Rip off hi fi true or false ?

[Esra]

What got me was a man buys a power supply for his hi fi For £4000 just to find out it only had £40 wouth of electronics in side is that for real ?

Yes, probably (at the 2007 figures he was quoting).

I recently looked into buying a speaker kit that retails for £310. If you want the company to build and finish and varnish the speakers then they cost £1024 (with postage). That seems unfair until you imagine how much a cabinet maker costs to employ to make a pair of speaker cabinets up to 'furniture' grade standards of finish and how much it costs to buy and store all the different veneers and then the assembly and fitting and testing of the drivers and crossovers etc.

Make the power suppply yourself with £40 worth of electronics is the only answer.

Otherwise let others source all the components and employ people to build them in a business premises with light, heat and power and a safe working environment (plus paid vacation and pensions in a few cases). They will have to pay taxes and NI and keep a bunch of spares for everything they make to support their 5 year guarantee. They will be legally obliged to keep their accounts in good shape and they might like to pay to advertise their wares (reasonable enough). They may even research future product lines.

Also they will not get the £3960 'mark-up' being objected to. The dealer will take a sizeable chunk of that and the taxman takes 20 percent VAT at every turn (on dealer and manufacturer and customer and courier).

Council taxes on the premises and - often - lease or rent payments.

+ shipping costs from china to around the world....

Good thing is we all can decide personally if we want to be ripped off...1.st world luxury problem

 

[drummerman]

Its pointless arguing about it.

No it's not!

This is sooo boring.

Can't we talk about something else?

Volkswagen?

Fabulous

 

[jjbomber]

Can't we talk about something else?

Cables???

 

[drummerman]

Can't we talk about something else?

Cables???

5 rows down ...

 

[CnoEvil]

Its pointless arguing about it.

No it's not!

This is sooo boring.

Can't we talk about something else?

Volkswagen?

Fabulous

Not too nebulous, then?

 

[drummerman]

Its pointless arguing about it.

No it's not!

This is sooo boring.

Can't we talk about something else?

Volkswagen?

Fabulous

Not too nebulous, then?

No. Clear example of a witch hunt against a small manufacturer.

Still, compared to my problem with peeling eggs it is rather unimportant.

 

[CnoEvil]

No. Clear example of a witch hunt against a small manufacturer

It's all smoke and mirrors.

 

[expat_mike]

What got me was a man buys a power supply for his hi fi For £4000 just to find out it only had £40 wouth of electronics in side is that for real ?

Yes, probably (at the 2007 figures he was quoting).

I recently looked into buying a speaker kit that retails for £310. If you want the company to build and finish and varnish the speakers then they cost £1024 (with postage). That seems unfair until you imagine how much a cabinet maker costs to employ to make a pair of speaker cabinets up to 'furniture' grade standards of finish and how much it costs to buy and store all the different veneers and then the assembly and fitting and testing of the drivers and crossovers etc.

Make the power suppply yourself with £40 worth of electronics is the only answer.

Otherwise let others source all the components and employ people to build them in a business premises with light, heat and power and a safe working environment (plus paid vacation and pensions in a few cases). They will have to pay taxes and NI and keep a bunch of spares for everything they make to support their 5 year guarantee. They will be legally obliged to keep their accounts in good shape and they might like to pay to advertise their wares (reasonable enough). They may even research future product lines.

Also they will not get the £3960 'mark-up' being objected to. The dealer will take a sizeable chunk of that and the taxman takes 20 percent VAT at every turn (on dealer and manufacturer and customer and courier).

Council taxes on the premises and - often - lease or rent payments.

Chebby makes several good points there.

I have spent the majority of the last 20 years working as a cost engineer, so I think that it is worthwile adding some extra context about how a firm will estimate its costs.

A simple approach for the manufacturer is to calculate the wholesale cost that it will sell its product on to the retailers, is as follows:

wholesale cost = (cost of components * markup ratio to accomodate the costs of the procurement dept, sales dept, parts storage etc) + (number of manhours * a chargerate). Note this chargerate can include the factors mentioned by Chebby (ie the workers salary rate, the cost of management, HR dept, business rates, VAT, marketing, transport, profit.....etc). To put this into context, a rule of thumb for this chargerate, is that it is 3 times the workers salary rate. So for the fictional speakers that were used as an example in the initial narrative, if the initial components/materials cost £20, and the speakers took 1 hour of manual labour (the labourer is paid £15/h) per pair of speakers, then the estimated wholesale cost is (20 * 2say) + (1*15*3) = £85 in total.

The next step is to estimate the retail cost - again a simple rule of thumb is that the retail cost = 3 * the retail cost. The factor of 3 includes elements for retail labour, management, marketing, business rates, profit .........etc. So speakers with a wholesale cost of £85 would have a retail price of about £250.

The exact ratios will differ with producers and retailers, but whenever I see advertised hifi prices, I use the ratios of 3, to get a feel of whether the hifi represents value for money.

Of course the above calculations are based on the price to manufacture the product - however it will always be argued that a product is worth what someone will pay for it. So if someone will happily pay £4k for something that cost £40 to make, then I always feel that they have money to burn, but it has made them happy, so who am I to judge them. *biggrin*

Sorry if that is a lot to digest in one go, but it may help inform the discussion.

 

[Esra]

No. Clear example of a witch hunt against a small manufacturer

It's all smoke and mirrors.

worth to take in shares?

 

[CnoEvil]

No. Clear example of a witch hunt against a small manufacturer

It's all smoke and mirrors.

?

worth to take in shares?

It might be gas to have a punt.

 

[Vladimir]

I'll gladly peels DM's eggs for £15/h + heated room + pension. Not sure how much for advertising.

PS + 20% VAT per peel stroke.

 

[Blacksabbath25]

At least it give you all something different to take about like peeling hi fi eggs lol

 

[matthewpiano]

It's the people who buy the stuff that keep the market viable, and where a market for extreme luxury items exists, some are always going to take advantage of it.

Having said that, I do think Ashley has a point. A lot of kit struggles to justify its price point if you actually assess what has gone into it, how it performs, and how it compares to reasonably affordable kit from the past.

 

[Blacksabbath25]

At least it give you all something different to talk about like peeling hi fi eggs lol

 

[Blacksabbath25]

It is very true you do have to think what it cost to get say a amp on to the market like the parts designing labour tax and so on as there so meany mouths money has to feed before we even get to buy it and at the end of the day no one is forcing us to buy it .

 

[Native_bon]

How can you bring this topic up in a HIFI forum, with boys & toys. *lol* It's like asking religious people if there is a GOD. The few opening replies says it all.!!

 

[Blacksabbath25]

How can you bring this topic up in a HIFI forum, with boys & toys. *lol* It's like asking religious people if there is a GOD. The few opening replies says it all.!!

is the lol on here a God who it !

 

[Al ears]

No. Clear example of a witch hunt against a small manufacturer

It's all smoke and mirrors.

worth to take in shares?

It might be gas to have a punt.

I'd wait for them to go down a wee bit more....

 

[SteveR750]

Hifi is not one of life's existential requirements. It's a luxury.

As such things are worth as much as people are willing to pay for it.

Its pointless arguing about it.

Someone, somewhere must have paid for a pair of Russ's Zapperators....

 

[Vladimir]

Hifi is not one of life's existential requirements. It's a luxury.

As such things are worth as much as people are willing to pay for it.

Its pointless arguing about it.

Someone, somewhere must have paid for a pair of Russ's Zapperators....

And helped many workers keep warm and pensioned™.

 

[Frank Harvey]

The next step is to estimate the retail cost - again a simple rule of thumb is that the retail cost = 3 * the retail cost. The factor of 3 includes elements for retail labour, management, marketing, business rates, profit .........etc. So speakers with a wholesale cost of £85 would have a retail price of about £250.

Please do point us in the direction of any speaker manufacturers offering a profit margin anywhere near that, as we'd love to set up an account with them!

 

[davedotco]

Names that would come up first in the UK as pioneers of 'designer' electronics are Ivor Tiefenbrun and Julian Vereker. However, the king of them all worldwide is definitely Mark Levinson. The man sold cheap OEM Chinese amplifiers for huge markups under his brand Red Rose Music, and he isn't even an engineer, just a failed trumpet musician. Someone else always builds the amplifier and speakers he sells. The Mark Levinson amps you can buy today have nothing to do with the actual person considering he sold his name as a brand to Harman Int. decades ago. After claiming to have retired, he again launched a company under the name Daniel Hertz in Switzerland. Hertz after his ancestor Heinrich Hertz and Daniel after a favorite uncle or something. The man is a genious coming up with this stuff. Who buys it? Dmitry Medvedev owns Daniel Hertz speakers and LG paid big money to have "Audio by Mark Levinson" signature on their gadgets.

Oh, btw. He is the only true jet set in the hi-fi world, being a former husband of Kim Cattrall (Sex and the City). If there ever was an exact opposite of Ashley James, it would be ML.

Actually Vlad these guys are virtually interchangable.

They are both convincing sales people with the uncanny ability to sell their 'vision' of hi-fi reproduction in a totally convincing manner. Mark is a little more subtle, he simply explains why his product is 'superior' and lets expectation bias do it's thing, Ashley tends to bash you about the head with 'details'.

The simple truth is that producing and selling hi-fi is an expensive business and very little of that cost is reflected in the material 'value' of the products. Even companies genuinely attempting to give value for money can not get around the costs of doing business, taxes, margins, quality control, packaging, transport and of course personel are all unavoidably expensive, that is just the way it is.

 

[Vladimir]

Actually Vlad these guys are virtually interchangable.

You do have a point there.

 

[davedotco]

Actually Vlad these guys are virtually interchangable.

You do have a point there.

Even with my 'cynical mode' fully engaged it is hard not to react to these guys, they are brilliant at what they do.

I recall a conversation with the designer of the original Red Rose amplifiers centering on how Red Rose 'tweaked' the Audioprisms on which they were based. I tried quite hard to find out what the 'tweaks' actually were, but no details were forthcoming. In hindsight I think the 'improvements' were really just hightened expectation.

The later chinese sourced product were from Korsun, allegedly improved in design and production from the originals, improvements that proved pretty hard to tie down.

There is however a certain predictable cycle to this, it goes as follows.

Company makes basically decent product but is, effectively, unknown so the product is hard to sell. A more high profile company buys the product, instigates some minor design changes, improbes the QC and rebrands the product.

The manufacturing company then introduces the 'improvements' into it own product and sell it cheaper than the rebranded items, at which point the whole thing breaks down. This is why so many western 'manufacturers' want to own their own production facilities.

 

[Vladimir]

They would just replace generic passive electronic parts for branded exotica (special caps etc.), thicker front aluminium plates... Done. Officially tweaked.

I always wondered who are these anonimous talented engineers who built these designer electronics. This is why I respect guys like John Curl, Nelson Pass, Tom Evans etc. Designer = maker = brand = legend.

BTW. The Daniel Hertz speakers are built by an old Czech piano company Petroff. If it was made by some random speaker company, the secret would leak and devalue the brand. But Mark learned his leson with Korsun and chose a piano company and this is advertized as a big premium of his product. A touch of class. It's a musical instrument, not an electrical appliance, get it? And the piano company wont sell a cheaper OEM variant. The guy is a genious I tell you.