Heads Up: ARC is introducing the new SP-20 in Fall

If they start producing their gear in China the ARC crowd will not buy it. They might find a whole new market but after being in the game for 40 years I doubt they want to start over with a new clientele.

ARC is a gold standard for good tube sound. As long as their less expensive models at least stay within reach of many, I will likely remain a fan.

Here's a ballpark guess of hard costs that go into manufacturing a Ref 150 which has a MSRP of $13K. I admit having no actual data to which to base my guest-I-mate, just experience as an accountant. If the Ref retails for $13K, I guess dealer cost is between 50% and 60%. For discussion purposes, let's just say 60%, which would leave about $5K mark-up ($13K, less $8K cost). (I'm rounding numbers).

I think a dealer needs that much mark-up to cover all of his costs, especially his investment in display equipment. Keep in mind that retail customers aren't standing in line to buy Ref 150s or any other expensive piece of gear. Sh*t, Vandy Model 7s retail for $45+K a pair. How many Model 7s walk out of John Rutan's shop a week??

Ok, if we can agree that dealer cost is in the neighborhood of $8K, I guess that ARC's cost is 50% to 60% percent of that amount, say something between $4K and $5K. The rest is margin, which ARC needs to make a buck and cover its overhead which includes R&D and QC.

For example, I understand that Bill Gehl is a full time QC employee who is ARC's chief "listener." I recall reading that Bill listens to every unit, either newly minted or repaired, before it leaves ARC's facility. So far, every QC checklist card that come with an ARC unit I bought had Bill's initials showing that the unit passed the last and most important test - listening. I also recall reading read that Bill has sent units back to the line even though the tech's signed off that a unit operated according to spec.

Does it surprise me that ARC might drop $4 or $5 grand into unit build. No. Don't know how many labor hours are needed for soldering, circuit board assembly, and construction. But I bet fully loaded labor costs (base rate plus usual employee benefits) are not cheap.

Further, mostly all of the Ref 150's outsourced parts, like trannies and passive, are built right here in the USA and are da*n expensive. I wonder out loud how much the new Teflon coupling caps cost, or the new power and output trannies???

So ... bottom line, my wild as*ed guess is that it costs ARC about 4 to 5 grand of hard material, labor and overhead costs to push a Ref 150 out the back door. I surmise that roughly the same manufacturing cost/MSRP ratio holds for the SP-20.

Bif's analysis sounds reasonable to me.

Me too.