Agreed when I look at what was knocked-off my kit when I purchased it. Most of it was 40% off RRP, recent headphones were slightly different at only 10% off. They still make a good profit even at this level of discount.All soundly run businesses will include the cost of product development / R&D into their product cost when figuring out a pricing strategy. That said, I suspect that the net margins of domestic hifi is quite high for the more popular products, if they don't sell in numbers you could easily lose a shirt or two in the process. Ultimately, the price of a product will be set as high as possible to generate maximum profit, at a level that enough people are prepared to pay. Some products are clearly a rip off, except people are prepared to pay £100s for cables for example that require little to no R&D for the intended application.