Economics of small speaker manufacturers


Looking at the drivers, cabling and woodwork that some small scale factory direct speaker manufacturers offer (Tyler Acoustic for example), I am curious to know what the selling price would be if the same speakers were sold by say Dynaudio, JM Lab or B&W via their multi-echelon distribution channel, accounting for shareholder return, marketing expenses, profit of all distributor-retailers involved, etc?
When Tyler sells a pair of Linbrook System 2 for $4,000 shipping included ( as stated "one 8" Seas magnesium woofer, one 7" Seas magnesium midrange and the Seas millennium tweeter. Hovlands, Alpha cores and Sidewinders are used in the critical signal paths. DH Labs wire comes standard" + real veneer"), how much would this sell for if it were a bigger "commercial" brand?

Thanks for educating me.
kanuk

Showing 2 responses by daedalus_audio

isn’t the bottom line, what is the actual quality of the product? any piece of audio gear is more than the sum of it’s parts, i’ve heard pieces that had all the best components but did not have the sound. some large companies gear is well worth the price, yet with others you get the impression you are paying more for their marketing etc than for the sound quality. we could make arguments about economies of scale vs low overhead all day long and the bottom line is still how does it sound? i think Aktchi has summed it up pretty well and one of the real benefits of the small maker is the personal attention. this makes me think of guitar builders. i’ve been a boutique amp builder in the pro world for many years as well as a player, hence i personally know a lot of guitar builders and manufacturers. i can say that while the manufacturers do benefit from scale and resources, in general the best guitars are built in small shops and usually for comparable prices. but and here’s the big but, you have to know what you want.

in general the economies of scale and resources are pretty much offset by marketing costs and extra markup. few if any high end speaker companies are churning them out by the tens of thousands and CNC machine time is readily available to small manufacturers. and yes i’m sure some small builders are putting their prices at the same point as larger companies products which you can hear at a brick & motor store while others try to keep their prices as low as possible reflecting the lack of dealer/dist. markup. again bottom line is the actual sound and quality.

this brings up another facet of this issue that i occasionally hear. sometimes people talk about the cost of the parts that go into a unit as if that should be the sole determining factor of the final price. yes it should play a large part but there is also the cost of developing the product and often that entails many years of work and sacrifice. large companies include this as development costs and there is no reason for boutique builders to be expected to work for nothing. sometimes when prices jump that is precisely what has happened, the company had been charging based on costs and overhead and then realized they needed to recoup some of the development costs.

well, back to making sawdust ; )

lou
one more side to this is that with all the pressure currently on brick & mortar stores it’s almost impossible for small speaker companies to build a dealer network. the big guys don’t want to see small companies directly competing with them in the same showroom and the store owner doesn’t want to gamble those accounts for a small company with a small advertising budget. B&W, Wilson and companies like that spend hundreds of thousands a year and more on advertising that helps the store sell the product. speakers take a lot of space, cost a fortune for shipping and are the biggest draw in a store, all these are reasons store owners have to go with the big names. the competition is so intense in today’s market that they can’t take a gamble on new, small speaker companies.

i agree with Duke. Ty, JohnK, Duke, myself and others aren’t competing against each other. we all do our own flavor but we all believe we are offering a better value than many of the big names. i know that for my flagship speaker which sells direct at $8800, the dealer retail if i went that way would have to be at least $15,000. is it worth $15,000? well i think so but the real test is does the person buying it think so and if they do then they are getting a great value.

last point ,and i think i can talk for most of the small speaker manufacturers, is that we all want to help create systems that working people like us can afford. silly money systems costing more than a house are fun to hear at a show but that’s just not what we want to do. a big part of this process for us is actually helping people. i get letters from people thanking me because the music is how they find respite from the stresses in their lives. that is what really makes it worthwhile.

thanks,
lou