Price Increases

Thank God for Audiogon! But seriously, I have often wondered who buys the megabuck speakers, i.e. $50K+, brand new in this economy. I'm just glad they do so when the upgrade bug hits, I can buy their second-hand 9/10 cast-offs at half the original cost. Works for me!

It's cheap trick first to bump it up and than discount.

The challenge is to find, say, the $10K speaker that sounds like those $100K "high-end" ones, instead of spending $100K to get something that sounds like a $10K speaker.

It's all arbitrary really, and since high end speakers are often completely differrent styles and proprietary designs they make a hard case for actual "apples to apples" comparison. If I like a speaker, I wait until it's severly discounted of available used.

With no updates to design I cannot understand why the price hikes.

Because they can ... simple supply, demand and price!

"Apple to apple" comparison? That's easy they are loudspeakers, use your ears. All speakers are in the same group, just different prices and sizes.

Seems the last 10 years they have pretty much doubled on a lot of brands. Way higher than inflation. It's gone crazy. It's starting to bleed over onto the used market in ways too. I was reading some old forum posts from 10 years ago. They were talking about the same speakers back then that were still pretty new and selling for almost half price used. Well today they are selling for almost that same price.

Well except now the newest model is twice as much as what that older model sold for when it came out. So there is more demand for the old models since now in comparison the new models are way way more money. It makes the older model appear to be an even better deal and causing the prices to cost the same as they did 10 years ago used.

That is the direction the market has been headed for about 6-8 years now. I've noticed that just about every manufacturer has come out with a new top of the line product in the last 6-8 years that is double the price of what their old top of the line was listing for. High end audio simply mirrors the economy, where the middle class is getting squeezed, and the money is flowing upward. Most other hobbies are experiencing the same dilemma.

As for prices rising on the same item, that is just the start of the devaluation of the US dollar that the Fed started early in 2012. We can lower unemployment when you devalue the dollar, the flip side is that retail prices will increase just to stay the same in value.

Jmcgrogan2- You are correct, but I fear that this discussion is about to go seriously off the rails!

Yes. Price inflation is everywhere and always a monetary phenomenom. Thank Ben for this round. Seen the price of art? big city real estate? farmland? Our money (future debt at least) is flowing upward.

113,100 millionaires in New York alone. Despite the economic situation for us, some are doing just fine and are willing to part with their money for the latest and greatest.

All the best,
Nonoise

There is, supposedly, an economic recovery on the way. Which may be part of the reason. I think the main one, is that HiFi is becoming more of a cottage industry. The ultra High End, hand building Audio Bling for Hedge fund managers, seems to be doing ok. The large manufacturers feeding in lower down the scale, I suspect are doing less well. I would be interested to know how sales are going with ARC, CJ, Macintosh and the like. I doubt if they are growing. There can not be the economies of scale that there were in the Golden age of Audio in the 70's, when everyone aspired to a "HiFi System"

Another factor must be costs in China. As you know, wage rates are shooting up there, even if it is from 1 to 2 handfuls of rice a day. It is ironic, that countries like Vietnam are undercutting Chinese wage costs at the moment.

Have you not heard, the rich have gotten richer. The appreciation in their assets, stocks and houses, give them more to spend. So, price increase in their end of the hi fi market can be made easily. Fortunately, the rest of us are spared as the mass producers of audio products still must cater to us poor souls. Hi end cars are also doing well with bit price increases to boot.

Look at some of the Virtual Systems at here costing into the hundreds of thousands and ponder upon the foolishness of man.

Look at some of the Virtual Systems at here costing into the hundreds of thousands and ponder upon the foolishness of man.

Is that more foolish than a man walking the streets with hundreds of thousands rolled into a wristwatch?

It's good to put it into perspective.

A: Something's worth whatever someone pays for it.

B: How many live music experiences could you go to for the price of a really high-end system?

"The challenge is to find, say, the $10K speaker that sounds like those $100K "high-end" ones",

Well, there are some giant killers out there Ack, largely the small manufacturers selling direct. I spoke to just such a small manufacturer a couple of years ago, who estimated the material, labour and delivery costs of a $80000 loudspeaker, was probably $20000, including a modest profit. The rest is marketing, dealer and distributor margins, which can easily add 50% to the cost+ a large margin to the manufacturer.

Who are they? Well ones I have heard myself, Devore, Silverline and the ones I bought and am very happy with, Daedalus. Others I have'nt heard, but who you hear good things about, Vapour, Tyler, Odyssey. Vapour and Odyssey get uniformly good feedback at the shows, from reviewers, as does Daedalus of course.

Material and shipping costs all have increased parts vendors are increasing prices and have been doing so for sometime. So only was a matter of time before manufacturers have to pass it on to consumer.

labor, shipping, tape, wood crates, boxes, drivers, caps inductors, screws, finishes..... 100% of everything used has gone up a in price and some things have doubled in 2 years. A few a the big "fine" makers are 100% produced in China now I finally get it!

Decent car 30K

Fine loudspeaker 30K

Fine Chinese loudspeaker 15K

David ... the "directionality" of your figures appears reasonable. To put an even finer point on your comment, let's add variable and fixed costs, such as R&D, QC and "S,G, & A" overhead. I made a similar point in other threads about manufacturing economics.

For example, I surmise that large manufacturing companies like Focal, Revel and Paradigm incur roughly similar amounts of fully loaded speaker production costs on a per unit basis. These companies have large volume operations, do their own R&D and manufacture many speaker components in house, most notably the drivers.

It is no coincidence that the three companies also use beryllium dome tweeters in their high end speaker lines. I understand that these companies manufacture their drivers in house.

I don't know how much it costs Wilson to make its speakers on a full absorption cost basis. I realize that the speaker enclosures are made of some secret formula materials, which may be expensive. But ... I surmise that because Wilson doesn't do the volume that a Focal, Revel or Paradigm does, its per unit full absorption cost to make a Wilson speaker is higher than a Focal, Revel or Paradigm speaker -- and that doesn't even speak to the quantum of gross profit that Wilson has to make if it has less volume.

I have no support for the next point which I heard from a Paradigm dealer, who in turn heard this from a Paradigm regional sales rep. So take this with a grain of salt. The story was that a speaker like the Paradigm Signature 8 would have to retail for $30,000 if manufactured by a smaller company for all of the reasons mentioned above. Is the $30,000 number a hard figure. Probably not. But the take-a-way is that because Paradigm is a large volume company, it would be a challenge for a small manufacturer to match Paradigm's MSRP of $9,000 for the Sig. 8.

As to price increases, the point of this thread, it is no coincidence that the US dollar has decreased in value compared to the Euro and the Canadian dollar. In the case of the Paradigm Sig 8, the MSRP was about $5500/pair when the S8s were first introduced sometime in 2004 or so. At that time, the Canadian dollar was worth about 70 cents US. The current exchange rate is about one-to-one. Just based on f/x considerations alone, the MSRP increased by almost 50-percent!! And that doesn't even speak to inflation or the cost of R&D design improvements.

Happy Holidays,

Bruce

Of course you are right Johnk, but I think the concern here is the 50-100% or more increase in cost of flagship models from numerous lines.

Of course you are right Johnk, but I think the concern here is the 50-100% or more increase in cost of flagship models from numerous lines.

Why is a concern? Companies can raise or drop prices WITH or WITHOUT changes to a product. All market driven where demand can support a higher or lower price.

Also seems many are aiming for where they think customers are still left with disposable income. Tossing in less sales you end up selling less units for higher price just to pay the bills. Think you will see a great thinning of the herd in hi end manufacturing.

Jmc, I'm not sure the point of this:

As for prices rising on the same item, that is just the start of the devaluation of the US dollar that the Fed started early in 2012. We can lower unemployment when you devalue the dollar, the flip side is that retail prices will increase just to stay the same in value

It seems you are advocating for a return to the gold standard? As far as price stability goals, the Fed has been targeting around 2% inflation +/- 1% for decades. Nothing about the period you referenced (early 2012) is unique. And I don't think big increases in prices for high-end audio are related to monetary policy. Others above more accurately described the phenomena in my opinion.

A) Something's worth whatever the buyer pays for it.

B) Always factor in the number of live performances you could see and subsequent memories you would make for what you'd spend on Amy component.

A) Something's worth whatever the buyer pays for it.

Yep! Unless you have manipulation or price fixing by governments.

Apparently not enough demand for LSA integrated amps so selling direct and slashing price?

VAC is jacking up prices without changes probably due to higher demand? Demand supports higher prices?

And as I mentioned, so does the impact of f/x to the extent that components are imported and the US dollar weakens as compared to the export country's currency. The f/x rates between the US dollar and the Canadian dollar is just one example.

Also ... I recall reading that production costs in traditionally low cost countries such as China are going up, particularly labor. That is a very good trend if it reflects a real increase in the standard of living in the other countries. Call me provincial, but I happen to believe in the dignity of hard work and a fair return on labor.

I also recall reading somewhere that because production costs in China have increased, Paradigm "re-sourced" back to Canada cabinet manufacture. Previously, that process was outsourced to China.

Happy Holidays,

Bruce

Yeah - i was wondering why the LSA's were being sold so cheaply. They're quite good, so getting one now is a bargain.

Down with high prices! I am boycotting all gear that is too expensive for my budget! ;^}

Call me provincial, but I happen to believe in the dignity of hard work and a fair return on labor.

No problem with hard work but market SHOULD determine a FAIR wage for your given skill set and talent. As always, government intervenes with politicians buying permanent voting blocks ...

Yeah - i was wondering why the LSA's were being sold so cheaply. They're quite good, so getting one now is a bargain.

ONLY a speculation on my part. I also contemplate getting one for my office.

Japanese gear prices should be falling as the Yen is being burned.

Used gear indeed! No doubt that most manufactures 'stick it' to us customers. Simply stated, they are covering the year's revenue loss.

No doubt that most manufactures 'stick it' to us customers.

What manufacturer is forcing you to buy their products NOT including the government? If you don't like their products or policies, shop elsewhere.

"The challenge is to find, say, the $10K speaker that sounds like those $100K "high-end" ones",

That all depends on the speaker. For example, take a look at the Vandersteen Model 5 speaker. I think the website or an old mag review shows the construction. Labor intensive for sure. Materials have gone up, and cost of health care went up in some cases close to 50%. Hard to run a business without hiking up the prices. Plus nobody makes money selling speakers as everyone has made and marketed a speaker. It is not hard to make a speaker, just hard to make a top speaker and not something that is just competitive. Most Goners have never heard a really top system like a system that Michael Fremer has. You can learn so much from hearing a system like that and how each component, cable, etc., changes the sound. In addition, the cost to experiment to develop something that is better than the original is quite costly. I build a preamp and it took me three years to try different parts to see what parts worked the best. I'm still trying different parts to see if I can improve the sound. That cost me $10K in parts that I don't use alone. he pram is hand build with custom parts, what would Audio Research charge for this preamp???

"Well, there are some giant killers out there Ack, largely the small manufacturers selling direct. I spoke to just such a small manufacturer a couple of years ago, who estimated the material, labour and delivery costs of a $80000 loudspeaker, was probably $20000, including a modest profit. The rest is marketing, dealer and distributor margins, which can easily add 50% to the cost+ a large margin to the manufacturer."

I think the list you show in your post are very good speakers but I am not sure what giants you are slaying with them. Magico, Hansen, etc.???

Look at the price of drivers in the speakers you own or think about buying. Paper, carbon, aluminum drivers are expensive. $80K no but go ahead and try 20 pairs to see what works the best in your speaker design, cabinet construction materials, finish, etc., not to mention cross-over parts, do you know how many capacitors there are to try? Look at the cost of Dueland caps, who are they kidding? That is where the cost comes in for the original design and research. Yep and then the 50% mark-up for the dealers. Look at how many good speaker designs are no longer around, Meadowlark comes to mind for me.

So I am carrying on and on. Sorry. I hope I made a point!

Happy Listening.

Bigkidz, much of what you just wrote makes a lot of sense. I seem to recall reading an article authored by either Steven Stone or one of his colleagues (Robert Skoff?) that advanced the same points about the relationship of "hard costs" versus MSRP, particularly the points about dealer costs and margins.

Perhaps some A'gon members who are dealers can answer a question about one element of dealer costs, namely inventory. Just guessing about this, but I suspect aside from display and demo units, most dealers do not inventory large stocks of high-end equipment. That is not to say that the cost of display and demos is not significant. Consider -- how many Magico or Wilson speakers can a dealer be expected to have boxed in the back?? OTOH, aside from inventory, I imagine the cost of running a B&M store must be quite considerable, plus there is also the need to make a profit. Otherwise, we're talking about a hobby.

That's why buying preowned top end gear makes a lot of sense for me. I've bought most of my gear preowned for about 60 to 70 percent of MSRP. Having said that ... I won't and don't shop and audition gear in B&M stores. I have mentioned many times before that I won't take up a salesperson's time unless I intend to buy retail.

Cheers,

BIF

I found Alan Taffel's article in this months Absolute Sound about the Swiss audio industry fascinating for its perspectives on the audio business and the business model Swiss industry has adopted. A point I noticed (relevant to this thread) was that when Cyrill Hammer of Soulution audio needed to remodel his electrical manufacturing firm and find a product that he could succeed with in Switzerland, he chose high end audio because of its relative insensitivity to price increases. Those of us without the living standards and purchasing power of the top 2-3% need to accept reality and realize that segment of the market doesn't care about price. If any given price tier product provides superior perceived value to their target demographic, they're adequately capitalized, and their marketing is successful, they'll have a chance to succeed in the marketplace. The vast spread of price points in the audio realm just reflects economic reality in the world. No point in beating up on businesses that try to go after the upper end consumer, they're just trying to find the product niche that works for them.

BIF I agree. The dealer I know very well offered to set up speakers that I purchased used. I cannot take up their time unless I am going to pay for the service otherwise I would feel obligated.

In the New World economy

Nothing really makes sense for example:

Well known American loudspeaker company (not telling) make a very well reviewed product known best for their powered towers company makes fantastic sounding product for the most part has a big advertising budget and designs everything in the USA but everything is made in mainland China EVERYTHING.

Interestingly all 12 of the drivers used in the now semi famous behemoth powered tower cost about 1/2 for just one driver found in a small stand mount speaker from someone else who's driver is made in Norway: Yep, roughly $360 wholesale for 12 drivers which includes 6 woofers 4 mid-band and and 2 Chinese made AMT drivers or 1 driver for $700.00 wholesale for 1 driver two are needed plus tweeters....

Moral is you can make a good sounding speaker that retails for 17K and is hugely profitable, sounds good, looks great, except for the excessive use of stamped steel baskets you believe your getting a fine item and your happy enough though in your belly your not really totally believing.

Bottom line it's about making money not necessarily about the love of the music; often 40K speaker is much more cost heavy in proportion than a great 10K speaker.

It's the new math.

If you don't care where it's made that's O.K. But don't laugh at the person of means that pays 250K for a hand built masterpiece that possibly only offers a slight bit of refinement in sound for the great cost.

Q

Nothing really makes sense for example:

Make sense to me and my .02.

Well known American loudspeaker company (not telling) make a very well reviewed product known best for their powered towers company makes fantastic sounding product for the most part has a big advertising budget and designs everything in the USA but everything is made in mainland China EVERYTHING.

Please tell me tell me tell me ...

Good for them. Companies should move to a more business friendly location whether it's lower manufacturer cost, taxes ... and hopefully pass the saving to the end consumers.

It's the responsibilities of governments to create a business friendly environment where companies want to stay and create jobs. Don't blame the companies but the politicians unless you are in their permanent voting block.

If you don't care where it's made that's O.K.

I don't care as long as equal quality.

But don't laugh at the person of means that pays 250K for a hand built masterpiece that possibly only offers a slight bit of refinement in sound for the great cost.

I don't and why should I? It's their $$ and none of my business. Actually insteading laughing, I like join them and buy a 750K hand built masterpiece.

Bottom line it's about making money not necessarily about the love of the music; often 40K speaker is much more cost heavy in proportion than a great 10K speaker.

Is this a TRICK question? Of course IT IS! Why do you work? For your health or to make $$ so you can have a life? Most work at a job, not a hobby.

Moral is you can make a good sounding speaker that retails for 17K and is hugely profitable, sounds good, looks great, except for the excessive use of stamped steel baskets you believe your getting a fine item and your happy enough though in your belly your not really totally believing.

Why 17K? Why not $129? How do you know? Are you Andrew Jones? You know his $129 Pioneer SP-BS22-LR almost made TAS budget product of the year.

In the New World economy

With improved efficiencies from technological advances, we have lower prices, bigger selections, higher quality products and improved quality of life. Haven't gone to an ATM for 10+ years, all bills online EXCEPT dealing with Uncle Sam, HD TV for $500 ... I think this new world economy is great!

It's the new math.

1 + 1 still 2 except slide rulers are out and iPhones are in.

Companies are NOT in the welfare business but to make money. Unlike government, NO profit, NO business. They can't print $$ or raise taxes ... books have to balance. They will charge whatever the market will bear. I guess if one can't afford something, instead trying to improve their own situation, it's easier to blame the companies. "Stick it" to us customers. Just live within your means. Wake Up!

Knghifi,

Pour yourself a drink or two!

While you've parroted my post and I don't totally disagree with you for the most part I think I'm talking about transparency which might make the "math" make more sense.
One drivers landed cost is $12.24 a similar unit is $250.00 this kind of discrepancy is disconnected from what possibly should be reality and when both items are cloaked under the made in USA disguise..well it's confusing.

Do you remember the Shogun bicycle from the 1970's? It was one of the first Company's to make made in China cool as they did not hide their origin of manufacture but kinda bragged about it.

The not telling Co starts with the letter L

Q

Most buy name brands that are well established and since buying name you usually don't get much value.

I'm talking about transparency which might make the "math" make more sense.
One drivers landed cost is $12.24 a similar unit is $250.00 this kind of discrepancy is disconnected from what possibly should be reality and when both items are cloaked under the made in USA disguise..well it's confusing.

Don't follow your logic but will try.

If a manufacturer can produce the same quality product at a lower price, good for them. They are a superior company and deserves the extra profit.

For the end consumer, they have to pay the same from either the superior or inferior company if they want the product. Why do they care?

So you want companies to publish (transparency) their margins so consumers can choose to do business with ones that have the least margin? You want to PUNISH competence?

Most buy name brands that are well established and since buying name you usually don't get much value.

Well established brand names are earned over the years and one can expect a certain level of quality. I do agree it's not true in all cases.