Law Of Diminishing Returns?

+1 for @russ69

@curiousjim 

Don’t ever buy a new car, its value drops 30% the second you drive it off the lot! Same thing with hifi, but if you want new and exciting with a full warranty, you’ll buy new. 

I always enjoyed buying a new auto from a dealership.  I enjoyed the testing of different brands and models, discussing the variations,  finding one that fit my needs and desires that was within my budget, closing the deal, and leaving with my brand new status symbol.  A few months later this euphoria was tempered by the high monthly payments and, after a while, the discomfort caused by knowing how long it would take for me to be out of debt.  This cycle repeated itself for about 30 years.  
I finally realized that I could purchase autos that originally cost more than I could ever afford, eg. Lexus and Mercedes Benz, for half or more off of MRSP.  I now have both of those brands in my garage each purchased by a check which eliminated the dreaded monthly payments.
The first paragraph above also describes my audio journey.  Audio retail stores, shows, videos, and magazines fulfill my exploratory needs. Purchasing everything used, except speakers, satisfies my audio desires.  My enjoyment level stays high.  My monetary discomfort never surfaces.  A perfect balance for me.

Over and Over and Over again Money has nothing to do with sound quality.

Why do you people keep positing this?

It is design and parts quality that make the sound.

I can modify any audio component to be as good as or better than another audio component at any price point.  Been doing this for 20 plus year now.  Most, if not all audio components are built to a price point so they are mostly all compromised to begin with.

This is easy to understand - pop the lid - look at the parts inside a $5K unit and compare to a $50K unit.  Not much of a difference in general terms.

Happy Listening.

There is an assumption on the part of the OP and others that audiophiles spend more money based mainly on sound quality. I would challenge this basic assumption.

This hobby has morphed into a luxury pursuit where there is no longer any practical limit on the cost of gear. There are speakers, for example, that retail for over $1 million. Burmester released mono amps that cost $350,000 a pair. I could go on. At the same time there are dozens of documented blind tests that show that listeners can't tell most gear apart on sound quality. Therefore, I think the question of diminishing returns is mostly irrelevant.

We buy and upgrade our gear because it makes us feel good to do so. We get an emotional response to the story behind the product, the design and aesthetics, input from members of our tribe, and the brand identity. Confirmation bias will insure that it sounds better than the previous stuff and there's nothing wrong with that. If it makes us happy then it was money well spent.

In my direct experience I have tried to determine if upgrading will bring a worthwhile benefit. The core of my system is about 25 years old (Thiel CS6, Krell KSA300s, etc.). I could afford to buy some fairly expensive new stuff if I really wanted it. I've been to 3 audio shows and I have heard a bunch of 6 figure systems that didn't sound better than my setup and some that sounded considerably worse. I have also heard a few systems that I would love to audition in my home; MBL 101 E Mk II, for example. But if I spend the money it will be as much for the pride of ownership as the improvement in sound quality. I would simply love to have a pair of 101 E's plus a pair of those beautiful black MBL monoblocks in my listening room. You can bet they would sound glorious.