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How are Hig-End Speakers Priced?

I recently (early Feb 2012) purchased a pair of Model 61 Human Speakers, intending to build a small office system with them. I've been listening to them through my main system for a few days now, while breaking them in. These were purchased directly from the builder/designer; my cost was only $675, delivered to my door.

I am so very impressed with the build quality of these small speakers and the quality of the music emanating from them (even though they are not yet fully broken in). I'm honestly surprised they are as inexpensive as they are, and have begun wondering how high-end speakers are priced.

The speakers are manufactured in the Northeast US, and (so far as I know) the builder/designer doesn't advertise and doesn't attend trade shows. The speakers are built with only one pair of binding terminals, two hand-built drivers, and a very simple 1st-order crossover using a design I believe is refined from an 1970's-era design. I'm not sure how much the designer is actively pursuing R&D currently.

I'm wondering if there is a formula that speaker manufacturers generally use when designing/pricing their products. For example, does a manufacturer target a price point, and then decide to follow an "industry-standard" formula like (say) 15% for R&D, 15% for materials, 15% for manufacturing/assembly, 15% for marketing, 15% for distribution, 15% for manufacturer's profit, and balance for seller's profit? Certainly, eliminating (or reducing) one or more of the above categories could yield a speaker that is much less expensive than the price point it was designed for.

Any thoughts?
rx7audio
jmcgrogan2's avatar
jmcgrogan2
6,346 posts
 
A grandson runs an import business... sales by internet. He had some small speakers priced at about $40. Few sales.

He reintroduced the same speakers priced at $200. Sold many.

Go figure.

I've heard similar stories before, sometimes even from a manufacturer. Hey, it's hard to knock them. They are simply along for the ride, the market drives them. A LOT of people just want to spend a LOT of money. This isn't quarantined to the audio industry either. You can find this in many luxury entertainment markets.
branislav
405 posts
 
Eldartford, makes you wonder how many high end manufacturers are using the same tacktics?
david12
1,454 posts
 
The editorial in this months HiFi+, discusses the new paradigm of what is expensive, in our hobby. A few years ago, $100,000 for a piece of kit, was a stupid waste of money, now it seems the norm. Who are these people, who can drop $500000 on a pair of speakers? The answer is, not us.
Another conversation with an idustry insider, about a US speaker company who decided to make a B..ls out, top of the line speaker, which came to about $1,500000. They were'nt expecting to sell a single pair, it was more as a marketing move. They took them to a Shanghai show. Some guy listened for an hour and paid for 2 pairs, by cheque.
pubul57
3,712 posts
 
Do you think if a manufacturer does not have a dealer withing 100 miles of you that they should sell to you direct at wholesale - no real reason they should take a dealer's cut on top of what they ordinairly make - right? I do understand paying a dealer for the service and ffacilities they provide, but if I'm not be services by a dealer, I would not pay the manufacturer for a service not rendered.
bombaywalla's avatar
bombaywalla
1,958 posts
 
02-28-12: Branislav
Eldartford, makes you wonder how many high end manufacturers are using the same tactics?
Branislav, EVERONE of them does without exception!! don't think too hard about this as it'll make your head spin & might even get you riled up.....
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