Why Is Hi Fi Gear So Darn Expensive?


Why Is Hi-Fi Gear So Darn Expensive?! - The Absolute Sound

Interesting read.

"I recently heard a small 2-way stand mount speaker at a show. The sound was excellent. The product was priced at $50,000 or thereabouts, per pair. Allowing for distribution and marketing leaves about $25,000."

$25000 for distribution and marketing? Really? That much more for this than a similar product at 1/10th the cost?

I don’t doubt the marketing cost per unit could be much higher with boutique products. Makes sense. Is the cat is out of the bag regarding the value proposition of boutique products?

How about fancy fuses marketed for free here that cost practically nothing to ship? Oh my!

I guess there are "excellent" expensive boutique products and others that offer value everywhere. Hifi not unique. Take your pick! Live and learn!

The article also chalks up people’s reactions to high-fi prices to emotion. What about the sound they hear? Real or emotionally distorted? What would Mr. Spock think about that? I know he likes music...he plays a harp!

128x128mapman
Post removed 

What’s amazing is the sheer  number of ‘cottage’ hi fi manufacturers who create products north of £30000. Given research and manufacture costs for what is probably a small number of sales, I’m not surprised at the price for such high end gear, even with the huge mark ups in price. I guess the more established manufacturers can afford, and need to, to create a flagship product for competitive reasons, benefiting from the trickle-down effect into mid-range products. But for smaller manufacturers, not sure how they make a profit if they just product a couple of high end items.

Hi-end hi-fi is all about creating a demand.  This has to be done with advertising and marketing, which are very costly.  That's where a lot of sales revenue disappears; the $25,000 or 50% of revenue in @mapman 's post.

Then you have all the overhead, employment on-costs, health & safety, taxes, compliance costs, legals etc etc.

As well as the R&D costs.

Truth is, it would be surprising if even 15% of revenues go into the hard components contained in the equipment being sold.

That's the fact of life on doing business in an advanced western economy.  Everything is on-costs.

My dad (and he was an accountant) used to say 'why should I pay $5 for a bowl of soup in a restaurant when I can buy a can of soup for 30c?'.   This, essentially, is the answer to mapman's dilemma.

Modern advertising has convinced people that things must cost more to be better! 

When I worked at a high-end store back in the late 70's the profit margin on most gear was 40% - which left some room for a customer discount to close a sale. I expect it is about the same today.