Why Is Hi Fi Gear So Darn Expensive?

Wealthy people want it.

Poor people have it.

If you eat it you will die.

What is it?

This is one my daughter hit me with when she was 6. 

They asked what they want and that's the only thing. I can built an amp good looking finish sounds pretty good and van asked 20.000dollars.

You should do that then... 

@temporal_dissident I don’t particularly disagree w/ your lusting after gear theory.

I built a fairly nice system when I was married to the mother of my kids, which gave me a taste of good sound. Years later when I decided to build another system I decided to implement a little bit of a strategy, because I had learned about how expensive the upgrade bug can be.

So glad I decided to just go ahead and do things right the first time around.

Also thankful I had already learned about how important synergy in a system is, including having a complete loom of whatever cables/wires you use. I’ve learned some really valuable things from reading these silly posts.

It’s a good feeling to be completely content with what you have and not be the least bit envious of what others have. Like others have mentioned, relatively good sound can be had for a fairly reasonable amount of dough. I would consider our buddy @mahgister to be sort of a master of that particular domain.

"I recently heard a small 2-way stand mount speaker at a show. The sound was excellent. The product was priced at $50,000 or thereabouts, per pair. Allowing for distribution and marketing leaves about $25,000.  Add management and cost of capital, that leaves maybe $12,500 per pair for parts and assembly and engineering. Say the cost of parts was $5000 and assembly was $2500. Could engineering realistically cost $5,000 per pair? "

$25,000 for marketing and distribution of every pair of speakers? What do they do? Fly them to your house on a private jet? Seems to me that that cost would be amortized over whatever number of units were manufactured. Same with the rest of his justifications.

In High End Audio, price is not as important as intention.

However, parts, development time and labor costs do, mostly, dictate cost.

However, most companies use a 5 or 6 times multiplier.

However, many companies have gone to direct to consumer sales.

However, most of those companies continue to use that same multiplier.

$$$

Quad 57s were mentioned. And there are many other affordable speakers that one can joyfully live with. Certainly, the same can be said for many components.

However, IME, a $13K cartridge is certainly $10K more amazing than a $3K one.

Maybe it had nothing to do with the speakers.  Maybe the stands were made of Unobtainum? 😀

On a more serious note, I also bought  a pair of the Ohm 2’s for $7xx.  Between improvements and inflation the new Ohm 5’s cost almost 5 grand with shipping and handling. 

@music_is_life 

I don't know. Nothing comes to mind.

@tony1954 Sly little devil you!

When I was in the retail jewelry business, margins percentagewise were greater on the cheaper items, with markups as little as 5% on the higher ones - and this was paying mall rents. When gold doubled in price, existing jewelry was suddenly worth more and we charged more as consumers foolishly wanted gold jewelry more at the higher prices than when they (and raw gold prices) were cheaper.

The point that’s never made when discussing prices is simply that manufacturers and retailers charge what their market will pay. Otherwise, they will either go out of business or have to cut their prices (or both). Big box retailers price their products based upon price sensitivity - in a grocery store, milk, bread, eggs and bananas are have much lower markups than the rest of the store as people determine affordability by those items and shun stores they perceive to be high.

Years ago, Mark Levinson’s original company’s products were held by many, including Stereophile, as the top of the then available consumer level equipment and now, even used, are still going for more than an average consumer would pay. Since demand still exceeds supply, prices stay relatively high, even for decades old items. How many of these $100k speakers or amplifiers will hold that value?

There are two standard ways of pricing: First, the market: basically compare your product with the available on performance and aesthetics, then to price accordingly. The second is cost plus… basically all costs plus the profit you require. If what you want to manufacture has the market price less than the cost plus price… you should not produce it… you lose money.

As a consumer you have a choice. Buy it or don’t. So the market of consumers will determine if the speakers you are talking about are worth it. There are a few people out there with lots of money with no sense, but this is the exception, not the rule. Folks that have made a lot of money typically have worked for it by being perceptive, educated, smart and not wasting money. So, if these speakers are successful. There is probably something to them.

@music_is_life 

Nice Tony!

I think this video quite explains some of the costs

Most audiophiles aren’t so wealthy that price is no object. We envision ourselves with something better but we must consider the costs. Those who fall into a petty bourgeoisie class structure can be the most vulnerable. It’s definitely a strange dichotomy. I do however believe that some products deserve their market value based on the quality, craftsmanship, time and costs invested. I also believe that most companies want to maximize their dividends and will charge whatever they think they can get. Power to the savvy who can find high quality products for down to earth prices.

I have been fortunate prior to COVID to be able to listen to a range of systems owned by others, in the dedicated listening spaces produced, where the value of the systems being presented can range between less than £8000 and up to £200 000, where in the most expensive set up, and item can cost as much as £80 000 retail.

Each of these systems are put together by very knowledgeable individuals who have done a fair amount of footwork preparing for their system choices, being very selective in their choices for building a system.

The systems are produced using methods where a particular device is bought and overhauled / modified (this is desirable when certain valued components used in a schematic are very rarely found). The other method being, where very well thought out choices for system matching with readily available devices is carried out.

My own system is produced using mainly Bespoke Produced devices, either as a commission bult device, or a complete rethink for a design that has been a readily available product.

I can assure anybody under the impression that uber expensive devices are going to create for them their best listening experiences, that there is substantial impressions that can be made by being prudent and carefully selecting devices that work in favour of the end listeners unique preferences for how a device presents.

This as a method does require a amount of money will be required that can be equivalent to the cost of a used vehicle, but certainly does not add up to monies that will be similar the cost of a residential property.   

For an individual to get to this position, the knowledge to make a choice is not readily available from using evaluation from others found in media, or from forum recommendation, it takes footwork from individuals interested in the pursuit, there is a requirement to receive demonstrations and singling out items that have made a good impression during a evaluation, and individual can be quite unique in their preferences, especially for what is attractive to them and leaving a very good impression. 

I have been present when a reputable DIY Solid State Power Amp Design with a build cost of approx' £1200,  was demonstrated along side a +£50 000 Soulution Power Amp, and I failed to separate one over the other for being the better in the system used, I wasn't the only in attendance coming to this conclusion. 

My take on it is whether the Soulution is an inferior design for the monies asked for it, or is both Amp's being compared sharing similar qualities within the design, but Soulution has a Marketing Strategy that places it at the cost being made known.   

My own approach, to anything and not just hifi gear, is to start with a budget and then decide how much of that budgeted amount to spend on components.  I have long heard that speakers are so important that one should spend half of the budget on the speakers alone.  If my budget for the system is $10,000 and I spend half of that on speakers, I have a choice of some nice speakers but it doesn’t leave much for the rest of the system — likely, the most realistic approach would be to limit my system to speakers, an integrated or separate amp/preamp with built-in DAC, and source (say, streamer or CD).  I didn’t spend half on speakers, so they had to be “good enough” and the same with the rest of the equipment.  Then, as many do here, upgrade the weakest link over time to gradually improve the entire system.

I don’t deceive myself that I will ever own (likely not even hear), the top of line components — they are out of my budget.  I enjoy looking at things like the Dan D’Agostino monoblocks, but those are a dream, nothing more. I enjoy what I have and enjoy reading about what others have.  More power to them.  

@bob540 😁

That is the way to go. Just for fun, go to an high end audio dealer… listen to their best. It is fun, and inspiring. Over time, you can slowly move up your aspirations as your means increase.

For me, now retired, my system is a constant source of enjoyment. I worked slowly and consciously towards this for decades. 

I always seek to listen to and emulate “the best”. 

Well about the only way to actually reduce prices is to cut out the middle man.  Also known as your local brick and mortar dealer.  As we all know many brands have gone that route to be more competitive in the marketplace.

But then we are left with that type of shopping experience and support etc.

It is really expensive operating both a manufacturing business and a retail shop these days folks, especially in locations where the $ and potential sales are - big cities.

As a business owner, I am not surprised at all with much of the pricing.  The real question is do enough people feel there is enough of a ROI.  At some price point one would think a buyer would want to experience the product, at least a little, before dropping big $ on a piece....but maybe not.

...Because there are stupid people with stupid money.  It's as simple as that.

I think you could ask this question in many different industries. Why is this kitchen faucet $5000 and this one $500 or this one $100. Why is this shirt $1200 and this one $200 and this one $20? There is generally a curve on actually quality, materials and style but at a certain point it’s really just about whether you want to spend the money or not. Some companies pride themselves on being handmade. Some just survive under the umbrella of their brand. Is Louis Vuitton’s leather really that much better? There will always be insanely expensive and probably overpriced pieces of gear because there can be and people will pay. 

P.T. Barnum was right.  "There's a sucker born every minute."

You can build the Linkwitz LX521 system for as little as $6000, and it will stand up against the $50,000+ systems all day.  You could easily drop $100,000 and more and get sound not as good as the LX521.   If you haven't got the courage to do the project yourself, there is a company that will sell you the full system, fully built and ready to run, at about $20,000.

This is a full system that includes amplification because it is multiamplified and uses an active crossover.

The LX521 is not hard to build.  Madisound sells flat pack kits, and there's nothing to stop you from having a local cabinet maker do up a custom set for you at a reasonable price.  Any competent cabinet maker could knock them out in a day or so.

More than any other hobby I can think of, audiophiles seem to associate quality with seemingly outlandish prices.  I don't deny there is a general relationship between price and quality, but it is inconsistent and certainly way out of proportion at times.  

I also truly believe many (but certainly not all) vendors take advantage of this fact and as a result make the hobby very confusing.  I know Ohm has been mentioned by several in this thread and I absolutely put them in the category of providing good value and not taking advantage of this trend, so good on them as well as other vendors who provide tremendous value.  

Some time ago, a Swiss watchmaker had about 20 prototypes of his new $400,000 watch and he went to the seaside and boarded one yacht after another. You know the kind, like you'd see at a Formula 1 race, all lined up with revelers and partiers doing their thing. 

It didn't take long before he was out of watches with enough commitments to buy that he didn't have to worry about work for awhile, of if they'd sell.

The kind of people who'd buy expensive audio gear live a different world than anyone here (I'd dare say) and would find these types of conversations both quaint, and sad, making them feel all the more fortunate and privileged, if they even cared.

All the best,
Nonoise

hmmmm 🤔 $50,000 or thereabouts U say?

were those the Oswalds Mill entry level speakers?

I think there are all kinds of people who buy ultra expensive audio gear. Some of them can easily afford anything. Others expend very significant amounts of their finances on that equipment and make sacrifices in other parts of their lives. I'd guess the vast majority of people who can easily afford that level have very limited interest in it. They may play with something like that for a while and then move on to other things. Have you ever seen those abandoned supercars in Dubai? I saw that first hand - beautiful cars half sandblasted by the desert wind and their interiors filled with sand. Somebody had their fun with that disposable trinket and moved on. 

A lot of high-end audio products might have more to do with art than with commerce. There are plenty of high-value products out there that deliver superb audio quality and are not at all frighteningly expensive.

But was it like this decades ago-- when nearly every decent sized city or town had stereo stores that served the full spectrum of products? No. Things have changed. The hobby isn't growing and it's market is greying. Retail has consolidated and most mom & pop stereo shops shuttered long ago, partly as a result.

Is the same thing happening in the EU? I don't know.

But in the USA, the numbers do not lie, and for at least the last forty years or so, the USA has been in economic decline-- not GDP decline, not productivity decline, they have continued to grow-- but decline in the incomes and the stability of U.S. middle class working families. This is called Social-Economic Mobility in the trades-- and in our case, the U.S. transformed from an upwardly mobile to a downwardly mobile society for most people over the course of the last four decades or so. The most basic of metrics-- lifespan, the chances your kids will have a better quality of life than their parents-- have all gone south. All key metrics for middle class viability have. Not my opinion, but rather a series of endlessly measured and documented hard economic facts.

Why? Because what hasn't grown nearly enough to keep up with baseline inflation are wages and salaries. This while many household costs-- like healthcare and college tuition, have grown nearly an order of magnitude greater than inflation over this time-- so has household debt as a percentage of income. This is an incontrovertible trend (those that don't believe in science or in the decades long collection of economic data-- don't bother replying to me-- I not interested in nonsense). This leads to less disposable income, and ironically, more work time spent for less money. The EU is better than the U.S., but still trending the wrong way. Their citizens at least have the benefit of more time to spend on hobbies, vacations, etc., with a vastly better safety net under their middle classes.

So people don't buy nice stereos generally, even if they wanted to, because they can't afford them, and are instead settling for the garbage they can get off of their phones and (mostly garbage) earbuds. That's normal today. 

So what's a smart, passionate high-end audio manufacturer to do? First they realize their is a limited market and many competitors in it. You want to sell the good stuff and you want people to know that is what they are buying-- then price becomes a very strong signal. 

On the really high-end stuff, it's so far beyond cost of goods or even R&D. It's aspirational pricing and and it requires relentless intelligent marketing to carve out a niche like this for your brand.

So I would not expect prices to come down, but I am also constantly amazed at the wonderful innovative and super high-value products that are released by so many excellent companies year after year. 

High-end audio is accessible to more people than ever. If only more of those people had the disposable income needed to take the plunge.

I know this is not everything and I'm leaving stuff out-- but this I think makes up the bulk of the reasons why the really high-end stuff is more costly than ever.

Turntables have clearly charmed Gen-Z, and the number of affordable products in this category is amazing. So who knows, quality sound may become a thing again. Priorities may shift, and if we don't give in to apathy, the U.S. can still have a huge second act sometime in our future -- if we can get our democracy working again-- working for everyone rather than just a few percent of us. 

Unlike Gold, expensive audio gear is not a sound investment because when its driven off the showroom floor, it loses considerable value. However you will never really own it if you don't pay the price. What happened to the term "Diminishing Returns" as you climb the money ladder?.

Today Hi-Fi is a niche.

The heyday of Hi-Fi was the late 1960s into the early 1980s.   Sales volumes were relatively large,  build quality was excellent and prices were moderate considering what you got.

Today, there's so little product sold; the companies are literally guys in a small shops either building them by hand or having them built in China.

And to sell them, you've got to take out ads in niche publications, show up to small trade shows, send out review copies to people on the internet all of which cost a lot of money.  And of course you've got to have guys who service, answer the phone, and give the appearance that you're a real company.   That overhead has to be recovered somewhere, and it's the price of the product.

I tried really hard to get the best sound i can afford. I did not have a big budget so i ended up with USED but "like new condition" items.

Aerial 5T with Pangea stands, Parasound Hint 6, and a new Bluesound Node (new model) with a Tidal hifi subscription. Paid a little north of $5k for all of it. I think it sounds great, and i couldn't be happier at this price.

I often buy used but a while back I commissioned an amp to be built.   It was about twice my original budget but from the feedback of other owners it will be worth every penny.  Hopefully that will be true.   My kids are grown,  have high paying careers so now that I have no obligations I said screw it and had something special built.

@oddiofyl you have some dang nice kit now.

Thanks !  I should have it pretty soon and hopefully be done for a while .

I was just in Vienna and bought a Carl Bucherer Scubatec Patravi. 

Carl Bucherer Scubatec

With discount and a tax refund (Austria policy for foreigners buying goods) I paid about $4500 on a watch that lists for $5,200 before taxes. Did I get a deal? No, not really. The things that go into the price of a watch besides parts include R+D, advertising, and building prestige such as paying Keanu Reeves to wear one in the latest John Wick movie. 

It amounts to this; https://www.wpdiamonds.com/swiss-watches-expensive/#3

because of quality? 

To reiterate my luxury watch analogy;

1) Parts    5-15%
2) Assembly 10%
3) R&D          10%
4) Marketing 10%
5) Profit margin for manufacturer 5-10%
6) Distribution and margin for retailer 45-60%

tomrk, I love it when you or anyone, for that matter talk about the 1960s through the 1980s. Don't forget about the early 1990s when some audio gear improved quite a bit like amplifiers. Good deal!

There are two things in play, expense and value.    Sometimes products are mediocre and insanely priced .  Sometimes a product may seem expensive but it's value is off the chart.   I try to seek out the latter. 

So here I sit looking into the abyss staring at my Denon AVR 1602 wondering how all of you fell in so deep, My feet are frozen, I cannot take that next step, but now am forced to, I don’t want to think this much,…

My father in law left us his system which is way beyond my pay grade, i broke it down, and put it in a climate controlled storage unit as it is literally a physical challenge to get it into my home. I’m 64 and had a quadruple bypass last year, and the amp alone weighs 287 pounds, 

it’s a Krell 700CX with a Krell Pre amp , digital this, and that, Theta system , The shelving stand he had it on has to be 100lbs + , Legacy speakers, etc

ive seen some receipts for thousand dollar (?) MET ‘cables’ for Christ sake,…

Anyone around upstate NY want to help me with some knowledge on where to go with this, I haven’t found a lot of information to make a decision to keep, or sell to someone who would appreciate it more then us,…

thaks

In 1912 Edison sent his salesman out across the country to pedal his new disc phonograph.  The price was up to $250.  That’s about $40,000 today- for a record player.  But things got better.  In 1968 a Marantz Model 18 stereo receiver cost $695.  That’s about $5700 today for a 40 W/ch receiver.  I remember my dad buying our first color tv in 1968.  A 25” Philco I recall it costing about $450 or almost $4000 in today’s money.  That was big money back then.  No vacations for a couple of years. 
Stereo receivers and TV’s are much cheaper and more commonly found these days but were once considered hi end luxury. We lament the high prices of luxury but historically that is how it has always been.  Same as it ever was, as they say. 

Hi tech stuff that's well made costs big bucks.Thats  life!!

Can't comment on the high-end prices, but I'm staggered by the inflation in prices over the past 2 or 3 years.

Admittedly, COVID, supply-chain issues and Brexit (here in the UK) have been disrupters, but looking at reviews only 3 years old indicate rises nearing 100%.

Paradoxically, it's made me spend more as if I delay for a couple of years on a purchase it will only be hugely more pricey.

@fsonicsmith 

The trouble with the expensive watch analogy is that they require regular expensive servicing.  

When I sold my 20 year old Omega recently I had spent more on servicing than on the original purchase.

Hi-fi can require maintenance, but nothing like this.

The watch analogy does not work at all in the high end audio field. In high end audio cost is based on performance… not even remotely true in high end watches.

Before I retired I realized one of my aspirations, if I was successful in life was to own a Rolex. So, ten or fifteen years ago I bought a starter watch to introduce me to nice watches (I had used Seiko divers watch’s for decades because I was a diver). I was shocked at how bad it was at keeping time… it’s primary function. I got it adjusted, but found that one second per day was standard for all mechanical watches… $2K, $10K, or $25K. I was shocked and disappointed… and if you get a quartz movement Rolex… then you loose cashe.
 

I lived much of the time in Japan and China, flying back and forth a couple times a month. This was not a watch for me. All luxury goods I have purchased before, first and foremost outperform… that is their raison d’être. But not watches. I finally found a Seiko Astron which was tied to the clock from GPS satellites and automatically adjusts the watch to where you are. In Japan, if your watch is off 30 seconds, you get on the wrong train. Anyway, watches, not a good analogy.

High end audio first and foremost is about performance. 

Was it Julie Mullins from one of the legacy mags that recently described the trend of manufacturers targeting the "ultra" high-end? I know I commented on it, and thought it was here (though I'm not a regular reader of the magazines anymore).

In the early '70s, when I got serious about this hobby, everybody had a stereo system. It might not have been a great one, but usually TT/Receiver/bookshelf type speakers. 

Today, hi-fi is not just a niche pursuit, but a luxe goods product. Which allows a lot of room for profit- from the importer/distributor to the dealer and on to the consumer. The market will bear these costs to a degree but the enthusiast market, in my estimation, was never about how big the check was- it was the pursuit of building something excellent (whatever that means to you) over time--many of us gradually upgraded to get where we are after various systems that were probably more than "OK" to the average consumer. 

Part of it is simply consumer culture. An Hermes store opened on South Congress near me. For old Austinites (I don't include myself in that category), it is emblematic of the "new Austin."

A lot of the people I know who have long been deep in this hobby are not in the billionaire class- they are just ardent hobbyists who don't spend on boats, Ferraris, second or third homes, jet shares or whatever. (I read a funny thing recently that said that X was a product for people who ran out of things to spend money on). For some reason, I don't think hi-fi is even on that list for most people.

In short, we are nuts about this stuff- hi-fi bugs (I think I did keep the LP with that title and the art is photos of insects).

Respectfully,

@whart "they are just ardent hobbyists who don’t spend on boats, Ferraris, second or third homes, jet shares or whatever"

Regular people don't get to spend on boats and Ferraris ever. They may buy a new mid-size car once or twice in their lifetime.

95% of the people, including me are trying to pay their bills on time, and avoid penalties. We are not not billionaires, we have 0 money to spend at the end of each month. Spending $500 on gear is a magic trick we can pull once every 5 years or so, when the stars align.

@grislybutter -fair comment and my observations may be dated. At the time I came up, it was possible to buy really good hi-fi without being rich. I depended much on used cast offs from the flavor of the month club. Now, that may be out of time.

I made money when I worked, but I never considered myself rich. I lived well based on my choices-- today, it is probably much harder. I have no kids and as long as the basics were covered (the mortgage, the normal overhead, eating, etc.) I was good to go. Perhaps we live in a different world now. NYC was never cheap and I always felt "behind," but somehow I carve a good life out of it. Today, maybe that isn’t possible; I don’t know. I’m a retired NYC copyright lawyer who kept very busy when I was in demand and eventually decided the fast track was no longer for me. By the time I bailed, I was in my late ’50s. I’m now close to 70 and don’t regret a minute of it. I had a blast.

@whart good for you! I know most people here are above or way above average and I am happy for them, their ability to pay for their hobby. There wouldn't be Ferraris and 30K speakers without them.

whart

... the enthusiast market, in my estimation, was never about how big the check was- it was the pursuit of building something excellent (whatever that means to you) over time--many of us gradually upgraded to get where we are after various systems that were probably more than "OK" to the average consumer ... A lot of the people I know who have long been deep in this hobby are not in the billionaire class- they are just ardent hobbyists who don’t spend on boats, Ferraris, second or third homes, jet shares or whatever.

I think that’s an excellent summation and we all started somewhere. For some of us, audio is a long-time priority, so that’s where much of the "discretionary spending" goes. Further, it’s a bit simplistic to think the alternative is a Ferrari or boat. It’s really all about the habits and practices that Thomas J. Stanley explained so well, starting with The Millionaire Next Door.