Posted by Audionorth (A) on March 23, 2010 at 23:44:07

One perspective on the economics of DIY and upgrading manufactured gear. . . not meant to dis the brick and mortar establishments but an interesting break down for considering DIY (BTW I don't live near any B&M establishments). . .

I'm leaving a copy of this pie chart on the coffee table in hopes my spouse "happens" to take a look at how much money/value for the dollar this hobby actually brings to the bottom-line of our budget. . . and listening pleasure . . .;-)

An excerpt from the link below that is actually referring to upgrading manufactured gear:

"Quality parts result in very high prices. Here's something to consider: when one manufactures high-end stereo gear, every dollar spent on parts adds $5.50 to $6.00 to the retail price. This is the industry standard "multiplier." Charge less and you go out of business, charge more and you are not competitive. There are a lot of reasons why the retail price is so high.

Do the math. Let's say you pop over to your local high-end audio dealer's salon and after careful consideration, drop $4,000 on a new preamp. As someone who is familiar with the pricing structure of high-end audio equipment you start to do the math while you're driving home. First, half of your $4,000 went to the dealer. The manufacturer gets the other half, or $2,000.

In reality, very little of the money given to the retailer is spent on the the parts that actually handle the signal. The most costly items are the retailer and manufacturer's overhead including advertising and high-end audio shows.

Of that, roughly 2/3rds goes to costs not associated with the actual product's materials (the rule of thumb is to wholesale the product for three times the parts cost). That means that your $4,000 preamp has $660 worth of parts in it. Of those parts, more than half the money is spent on non-electronic parts, like the pretty new chassis, the product's shipping carton, the owner's manual, the knobs, the feet, the front panel, transformers, good-quality connectors, an AC cord and the circuit board. What's left is less than $340 for the parts that actually handle the signal -- the parts that make the music. Now, open the top cover and count all the parts. How many $100 capacitors and $7.00 resistors do you think are in there?"

Again this is not meant to dis B&M but instead remind us of the benefits of DIY for those interested in learning as you go . . . the Audio Note kit build manuals have to be some of the best in the business for clarity . . .

I'm not sure where R&D fits into this particular break down . . . I have no particular interest in this company but thought the article a bit interesting. (ALTA VISTA AUDIO L.L.C.)

M-

• http://www.altavistaaudio.com/why_upgrade.html   (Open in New Window)