Is it possible for a high end manufacturer to overprice their goods?


Having just read the interesting and hyperbole laden review by RH of the new Rockport Orion speakers in the latest issue of The Absolute Sound, one thing struck me..

is it possible in the high end for a manufacturer to overprice their product ( doesn’t have to be a speaker, but this example comes to mind)? I ask this, as the Orion is priced at $133k! Yes,a price that would probably make 99% of hobbyists squirm. Yet, the speaker now joins a number of competitors that are in the $100k realm. 
To that, this particular speaker stands just 50.3” tall and is just 14.3” wide…with one 13” woofer, one 7” midrange and a 1.25” beryllium dome ( which these days is nothing special at all…and could potentially lead to the nasties of beryllium bite).

The question is…given this speakers design and parts, which may or may not be SOTA, is it possible that this is just another overpriced product that will not sell, or is it like others, correctly priced for its target market? Thoughts…

128x128daveyf

@waytoomuchstuff 

A little about the luxury market: Centi-millionaires, traditionally, don’t loose sleep agonizing over whether or not they received strong price/performance when making a purchase.. They are primarily concerned with owning something that really IS something worth owning. Sure, they’ll brag about the "guts" or "workmanship", but their true motivators may be the intangibles that can’t be measured. What is the prestige in owning the best of the best actually worth? And, if it IS expensive, wouldn’t it be viewed as a badge of honor rather than a shockingly high-priced trophy?

Very well put. Their motivation by the "intangibles" specifically referenced here place them outside of audiophilia, in my opinion, as their concern is about their power (relative social status) and that is neither about "sound" nor "music." (Nor about their soul, if we channel Pope F.)

we could look at various price ranges to see if a significant and meaningful gap exists whereby a segment of the buying public is being ignored, or has been abandoned altogether. As a result of that 2x product introduction, is there still a healthy market for legitimate high-value products at 1/2 that price, and somewhere in between? IF that 2x product negatively impacted the viability and availability of those other (lower) price ranges, then some measurable damage has been done.

This is really insightful. Let me see if I got the gist: the intrusion of hyperbolic price increases ("game-changer" products and prices) creates a carve-out which damages an existing market segment. That segment has high quality (if a bit more expensive) stuff. They experience a new customer drought. Here, my mind goes to, say, an expensive Hegel H30 amp which at, say, $16k may be just a fantastic amp and an end-game solution for many customers in that aforementioned segment. But now, if enough people are now chasing, say, Gryphon amps, then Hegel has a problem because the carve out is starving them. I hope I am getting that right.

Once said, the comments made by Pope Francis and the criticism of materialistic values is a slippery slope. Consider a $133k or $3k pair of loudspeakers. If you get on his slope then you have to ask, "Why should we enjoy any stereo or hometheater system when there are poor people living in cardboard boxes?" We also would then have to ask, "Who’s to decide how much we are allowed to spend, if anything, on loudspeakers?"

Who's to decide? Are you suggesting that there should be no limits? 

@hilde45

"hyperbolic price increases"

When the "market" determined that a $4 cup of coffee could actually be enthusiastically adopted when the "norm" was 99 cents -- with free refills, it may have been a good example of a game changer? It might be interesting to take a granular approach and determine how consumers prioritized the elements of that $4 cup of coffee at the time: "the coffee"- 99 cents, "being actively involved in the coffee culture"-99 cents, "looking good while I’m drinking coffee"-99 cents, "an affluent, unique experience"- 99 cents, "free wifi" - 4 cents?

Now take those numbers and project a straight line out to 100,000 times that investment ($400k) while removing the word "coffee". Is there some level of consistency in the motiviators?

Last year I heard the just released Burmester 216 and was very impressed with the liquidity and the ease of operation driving a Sonus Faber Lilium. I asked the sales rep. the usual generic questions and $35k was quoted. I thought this an extreme value when considering brand/build quality and near reference SQ. When comparing the Burmester to any Hegel amp(mid fi darlings?) which company is making more profit(%) on a component. Compare the Hegel H30a at $20k? and the Burmester 216. My conservative guess is the the Burmester is at least 3x more costly to produce. Clearly the Burmester is a superior product and represents better value.

The question is whether the Supra expensive product is delivering an outcome that can’t be achieved at a lower expense 

my dress watch from Tiffany has a quartz mechanism that keeps perfect time and requires a 75 dollar battery change every 3 years

the same model with an automatic movement is 4 times the price, requires a 500 dollar overhaul in 5 to seven years and is less accurate

Resale in my quartz is 20 percent cs cs the automatic held its original price

 

perception of the value does not match the reality.   Same with tubes bs solid state.  We don’t use tubes to make our TVs have a less clear picture that is more natural