How big a rip off is high end audio?

[Anonymous]

Knowbody pays the RRP any more, there are deals to be had on every level.

A major point (like Andrew says) does the musical performance justify the cost and are your pockets deep enough to run to it!

 

[jc.com]

idc:

Don't get me wrong, If I had the cash I would try a really high end system, but I dont know even then if I could justify the expense.

If you had the cash, you wouldn't need to "justify"it. Manufacturers make high -end products because some people out there (sadly, I'm not one of them....) can afford them without having to think about the number of ££ they're parting with, they just have to decide if the item does what they want it to.

The answer to the original question: "How big a rip-off is high-end audio?" is "it's not", for the simple reason that you're not obliged to buy it.

 

[jaxwired]

jc.com:The answer to the original question: "How big a rip-off is high-end audio?" is "it's not", for the simple reason that you're not obliged to buy it.

While it's true that I don't have to buy it, I would argue that a rip-off is still a rip-off even if the buyer doesn't care that he's being ripped off. It's a simple matter of value for cost. Can similar quality be had for much cheaper than 20k? Yep, Klipsch provides it themselves with the next model down.

Which makes me wonder where the term "rip-off" comes from? Maybe purse snatching?

 

[jc.com]

jaxwired:

. Can similar quality be had for much cheaper than 20k? Yep, Klipsch provides it themselves with the next model down.

"Similar" is not "the same". I accept that there may not be a huge leap up in performance between these two speakers, but the manufacturers claim there is an improvement, and therefore charge more. Whether or not we choose to pay the difference is up to us, assuming we can hear the difference.

I maintain, it's only a rip-off if you can't avoid paying for it. For all the rest, it's up to the individual how to spend his/her disposable income.

 

[JoelSim]

jaxwired:

jc.com:The answer to the original question: "How big a rip-off is high-end audio?" is "it's not", for the simple reason that you're not obliged to buy it.

While it's true that I don't have to buy it, I would argue that a rip-off is still a rip-off even if the buyer doesn't care that he's being ripped off. It's a simple matter of value for cost. Can similar quality be had for much cheaper than 20k? Yep, Klipsch provides it themselves with the next model down.

Which makes me wonder where the term "rip-off" comes from? Maybe purse snatching?

The price, as I've said before is a factor of many things, not least the number of items they expects to sell.

An example:

Cost to the company £50,000 in materials, labour, R&D, marketing etc etc

Expect to sell 1,000 units

Therefore cost price per unit £50.

Add margin at 25%

Total selling price to dealer £62.50.

Dealer mark-up 30% £18.75

Dealership price £81.25

If this same example was on a bigger set of speakers with slightly more expensive materials but the same everything else...but they only expect to sell 250 units then:

Cost price per unit is £52k across 250 units, therefore £208 per unit

Add margin at 25% equals £260 cost to dealer

Add dealer mark-up 30%, gives a total selling price of £338.

You see the price has gone up by nearly 4 times.

That explains how these things work. It's not a rip-off, it's economics.

 

[jaxwired]

JoelSim:The price, as I've said before is a factor of many things, not least the number of items they expects to sell.

An example:

Cost to the company £50,000 in materials, labour, R&D, marketing etc etc

Expect to sell 1,000 units

Therefore cost price per unit £50.

Add margin at 25%

Total selling price to dealer £62.50.

Dealer mark-up 30% £18.75

Dealership price £81.25

If this same example was on a bigger set of speakers with slightly more expensive materials but the same everything else...but they only expect to sell 250 units then:

Cost price per unit is £52k across 250 units, therefore £208 per unit

Add margin at 25% equals £260 cost to dealer

Add dealer mark-up 30%, gives a total selling price of £338.

You see the price has gone up by nearly 4 times.

That explains how these things work. It's not a rip-off, it's economics.

LOL. Joel, you seem like a nice guy and I'm glad you're an active member of this forum. How dull would it be if we all agreed on everything?

With that said, your post is total rubbish. For one thing, the R&D for all 3 speakers is the same R&D. They didn't R&D them separately. Secondly, price has to be set based on value and demand, not based on your recoup costs.

If I spend 50 years developing a remote control that works 1 foot farther away from my TV than all the other remotes, by your theory it would not be a rip-off to charge $100k for that remote control. I beg to differ. It's not the publics fault if you wasted money in R&D that didn't produce enough value to recoup the cost.

Whether speakers are worth 20k has nothing to do with the R&D costs. That value of speakers is based on simply the speakers qualities. And if those qualities are not worth 20k relative to other things you can buy for 20k, then it's intrinsically a rip-off.

 

[Gerrardasnails]

JoelSim:
Don't knock it til you've tried it.

To some, money isn't an issue so why wouldn't you spend money on a passion?

I agree. Some people, myself included, would think nothing of spending £100 per head in a restaurant - not every time I go out but being a food and wine lover, it would be worthwhile to me. Others, would not dream of doing that. I know people that spend £50k on a car that will be worth £35k in three years time. I don't drive. At least with HiFi, it lasts! You can spend £10k on a set up and it would probably still be sounding great in 10 years time. Ok, it will have been overtaken by technology and newer models but it would still be of value.

I am never going to spend £20k on speakers - unless I won the lottery and would probably still settle for PL300s - I am however intrigued at how it would sound.

 

[Gerrardasnails]

jaxwired:
JoelSim:The price, as I've said before is a factor of many things, not least the number of items they expects to sell.

An example:

Cost to the company £50,000 in materials, labour, R&D, marketing etc etc

Expect to sell 1,000 units

Therefore cost price per unit £50.

Add margin at 25%

Total selling price to dealer £62.50.

Dealer mark-up 30% £18.75

Dealership price £81.25

If this same example was on a bigger set of speakers with slightly more expensive materials but the same everything else...but they only expect to sell 250 units then:

Cost price per unit is £52k across 250 units, therefore £208 per unit

Add margin at 25% equals £260 cost to dealer

Add dealer mark-up 30%, gives a total selling price of £338.

You see the price has gone up by nearly 4 times.

That explains how these things work. It's not a rip-off, it's economics.

LOL. Joel, you seem like a nice guy and I'm glad you're an active member of this forum. How dull would it be if we all agreed on everything?

With that said, your post is total rubbish. For one thing, the R&D for all 3 speakers is the same R&D. They didn't R&D them separately. Secondly, price has to be set based on value and demand, not based on your recoup costs.

If I spend 50 years developing a remote control that works 1 foot farther away from my TV than all the other remotes, by your theory it would not be a rip-off to charge $100k for that remote control. I beg to differ. It's not the publics fault if you wasted money in R&D that didn't produce enough value to recoup the cost.

Whether speakers are worth 20k has nothing to do with the R&D costs. That value of speakers is based on simply the speakers qualities. And if those qualities are not worth 20k relative to other things you can buy for 20k, then it's intrinsically a rip-off.

It's only a rip off if the customer is being tricked into buying them.

 

[Thaiman]

Gerrardasnails:JoelSim:
Don't knock it til you've tried it.

To some, money isn't an issue so why wouldn't you spend money on a passion?

I agree. Some people, myself included, would think nothing of spending £100 per head in a restaurant -

We love people like you

shame not many out there think the same!

 

[JoelSim]

jaxwired:

JoelSim:The price, as I've said before is a factor of many things, not least the number of items they expects to sell.

An example:

Cost to the company £50,000 in materials, labour, R&D, marketing etc etc

Expect to sell 1,000 units

Therefore cost price per unit £50.

Add margin at 25%

Total selling price to dealer £62.50.

Dealer mark-up 30% £18.75

Dealership price £81.25

If this same example was on a bigger set of speakers with slightly more expensive materials but the same everything else...but they only expect to sell 250 units then:

Cost price per unit is £52k across 250 units, therefore £208 per unit

Add margin at 25% equals £260 cost to dealer

Add dealer mark-up 30%, gives a total selling price of £338.

You see the price has gone up by nearly 4 times.

That explains how these things work. It's not a rip-off, it's economics.

LOL. Joel, you seem like a nice guy and I'm glad you're an active member of this forum. How dull would it be if we all agreed on everything?

With that said, your post is total rubbish. For one thing, the R&D for all 3 speakers is the same R&D. They didn't R&D them separately. Secondly, price has to be set based on value and demand, not based on your recoup costs.

If I spend 50 years developing a remote control that works 1 foot farther away from my TV than all the other remotes, by your theory it would not be a rip-off to charge $100k for that remote control. I beg to differ. It's not the publics fault if you wasted money in R&D that didn't produce enough value to recoup the cost.

Whether speakers are worth 20k has nothing to do with the R&D costs. That value of speakers is based on simply the speakers qualities. And if those qualities are not worth 20k relative to other things you can buy for 20k, then it's intrinsically a rip-off.

Unfortunately fella, this is how things work. Whether it's good value or not is another matter entirely. But it does explain why the costs are vastly different. It's why a Rolls Royce costs far more than a Fiesta. The materials involved don't cost 20 times more, but the amount of labour/R&D/marketing etc per vehicle is vastly different.

 

[method man]

That value of speakers is based on simply the speakers
qualities. And if those qualities are not worth 20k relative to other
things you can buy for 20k, then it's intrinsically a rip-off.

I have to disagree. economics dictates that the value is set by what people will and during a credit squeeze are able to afford to spend on it. thats why so many people cant sell their houses because they belived the 'value' that was attributed to them during a credit induced boom.

if thses monkeys can stay in business selling them at 20k then however you feel that is the market value. offer them 15k and see if they sell them to you. if they do you might just have found a new value.

It's only a rip off if the customer is being tricked into buying them.


And I have to agree with the above line. they arent conning anyone they arent even marketing aggressively with leaflets to unsuspecting dimwits.

 

[hammill]

Joel's post describes how the world works, whether you like it or not.

It explains for example, why I can buy a DVD player for £25 and a cable to connect it for £250 (if I were daft enough). The DVD player sells millions, so the development costs per unit, although higher than that of a cable, are trivial. The cable sells hundreds so everyone customer pays a high % of the development costs.

Any company that does not recoup its costs will go bankrupt, so the remote control situation you describe could never happen - either they charge what the consumer thinks is a fair price (they go bankrupt because they dont cover their costs) or they charge the development plus cost and sell 0 so they still go bankrupt.

 

[John Duncan]

I think that high end furniture is a rip off. Five grand for a chair? I mean come on - there can't be more than ten quid's worth of materials in there.

And what about this?!?!? It doesn't even do anything.

 

[JoelSim]

Just goes to show that cheap doesn't always mean good value and visa-versa.

I could buy some Acoustic Solutions speakers from Argos for £20 and they would be an appalling waste of money as they would sit in the cupboard.

I could then spend £200 on a cable and use it every day.

Which is better value?

 

[Alec]

JohnDuncan:I think that high end furniture is a rip off. Five grand for a chair? I mean come on - there can't be more than ten quid's worth of materials in there. And what about < a href="http://www.telegraph.co.uk/news/uknews/5196897/Worlds-most-expensive-suit-goes-on-sale-in-London-for-70K.html" mce_href="http://www.telegraph.co.uk/news/uknews/5196897/Worlds-most-expensive-suit-goes-on-sale-in-London-for-70K.html"/>this?!?!? It doesn't even do anything.

That second article is very well written.

"£14 per stitch...£14 per stitch...£14 per stitch...".

I exaggerate, but hey.

 

[Gerrardasnails]

JohnDuncan:I think that high end furniture is a rip off. Five grand for a chair? I mean come on - there can't be more than ten quid's worth of materials in there.

And what about this?!?!? It doesn't even do anything.

Note that Heal's have been going since 1810! The suit is ridiculous. It's not even going to be nice with gold and diamond buttons is it? Only someone like Elton John will buy one!

 

[John Duncan]

I own a Gucci plectrum. Cost me £20, which at 40 times the cost of a normal one is officially the most expensive thing I've ever bought. Nice box though.

 

[jaxwired]

We just disagree on the definition of "rip-off". To me, it's a rip-off to charge more than the value of the product warrants. If I can find similar value for way less money, it's a rip-off.

To Joel and others, Klipsch could charge a million for that same pair of speakers and it's still not a rip-off. As long as no one is tricked. I just happen to disagree.

In fact, I'd say that a big part of the high end industry is composed of rip-off products. And that the reason they are successful is because they sell to people that are so rich they do not care if they are being ripped-off.

If Michael Jackson comes in to my store to by a vase and I say, "normally the vase is $20, but for you it's $10,000", and MJ says "whatever, ring it up, I like it." is he being ripped off? I'd say yes, many of you say no. That's where we differ.

 

[John Duncan]

jaxwired:is he being ripped off?

not any more...

 

[method man]

If Michael Jackson comes in to my store to by a vase and I say,
"normally the vase is $20, but for you it's $10,000", and MJ says
"whatever, ring it up, I like it." is he being ripped off? I'd say
yes, many of you say no. That's where we differ.

well yes. that would be a rip off. Thats not what they are doing though is it?

If they were known to be sellers of high end vases. and had them for 12000 and 20000 in thier shops and brochures and MJ decided cos he was rich he wasnt going to look around for similar at cheaper pricesd but would rather spend the money at where he considers a reputable dealer then, no, I wouldnt say it was a ripoff.

 

[Anonymous]

Caveat Emptor....

 

[Clare Newsome]

raym87:
Caveat Emptor....

You know, I do believe that is actually the name of the high-end vase shop in The Venetian, Las Vegas, that MJ was filmed shopping in

 

[Anonymous]

Clare Newsome:raym87:
Caveat Emptor....

You know, I do believe that is actually the name of the high-end vase shop in The Venetian, Las Vegas, that MJ was filmed shopping in

Carry It Empty......HSE label stuck to the side.......

 

[hammill]

Clare Newsome:raym87:

Caveat Emptor....

You know, I do believe that is actually the name of the high-end vase shop in The Venetian, Las Vegas, that MJ was filmed shopping in

Those indoor canals dont come cheap

 

[Anonymous]

MJ had no idea about the value of anything, poor fellow, he lived in his own little bubble. (No jokes please).

Part of this conversation relates to companies calculating their break-even points and then making predictions as to the volume of sales they can achieve. It's not a simple equation of cost v.s. sales price. Though I always believe there should be a degree of margin between kit at different prices, that shows where the extra money goes. In order to do this the manufacturer has to take "risk" in order to price competitively enough to achieve sales. For this to work, sales have to hit certain targets. The tragedy is that fixed costs are often quite high, so even if a product sale could be profitable in a good market, the business could still go bust if the overall figures don't meet those required to put the company into profit.

Right now, I just feel really sorry for the whole industry because they'll be struggling to survive. This will ultimately hurt us as consumers as speculative investment in R&D from the more specialist manufacturers slows down and we see less brilliant and esoteric kit released as less companies survive the recession.

I have my fingers crossed that as many as can survive, do.