Design a $60,000 Speaker - Start here

@shadorne

That’s fine, but vertical integration:

- No guarantee of best parts
- No more or less incentive to have spares on hand than driver makers IMHO.

Pros:
- Hides cost and makes comparisons with other makers much harder.
- Increases profit margin for manufacturer.

There are some manufacturers that are vertically integrated I like a lot more than others. As a business owner however, I absolutely would want to be integrated. As a consumer, meh, I am going to build my own anyway. :)

I think that this is very often the goal. If you look at JM Lab / Focal for instance, it started as 3 different companies. A cabinet maker, a driver maker, and a loud speaker manufacturer (either JM Lab or Focal, forgot which was which). All three in close proximity in France. I believe cooperation and alignment allowed this merger to eventually take place.

Their strategist is a brilliant guy who focuses on increasing brand value in the minds of consumers and drives design towards this goal with all his energy, quite successfully.


Best,

E

Oooh, no.

As a manufacturer, I need to sell these speakers for $30k / pair, which means I must spend no more than around $10k to make them, including labor and packaging.

Let’s not even get into top end Copper Foil capacitors!

Of course, my goal is to spend no money at all, and sell you speakers, so I will engage a marketing and sales team to separate the retail price from manufacturing cost as much as possible. That’s where the profit lives.

Best,

E

@erik_squires   

I think we agree. There are advantages and disadvantages to each business model in different industries.

So I think the very issues you raise about performance or the best is a determining factor in choice to go integrated or not. If you can't make a better mouse trap then it makes sense to use the best mouse trap that fits nicely within your design philosophy. 

I strongly suspect that those making certain in house drivers for their speakers are doing so because they can't find a better mouse trap that works well or it is too costly to ask an OEM to make a special run of drivers just for a limited high performance application. OEM are going to chase high volumes with low margins or low volumes with very high margins.....it is just economics.

I wish I knew more about driver manufacturing. I mean, is there a show where I can go and buy a woofer press? :)


Erik

This would be a great MBA program exercise.
Off the top of my head, major cost categories to consider:

R&D (including any licensing fees)
Raw materials (drivers, electronics, cabinetry etc.)
Manufacturing
Warehousing
Distribution
Promotion (advertising, dealer incentives, etc.)
Warranty support
Financing (unless the business owner is independently wealthy, there’s going to be a note to pay off! ;-)

Each of these major categories can be further subdivided and refined.

Ttl. Costs/(1-Target Profit Margin*)=Selling Price

*as decimal per cent