Law Of Diminishing Returns?

I'm curious about what you enthusiasts think of the product or price that eclipses your definition of "value".  

As an example I have a rich buddy that just spent 100K upgrading his (former) Pass 600s / Bryston / B&W Signature 800s / JL Fathom 8 speaker  system. I have a discerning ear and cannot hear the difference between the old system and his new S5M Perlistons (4) , Anthem AVN90, ,ATI amp AT6005 (4) and four subs.

This got me to thinking- 80% more money for maybe 20% more sound quality? 

Where is the sweet spot for the discerning ear and the affluent but not Billionaire (think Doctor/Lawyer/Indian Chief) budget?  Can you get 80% HiFi sound for 20K or do you need to spend 100K to get that HiFi sound?

-Asking for a friend :)

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I think what sets my threshold for diminishing returns lower than many other audiophiles on this forum has to do with unrealistic expectations on my part. Just to throw out a number, I’ll say that an affordable system for me will get me 65% towards what my mind might idealize as the ultimate in reproduced sound. I expect a very high end system in an excellent room to get me to 95%. It instead gets me to 75%. Some of the major shortcomings of 2 channel audio recordings, which are what I listen to mostly, are still plainly evident to me, even on the best recordings. It’s like I’m expecting a $1,000,000 supercar to be able to silently hover and fly me across oceans at supersonic speeds. Instead, it just rolls along on the ground like my Nissan, faster and a lot classier but no where near as fast as I’d really like to go, or expect to go for $1M. A car is a car, not an anti-gravity flying machine. The truth is, $1M isn’t really all that much money in the grand scheme of things. I just don’t have that much so my expectations are inflated. 

The concept of diminishing returns does apply to the audio world.  However, "hifi sound" is entirely subjective.  Most people will tell you they're getting it for < $1000.  A few people will tell you that you can't get it for $100,000.  They're both right - they just have different standards, and there's nothing wrong with that.

Buy and assemble what you love and can afford, hell with diminishing returns. Some people will base the change in equipment for the simple reason they love the way a pair of Sonus Faber speaker looks and not necessarily because it sounded better than their previous speaker. Someone may switch from solid state to tubes again for the same reason. Others may change because the new piece of equipment has more features they require. The concept of diminishing returns does not matter if what you changed to brings you more enjoyment and satisfaction.

With all that said, certainly as you spend more for pieces of equipment the next one right above it in the product line may not sound significantly better however if you switch to the higher end line and jump up in models you are going to hear a much more pronounced improvement the majority of time. So once you hit really expensive equipment more than likely to easily hear a big difference means you need to spend a lot more money where if you are in the entry level area the jump in dollars to hear a significant difference is not going to cost you as great a spread in the amount of money required. All this assumes that you have the correct synergy already going with your equipment and your room has been worked on so your equipment is properly placed, particularly the speakers and the corners and walls have been treated.

A better room with treatment is going to make a bigger difference than spending a five hundred to a thousand dollars for a new pair of speakers.

If you can’t hear the difference between two totally different set don’t really have a discerning ear...

I have an excellent sounding system. I don’t have $20k invested. Most would believe that I must have more invested. Here it is

Martin Logan Spire loudspeakers-used for $3300

Primaluna Prologue 6 tube monoblocks-used for $1800

Dennis Had Inspire LP3.1 preamplifier - used $1150

PSAudio PerfectWave dac-new $1600

Marantz TT15S1 turntable- new $1200

Benz Micro MC cartridge- used $500

PSAudio phono stage- used $450

Threshold T3i preamplifier-used $1200

Pass ACM monoblocks 25 watts Class A amplifiers -used $600

CambridgeAudio CXC transport-new $600

Nordost Purple Flare speaker cables 3Meter-used $500

Total $12,450

It’s a very decent sounding system. And I didn’t need to spend an additional $2k for a SS preamplifier and SS mono’s to gain the joy of the tube mono’s. So a very conservative system that plays way above its weight. But of course, buying used definitely helps. Instead of spending $9k for new speakers I purchased the identical speakers used @ $3300. Same for the tube mono’s at half off. 

So basically $10k for an entire system. But it helps buying the speakers locally as I did to avoid shipping costs and avoiding shipping damage. So yeah, it can be done by a normal Joe Blow working stiff.