Why Is Hi Fi Gear So Darn Expensive?

When I was in the retail jewelry business, margins percentagewise were greater on the cheaper items, with markups as little as 5% on the higher ones - and this was paying mall rents. When gold doubled in price, existing jewelry was suddenly worth more and we charged more as consumers foolishly wanted gold jewelry more at the higher prices than when they (and raw gold prices) were cheaper.

The point that’s never made when discussing prices is simply that manufacturers and retailers charge what their market will pay. Otherwise, they will either go out of business or have to cut their prices (or both). Big box retailers price their products based upon price sensitivity - in a grocery store, milk, bread, eggs and bananas are have much lower markups than the rest of the store as people determine affordability by those items and shun stores they perceive to be high.

Years ago, Mark Levinson’s original company’s products were held by many, including Stereophile, as the top of the then available consumer level equipment and now, even used, are still going for more than an average consumer would pay. Since demand still exceeds supply, prices stay relatively high, even for decades old items. How many of these $100k speakers or amplifiers will hold that value?

There are two standard ways of pricing: First, the market: basically compare your product with the available on performance and aesthetics, then to price accordingly. The second is cost plus… basically all costs plus the profit you require. If what you want to manufacture has the market price less than the cost plus price… you should not produce it… you lose money.

As a consumer you have a choice. Buy it or don’t. So the market of consumers will determine if the speakers you are talking about are worth it. There are a few people out there with lots of money with no sense, but this is the exception, not the rule. Folks that have made a lot of money typically have worked for it by being perceptive, educated, smart and not wasting money. So, if these speakers are successful. There is probably something to them.

@music_is_life 

Nice Tony!

I think this video quite explains some of the costs