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How are Hig-End Speakers Priced?

I recently (early Feb 2012) purchased a pair of Model 61 Human Speakers, intending to build a small office system with them. I've been listening to them through my main system for a few days now, while breaking them in. These were purchased directly from the builder/designer; my cost was only $675, delivered to my door.

I am so very impressed with the build quality of these small speakers and the quality of the music emanating from them (even though they are not yet fully broken in). I'm honestly surprised they are as inexpensive as they are, and have begun wondering how high-end speakers are priced.

The speakers are manufactured in the Northeast US, and (so far as I know) the builder/designer doesn't advertise and doesn't attend trade shows. The speakers are built with only one pair of binding terminals, two hand-built drivers, and a very simple 1st-order crossover using a design I believe is refined from an 1970's-era design. I'm not sure how much the designer is actively pursuing R&D currently.

I'm wondering if there is a formula that speaker manufacturers generally use when designing/pricing their products. For example, does a manufacturer target a price point, and then decide to follow an "industry-standard" formula like (say) 15% for R&D, 15% for materials, 15% for manufacturing/assembly, 15% for marketing, 15% for distribution, 15% for manufacturer's profit, and balance for seller's profit? Certainly, eliminating (or reducing) one or more of the above categories could yield a speaker that is much less expensive than the price point it was designed for.

Any thoughts?
rx7audio
snofun3
601 posts
 
"I'm wondering if there is a formula that speaker manufacturers generally use when designing/pricing their products."

You mean like - -whatever the market will bear, like every other industry.
rx7audio OP
24 posts
 
Jmcgrogan2, I'm one of those people who, with most things, characteristically buys once and keeps "forever"—at least, this has been the case with me with respect to audio ever since my first several years in this hobby in college—so resale value means relatively little to me. However, I do appreciate your point. The fact is, when I did my initial Google search in April 2007 and stumbled upon Human Speakers, there really wasn't much I could locate on the www about the company. And today, there is still very little there. By the way, after several e-mail exchanges with the designer/builder/owner back then, I was intending to make a purchase, but then life for me suddenly got extremely complicated!

Tpreaves, my percentages were completely made up to help illustrate what I was asking. I was hoping to learn some *real* percentages (if they actually exist) from knowledgeable A'goners, so I might impute the *real* value of my speakers.
thorman
1,262 posts
 
5 times the cost..Thats the reality of it........
bigkidz
3,311 posts
 
5 times the cost is what I was told also. I am building a preamp for commercail sale and after I added it all up, it would be priced at over $10K by this standard. Parts add up quickly.
martykl
3,578 posts
 
Speakers are priced by what the market will bear. A look at the recent pricing history of the Gallo 3.x will illustrate that (no shot at Gallo intended, it's just one good example of a popular speaker model that saw pretty steep prices increases commensurate with increased demand - rather than with increased cost of parts).

My understanding is that the rule of thumb re: "price vs cost" was that retail should be at least 400% of parts. That is, if the market won't support that level of mark-up, the belief in the business is that the speaker is likely to be a commercial failure.

Marty
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