when the time comes to upgrade the speakers, there is little to do to optimise for them, simple as cables, or perhaps an amp, and then move forward.

A "strategy" for progress.....although recently I have been through wholesale changes as everything is getting on a bit in age now. And I've mellowed as I 've got older and priorities do change.