MSRP, diferentiation and the illusion of value


I've been an audiophile for a very long time.  I've gotten to listen to a wide variety of gear, and even participated in the creation and manufacture of some audio gear in my past.  Took college courses in audio engineering I was not prepared for, and read quite a bit from the usual audio rags.

I want to share something I think every audiophile should know, which is how manufacturers leverage the suggested retail price (MSRP) as well as product differentiation to create this illusion of value.

A lot of gear sounds different. Cables are good examples. You make a cable which sounds different to a perceptive ear.  It doesn't matter if it's better or worse, but just make it different, and raise the MSRP above other cables costing similar prices to manufacture. Throw on some connector jewelry and exotic fabric to dress them in and bam, your $1 to make cable just became $250.

My point is, too often audiophiles want to equate different sounding with better. If the MSRP is higher, well, that reinforces this idea that this difference must be going towards some illusory holy grail, floating above the tower of nuns. Another factor that benefits the seller is that we almost never ask ourselves how much this difference is worth.  Lets accept that these cables, or speakers or amps are different sounding, and that you have judged that difference as preferable to what you wanted to buy when you started. How many of us step back and ask "is this difference worth the $$$ being asked?" Will it make my life that much better, or am I just bejeweling my sensual pleasures every chance I get?

I'm not begrudging anyone the right to spend money how they please.  I do however think audiophiles who feel like they work hard for their money to stop and think about these natural forces when judging how they will spend it.
erik_squires
@glupson
Doesn’t it seem that Tekton owners often feel someone is after them, or their speakers? What is up with that? Any mention of Tekton and it flares up.
It’s probably because of many posts from particular forum member whose speaker suggestion seems to default only to Tekton regardless of the audio chain components or what the audiophile is trying to achieve. Likely most of the resistance is from those who don’t believe in a one-size-fits-all.

I heard the Tektons at RMAF. It sounds great for the money maybe even a bargain, but is rather large and appearance may be an acquired taste.
I generally purchase used equipment.   The secondary market allows most components to settle around their intrinsic value.   A Dynaco ST-70 will never sell for the price of a McIntosh MC225, regardless of what a seller may think.   Conditions are not the same in the new item retail market.   Transparency is deliberately avoided because an opaque market benefits sellers more than buyers.   I recall the TAG McLaren group purchased an audio company with an established line of components.  The new owner commissioned new casework  with thick metal faces, substantial metalwork, and shiny connectors.  Looked great, and expensive.  MSRP was 2x the price of the old units made by the company before it was purchased.  Most reviews were favorable, and some were fawning.  Then a reviewer opened up the brand new case and discovered the old component was literally bolted in place, with additional electrical connections to the new casework.  TAG was forced to suspend sales of the model, and later sold off the audio company to another buyer, at a substantial loss.    There was another company that tried to pull roughly the same stunt with a CD player and DAC, until they were exposed.    And companies wonder why buyers are reluctant to pay MSRP ?
Another factor to consider is how the component makes the buyer feel.  There are several examples of buyers choosing to pay higher prices, or believing that a higher price implies better quality, because paying the price gratifies the buyer's ego.   If one takes a few min for a web search, one can find reports from audio industry execs regarding the practice of raising prices, and repositioning the marketing of the line, then seeing sales volume increase because the perception of the line is now "better".  The key to realize is nothing affecting sonic quality of the line was changed !  Only the price and marketing strategy !     I see this trend in other consumer spending areas.   Wristwatches are a prime example.  There are just a few OEM watch companies that make watch movements for most of the brands sold today.  One can purchase 2 watches, 1 for $x and another for 2x the price of the first-  and they will have the exact same movement inside !  Only difference is the case, and how the watch is perceived in the market !    Automobiles are a great example of brand management affecting price.  A VW Touareg has the same engine, transmission and basic chassis as the Porsche Cayenne and Audi Q5/Q7, but had a substantially lower MSRP.  It was made on the same assembly line as the other cars, but was sold with a lower level of accessory refinement.  Mechanically it is the same car.   But try telling that to someone who paid a dealer for the Porsche or Audi !   We have a Touareg, and use an independent German Car specialist for service.  I asked the owner about differences in service requirements and repairs across the 3 models I referenced.  He said basic replacement parts and service requirements are the same and part numbers are interchangeable.  He also said he is able to charge more for some services, because Audi and especially Porsche owners expect to pay more than a VW owner for service and repair.   Perception vs intrinsic value.
There are just a few OEM watch companies that make watch movements for most of the brands sold today.

Well, don’t get me started on this one. I have owned a number of famous name Swiss watches. The most reliable and accurate one I ever owned was a late 1960’s Longines. The other 3 required numerous trips to the watchmaker.

Both of my Seiko’s, the mechanical and solar/quartz have been more accurate and more reliable than any of the modern Swiss watches I have owned.

As a result, if I want to buy a Swiss watch, I only buy vintage. More reliable, more accurate and a far better price point.

Best,

E
Different is not necessarily better. 

If you think it’s better, however, go for it. 

I do believe in things like context and proportionality, and social responsibility, and therefore do begrudge spending disproportionately on audio.