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In Reply to: RE: Not since the late 70's - inflation is a killer! nt posted by Isaak J. Garvey on August 30, 2016 at 11:08:30
Most consumers (at least in the U.S.) want the biggest thingy with the smallest price tag. So, who is being greedy when manufacturers move offshore? Not so clear cut, IMO.
Follow Ups:
No, it is clear, at least in this hobby. An over view of pricing and the way high end audio products are marketed makes obvious.
Certainly there are a lot of crazy expensive products in high end audio but it's not clear whether they are overpriced because of simple greed or because of manufacturing costs. Amps with fancy cases, silver thingeys, and first-rate customer service, sold at brick-and-mortar salons, and built-by-hand in the USA (rather than stamped out in a factory) will probably cost a pretty penny.Let's say that a hypothetical amp has $1000 worth of circuit boards, power supplies, case, etc. The manufacturer has to cover that plus pay for labor, facilities, utilities, etc. Then they have to make a profit to pay the designer and owners. Then the retail store has to make enough to cover the purchase, all their expenses, and make a profit. By the time it gets to the consumer it probably retails $6-10K. That's the cost of doing business under this model.
Most people aren't willing (or cannot afford) to pay this price, so they go down to Best Buy and get a Chinese-made amp. One reason they aren't willing to is because they also want money buy a big screen TV and a jet ski. I own a really nice stereo and have a middle-class income. I'm able to do that because I drive a 1997 pick-up and don't own a jet ski (my TV is a 20 year old vacuum tube).
Also, if your claim was clear cut, don't you think there might be at least one integrous person who would build nice stuff in the USA that regular people could afford?
Not so clear . . .
Edits: 08/30/16
Not a knock at all, it is human nature, but your narrative is myopic and is sculpted to fit into your world view.
Nothing, and I mean NOTHING can possibly justify 100K plus audio components except sheer arrogance, greed, and the knowledge that the top 1% have more disposable income than in any time in history. Study after study has show that tax breaks for the ultra rich do not result in job growth and capital investments. It DOES however, lead to an increase in conspicuous consumption, which in the end, serves the economy I guess.
A $1500 US cable? $45,000 phono stage? $35,000 CD player? $55,000 speaker cables. NOTHING on earth, including R&D, parts, employees or rent could justify these costs given the end product.
That is my world view...:)
That is very sound thinking and I agree with you....
Unfortunatly it doesn't need to be justified. COGS, G&A, R&D, marketing, economies of scale are all considered to determine pricing, but what overrides all of this, is what the market will bear. And yes, income inequality is a factor in high end audio.
Good point.
An enormous amount of blame can also go to the review publications who have gone to EXTRA-ordinary lengths to justify pricing and brainwashing many into correlating price with musical satisfaction.
Not particular to Hifi, it is the nature of the beast. Trade publications, an anchronistic term now, incestuous with the manufacturers, court each other, support each other.
What is unique is the large number of people that are in the industry truly because they love it. AA and similar shows that, you don't find that in most industries.
What may be similar are the arts, and looking at some of the equipment you can see that. The art of Hifi, the aestetics of the sound and appearance.
> > > NOTHING on earth, including R&D, parts, employees or rent could justify these costs given the end product.
Unless you're in manufacturing, I don't think you have credibility on the topic. My wife is a massage therapist. She has 20 years experience and charges $55/hour. She averages 12-15 massages per week, which is close to the maximum a person can do without wrecking their body within a few years. Her net income is, maybe, $15K per year. The point is: unless you're in the business, you really have no idea of the costs involved and, thus, no idea of the profit margin.
Running the numbers, 13 massages a week at $55 per massage is $715 a week. If she works 48 weeks, that's $34,320. Our some of the massages only a half hour?
Otherwise, the net sure seems low.
It's not just the stuff you think about (office rent, laundry, oils, linens, towels, utilities, phone, fees, licenses and more) but also trainings, books, tuning forks, furniture . . .
Some of it is quasi-one-time expenses but it all adds up and her take-home is less than one-half her gross receipts. As with manufacturing, there is an economy of scale but you can't scale up past about where she is without ending your vocation. I've read that some therapist in big cities can make an actual income. Those people don't last more than a few years unless they can branch out (tuning forks, light therapy, cranio, etc).
I ran my own business for 25 years. I understand!!!!!
It was very eye opening how many different costs there were that I was previously ignorant of.
I like to think of business today as you being a Zebra with vultures feeding off your carouse.
I have not worked directly in manufacturing but I have purchased and advised on millions of dollars of pro gear that has been installed in countless recording and mastering studios. I have done factory tours of and I can tell you I have observed the manufacturing process first hand..Bryston, Manley, etc etc. They make gear that lasts decades with 24/7 uese, built like a tank, with excellent sonics.
I have talked extensively with the principals of these companies and I know what their margins are. They know they can only charge 1/10 of what they charge the home audio market because in the pro audio world there are budgets and the sticker shock threshold is far, far lower.
Again, from my experience and world view.
Bryston and Manley make home audio gear, right? I'm pretty sure both make amps that sell north of $10K. Or do they have pro-audio divisions that sell the same stuff to that audience for <$1K?
Meanwhile, care to name some high end companies whose owners are buying second homes or driving Bentleys? I guess I've read that David Wilson has a Ferrari. Regardless, I've noticed the shrinking pool of advertisers in Stereophile. That suggests that the industry is in trouble despite what you perceive as greedily high profit margins.
and a follow up...again..wild..
Kessler: No Apologies
Here is a wild take on it all...I mean out there..but touches on some of the points discussed here.
Ken Kessler:
Kessler's rant is interesting but he hardly touches on how hi-fi got that way or offers any ideas on how to find a different way.
Meanwhile, I see that Manley indeed has a pro-audio "division" but I can't tell that the pro stuff is 1/10 the price of the home audio gear.
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