What makes a speaker thousands more...

Jeff's post is excellent. One thing I'll add, based on the experience of friends of mine who build speakers, is that the cabinets are a huge portion of the cost of speakers, both the enclosure itself and the veneers. As you get into speakers with superior bass response and non-resonant enclosures, the size of the enclosures and the bracing, etc. grow, and the price shoots up dramatically as a consequence. I think that less goes into internal parts than you'd think, unless the speaker manufacturer is willing to go a cost-no-object route.

I'm sure there is plenty tacked on in most cases, but cost does go up to some extent. Some of the ScanSpeak drivers cost $800-$1000 per pair. If they use decent tweeters and woofers, they could easily be spending $800-$1500 on drivers alone. THe nicer cabinets may be handmade and require expensive craftsmen, etc.

Image and advertising budget.

Its a combination of a lot of factors as mentioned already, R&D, better quality drivers, hand crafted cabinets, nice materials and time intensive finishing methods. After all of that though there is still the value compared to others in the market and the manufacturers trying to set up price points throughout their various lines in order to attract customers with different budgets.

I've often wondered about this myself for the extremely expensive products, like the Dynaudio Evidence for example. Since Dynaudio makes their own drivers, they have to be saving some money there, and the enclosure isn't anything too terribly difficult to make so there is no way it costs $85,000 or even a fifth of that but they designed that as their flagship model to attract attention to their brand. Some people with enough money will decide that they can afford the Evidence, but more importantly for the company, they get magazine reviews from it and people recognize the name. Then when someone buys from the Contour line they feel they are buying into a name brand that is high end. That's the same thing that Dodge does with the Viper. They don't expect to make a ton of money overall from Viper sales with the limited production etc, but it is a flagship product that gives them brand recognition.

Setting aside the flagship models, each manufacturer tries to match up similarily performing models against other models. In a way with so many models and so many manufacturers, its hard to get above the noise level to get your product recognized. So if a manufacturer took one of their $10000 top of the line models and decided to lower the price to $4000, I don't think they could make the same profit even though they would sell more. The problem is that 1) people may think less of the speaker because it costs $4000, it may be considered in a lower league, 2) Because there are so many models to choose from at the lower price point, it would get lost in the other models in a similar price range - how would this $4000 speaker stand out from others? 3) As part of that, if it cost $2000 to make, and they made $8000 profit selling at $10,000 and sold 10,000 speakers, they would have to sell 40,000 at $4000 to make the same profit, and they may not be able to get a 4x increase in sales because there are so many models in that price range.

It may not cost too much more for some of the improvements made between different models or speaker lines, but imagine if they only charged the small difference between the models. If a manufacturer offered 6 different speakers in a line with a difference between each one of only $100, almost nobody would purchase the models in the middle, or maybe the low end. If the lowest one cost $800, and the top of the line $1300 I suppose most people would just go for the $1300 to get the top of the line. So the manufacturer has to exploit the percieved value of the models rather than base it on a pure cost structure.

Often things work in reverse. The manufacturer decides to offer a speaker at a given price point, and then designs a speaker that it can sell profitably at that price point (or points, if it's designing a whole line of speakers). The price is, as the saying goes, "what the market will bear," and that depends on such factors as what the competition is offering. And, since many consumers (present company excepted) use price as a signal of quality, prices are sometimes set to impress those consumers. This may be less true for speakers and electronics than for other high-end products.