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In Reply to: RE: Still not so clear posted by Isaak J. Garvey on August 30, 2016 at 12:10:43
>>>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.
Follow Ups:
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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