Why Is Hi Fi Gear So Darn Expensive?

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.

@emrofsemanon ​​​: I agree! Expensive audio gear is a status marker! The same sound quality can be had for considerably less!