How do you determine how much to spend on speakers

The speakers are a choice that is left up to a persons own ear!
After listening to 10,000 dollar speakers vs.1,000 speakers the pearson might like the sound of the less expensiveitem.
It's all in the ear of the beholder,not the pocketbook.

In building a system. First you buy Speakers that asthetically and acoustically work well with your particular Listening Room. Then you buy an Amplifier well suited to effectively power those Speakers. Lastly you buy the best sounding source component that you can afford. Add-in some good inexpensive Cables, and your done. As far as what percentage to spend on a particular component is concerned, it doesn't matter, there is no formula, it's impossible to calculate, there are far too many variables. The Speakers are the only Component that need to fit a physical and acoustic criteria set by the listening room. There are no physical restrictions on the other components, so this is where I would start, and let the costs/budget play-out from there.

I'll chime in on the "garbage in, garbage out" side of things. Proportionally too little money on the source(s) and even amplification can lead to a kind of dead or ill-defined sound, even through the best of speakers- there's a kind of "musical integrity" lacking, is the best expressionistic means of putting it. I'd generally go roughly one-third for each stage in the chain, more for sources if you have a turntable and cd player- and I'd spend more on whichever source is more often used. No more than 10-15% on i-c's and spkr cables, perhaps more if power cords are also used.

The speakers are a choice that is left up to a persons own ear

For that matter, so are all other components. I'd add the "eye" as well as the ear.

In practical terms, however, the above statement indicates absolute precedence to the speakers: speakers are the ones coverting an electrical signal (that we do NOT hear) into sound pressure (that we DO hear).

I agree with this take on the statement above (even though it doesn't seem like the intended one:)).
In ABSOLUTE terms, you choose a speaker and then work upchain accordingly. In real life's relative terms, things aren't so simple: pbs such as, i.e. "how do you drive said spkr" come to mind.

Maybe a spkr+amp combo is the way to go! I for one would strongly urge in that direction.

With so many great sounding budget electronics and source components these days, I don't think the old "garbage in, garbage out" argument holds up as stongly as before. You have Naim, Arcam, NAD, DK, Musical Fidelity, etc making great sounding budget amps and cd players that take you 80-90 percent of the way there where the big equipment take you. I don't think the same can be said for a budget speakers compared to a high quality full range speaker, the budget speaker just won't have the range or ability to move enough air fast enough or efficiently enough to create a cohesive and convincing full range sound. My opinion is that the shortcoming of a budget speaker and the cohesive sound quality of well made full range speaker is easier to hear and is a big factor in the enjoyment of listening to reproduced music.