Diminishing returns...why you should be very happy with your kit...

[jaxwired]

There have been numerious posts lately about how much to spend on gear, and how much quality money buys, etc, etc.. The problem with this question is that the answer changes as you move up the price ladder. Let me explain.

At the lowest price levels, the manufacturer must compromise on quality of all the physical materials that create the product. For instance a very cheap amplifier must have a cheap transformer, cheap power supply, and cheap circuitry. This impacts quality greatly. So, as you move up from say a £100 amplifier to a £800 amplifier, the manufacturer is free to use better and better parts. This reaps huge gains in sound quality.

After a certain point, moving up in price does not allow for the use of better parts since there are no better parts. For amps, this price point is probably around £1000. After than point, all the manufacturer can do is improve design. This cost of good design is debatable, but there is no reason that a £1000 amplifier cannot sound as good or better than a £5000 amplifier since all the same parts are available to both manufacturers. The £1000 amplifier might in fact have the better design.

This same principle is true for all electronics and speakers. Sure, B&W can claim it has to charge more for it's "diamond' tweeters, but there are many designers that feel cheap aluminum or silk can sound even better.

Now, some people will say that the component cost element of audio product design never is eliminated regardless of price. To this, I say, that whether it's completely eliminated or it is simply negligable is irrelevent. It simply has little or no impact to performance of the products once you move beyond a certain price level.

So what all this means is that, yes you should upgrade your £100 electronics to reap big gains in quality. But, as for upgrading your £800 amplifier to a £2000 amplifier, it is much less likely to produce gains at all. Price matters at the low end, once you hit £1000 or so, it's just preference and system matching that matters for the most part.

 

[basshound]

Very good points well put Jax,do you think the £1000 mark applies to speakers and CDP`s as well?

 

[jaxwired]

It's debatable exactly where these price point are. For amps I would say around £1000, for CDPs, I say around £1000 also. If someone thought it was more like £1500 I wouldn't argue, but the point is that £5000 rarely contains parts that the £1000 amplifier manufacturer can't afford to use.

Speakers are different, which is one reason I recommend spending more on speakers than electronics (just my opinion). First of all, with speakers, size plays a huge role in cost. This is not true with electronics. For stand mounts, I would say that once you hit £1000, materials play little or no role in sound quality improvements. For floor standers, I would put the number at £2000.

Another big component in this debate is profit. When you buy a £5000 component, you are paying for much more profit than with a £1000 component. This is because markup is usually based on a percentage. Retailer mark up is often 40%. So a £5000 component has £2000 of retailer profit built into the price. While a £1000 component only has £400 of profit for the retailer. So the £5000 component costs the buyer an extra £1600 for which zero benefit is achieved.

 

[RodhasGibson]

jaxwired:

It's debatable exactly where these price point are. For amps I would say around £1000, for CDPs, I say around £1000 also. If someone thought it was more like £1500 I wouldn't argue, but the point is that £5000 rarely contains parts that the £1000 amplifier manufacturer can't afford to use.

Speakers are different, which is one reason I recommend spending more on speakers than electronics (just my opinion). First of all, with speakers, size plays a huge role in cost. This is not true with electronics. For stand mounts, I would say that once you hit £1000, materials play little or no role in sound quality improvements. For floor standers, I would put the number at £2000.

Another big component in this debate is profit. When you buy a £5000 component, you are paying for much more profit than with a £1000 component. This is because markup is usually based on a percentage. Retailer mark up is often 40%. So a £5000 component has £2000 of retailer profit built into the price. While a £1000 component only has £400 of profit for the retailer. So the £5000 component costs the buyer an extra £1600 for which zero benefit is achieved.
Jax,Good Post well thought out. Youre not far out there mate.

 

[basshound]

jaxwired:
Retailer mark up is often 40%.

Is this an accurate figure? If so it seems excessive to me.Maybe some of the dealers who post here would like to comment (but I doubt it)

 

[Anonymous]

I would wager far more depending on the kit.

 

[Anonymous]

basshound:jaxwired:
Retailer mark up is often 40%.

Is this an accurate figure? If so it seems excessive to me.Maybe some of the dealers who post here would like to comment (but I doubt it)

This would make really interesting reading.......

 

[chebby]

I would be suprised if it was as low as 40 percent. (For brand new, current range equipment from 'specialist' manufacturers with no discounting.)

 

[pwiles1968]

Would agree with the diminishing gains, but one thought on profit margins, the margin is likely to be larger in high end kit but the volumes shifted are much lower and companies need to re-invest in developing new kit, Just my opinion.

 

[basshound]

pwiles1968:companies need to re-invest in developing new kit

The profit margins referred to in this thread are the retailers/dealers not the manufacturers.Obviously dealers have overheads,rent & rates for premisises etc. but 40% or more mark-up still seems a lot to me.I doubt any equipment manufacturers work on such margins

 

[skr1]

basshound:pwiles1968:companies need to re-invest in developing new kitThe profit margins referred to in this thread are the retailers/dealers not the manufacturers.Obviously dealers have overheads,rent & rates for premisises etc. but 40% or more mark-up still seems a lot to me.I doubt any equipment manufacturers work on such margins

Overheads yes... Profit margins 40% -75% Stem from ..In most cases on.. Who you are ..and the Size of the Order.

But other factors also have an effect on Profit margins and some times mark up can be next to Nil or worse.

 

[SteveR750]

This is all well and good, but look be honest, listening to music is at best a substitue for actually playing it. Therefore, and certainly true of lots of us; hifi is simply yet another material object that makes us feel good in a variety of ways, and I include even listening to music that isn't live. Therefore to apply any rational argument about value for money or some kind of absolute sonic value is irrelevant and peraps ultimately meaningless. Therefore, the arguments for and against spending money on kit are at best misplaced, at worst material envy or boasting. Either way, does it really matter, does it really matter to any of us internally that we can hear or afford to hear the differnences ourselves, or is it more important that our peers know that we can hear/value such differences? Personally I am quite happy to exist in the knowledge that its all really a fake, that way I can convince myself it has been worth it.

Now for the interesting part: what will be the split between the sinners and the altruists... 50/50?

 

[Thaiman]

Simple!.

If you can afford highend Hifi and you can hear a big improvement over your current set up, WHY NOT buy them?

If you can't afford it or your ears told you that the £800 amp sound just as good, well, just stick with what you already happy with.

Did I say...simple or Is it just a common sense?!

There is no point discussing value for money, professional footballers (for example) will think Adam Tensor speaker is the best bargain ever while many other will never could get round the idea of spending that much money on (part of) hifi system.

There has been a few posts here slaging off Highend, I think you can do this ONLY if you already have own them and found entertainment for £ is poor otherwise your posts are base on certain feeling.

Don't forget one FACT, Highend dealers are normally dealing with a succesful business man and most of them will have to be so sure that they are happy with the purchase before parting with their cash. People who have that kind of cash to spend on this hobby are not stupid and just spend for the sake of it, you can't be succesful and stupid at the same time imo (please leave Becks out of it, he can play footie well).

 

[jaxwired]

The point of my post was just to kind of help out all the people that struggle with the upgrade question.

Lots of people get into this hobby and quickly upgrade to kit in the £500 - £900 range. They are blown away by how great their gear sounds and how big the improvement was over their cheap big box stereo. So they then think "hey, if it's this good at £700, what if I spend £3000, then I'll be blown away yet again...".

Only they don't understand that the first upgrade from £100 to £700 reaps bigger gains AND is much more guaranteed to be successful because that first leap is all about quality construction which is well proven and the second leap is all about design which is much less guanranteed and much more subjective.

 

[Thaiman]

jaxwired:
The point of my post was just to kind of help out all the people that struggle with the upgrade question.

Lots of people get into this hobby and quickly upgrade to kit in the £500 - £900 range. They are blown away by how great their gear sounds and how big the improvement was over their cheap big box stereo. So they then think "hey, if it's this good at £700, what if I spend £3000, then I'll be blown away yet again...".

Only they don't understand that the first upgrade from £100 to £700 reaps bigger gains AND is much more guaranteed to be successful because that first leap is all about quality construction which is well proven and the second leap is all about design which is much less guanranteed and much more subjective.

From my past experience I found most upgrade have work and some
unlucky times I side graded. Quick example from my note book. Krell
400Xi (£2700) was a lot better than cheaper Cyrus 8 (£800) but when
compare to Musical fidelity A5 (£1500) the latter sound as big and
details at just a tad more than half of Krell's price.
and
while this may be the point you try to make, but wait! With Sonus Faber
cremona at the end of system, Krell amp sound so much better than
Musical fidelity, it had a proper controld bass and the clinical part
of American power house has all disappeard. Swap the Cremona to Neat
MFS and most would prefer musical fidelity for a concert like, room
filling sound so system matching at this level is harder than budget range where most equipments seem to work well together regardless of brands.

I am now getting closer to what I am try to say which is- when step up
to Mcintosh MA 2275 (£7,800), the MAC made krell and Musical Fidelity
sound broken! The going back to cheaper amp is now a very
uncomforthable thought even if Krell is a superb sounding amp in it's
own right but at it's price point. Does it make sense? (my English is
getting worst lately)