The True Cost of Hi-Fi ?

[sthomas048]

I was thinking about the price of good Hi-fi and i feel so much of it is over-priced. Im not an expert in anything, but how does the cost of the parts and components for hifi (and most other tech) continue to drop and yet the prices steadily rise and rise ? Why is new hifi so expensive ? What is the manufacturer's reasoning behind their prices ? what is the actual cost of hifi kit versus how much we pay ?

Wondering what you guys think.

 

[Anonymous]

Lots of reasons i guess.

One may be the focus on home cinema that has been alot higher over the past decade and has driven the price down on those components due to high competition. In the HI-FI sector the competition has not been that high and driven the price and quality of those companies that are still serious about it up. HI-FI is more of a niche market than it used to be and many of the large volume actors such as sony, yamaha, onkyo etc etc are not researhing as much or puttin out as many components as they used to.

Lower volume of sales is what it boils down to i think.

 

[Andrew Everard]

I think you'll probably find that in real terms mass-market hi-fi and home cinema equipment has never been more affordable. Yes, there are some high-end products with premium prices, but I well remember even mainstream CD players being in the £300-£500 range a decade or more ago, whereas now you can buy one for around £200, and a 3D Blu-ray player for not much more.

And as for the cost of parts falling, have you seen the strength of the yen, the Korean won and even the Chinese yuan against the pound/US dollar/Euro recently?

All that said, you couldn't do a stripdown of a product, cost the parts and say that's what it costs to make - there's design, R&D, tooling, production, transport and capital costs to be factored in, too. Plus taxes, distributor margins, retailer margins...

All that and you're still paying no more for a product than you would have done for an equivalent model a decade - or two - ago?

This is not the tree you seek: the one you should be barking up is over there...

 

[JamesOK]

Er, isnt the cost of research, design and development of new products a big factor in all this too? I wonder how much it costs a company to develop a new product.

For example - think of Naim. Theyve been making CD players for years, so I would assume the cost of bringing out their latest player is considerably lower than the cost of producing the UnitiQute for example? Although the UnitiQute relies on the Uniti, so does that mean the development and design costs of the Uniti outweigh all other products they have released recently? I have no real idea, just speculation.

 

[Alec]

I'm glad someone decided to tackle this one, at long last.

 

[Andrew Everard]

Is someone tackling it?

 

[chebby]

al7478:I'm glad someone decided to tackle this one, at long last.

'Tackled' quite a few times a year on this forum IIRC.

sthomas048,

The problem is that there aren't that many voluntary co-operatives making quality audio gear from donated components. Added to which, your usual specialist audio equipment consumer is not (typically) a charitable case deserving of subsidised, quality hifi.

What makes you think that it is unfair of the manufacturers to charge what the market will bear to people in a niche luxury goods sector?

 

[Andrew Everard]

Conversation with the owner of a then-prominent chain of mid-end shops a few years back:

Me (grabbing a moment in a seemingly endless tirade about how manufacturers, magazines and consumers were all idiots intent on destroying his business): "So, how's business, then?"

Retailer: "Tough - think I may have to switch to updating the Jags only once a year, rather than every six months. Haven't dared tell the wife, yet - she'll kill me when she gets back from our place in the Algarve..."

 

[Alec]

chebby:

al7478:I'm glad someone decided to tackle this one, at long last.

'Tackled' quite a few times a year on this forum IIRC.

Really? Can't say I'd noticed.

 

[chebby]

al7478:Really? Can't say I'd noticed.

A small selection from a search of just one keyword (and sifting out similar - but AV related - threads)...

http://community.whathifi.com/forums/t/146282.aspx

http://community.whathifi.com/forums/t/35109.aspx

http://community.whathifi.com/forums/t/190324.aspx

http://community.whathifi.com/forums/t/299082.aspx

http://community.whathifi.com/forums/t/277378.aspx

http://community.whathifi.com/forums/t/350571.aspx <--<<< this even has (almost) the same title

If I had the time to search other keywords I am sure I would find many more similar threads.

 

[Alec]

Maybe I should have included a winking "smiley" in my last post.

 

[drummerman]

al7478:chebby:

al7478:I'm glad someone decided to tackle this one, at long last.

'Tackled' quite a few times a year on this forum IIRC.

Really? Can't say I'd noticed.

... as have just about most subjects brought up day by day here ...

My take; it's speakers and accessories where some seem to try to cash in rather handsomely, especially at more elevated prices. I say some, not everyone.

Budget and mid-range, the market is far to competitive to get away with a duff, overpriced product these days.

 

[plastic penguin]

A bit of a hum-drum subject.

However, my take is, for instance, the cost of a CD player: My Arcam cost me £400 four years ago. If I keep the machine another year it works out at £80 per year. That, in real terms, works out at roughly two weeks worth of petrol in my car. And factor in the hours of enjoyment we get as a family from the hi-fi...pretty good value, eh?

 

[defo]

Like anything it depends on what you buy and how high up the ladder you want to go. For £600 you can get a truly excellent set up, but if you want to squeeze the very ends of high fidelity out of the system you can stick another zero on the end. I like to get good value, hence I'm a NAD fan.......

 

[JoelSim]

defo:
Like anything it depends on what you buy and how high up the ladder you want to go. For £600 you can get a truly excellent set up, but if you want to squeeze the very ends of high fidelity out of the system you can stick another zero on the end. I like to get good value, hence I'm a NAD fan.......

Good value is not all about price.

A bag of frozen mince may be good value to one person who will enjoy it, but very poor value to someone else who wants lean steak mince from a cow who's been massaged twice a day for a couple of years.

Economies of scale play a massive part in the cost of items. If R&D costs £300k and you are selling 300k units then that's £1 per product. If you R&D the same amount but only sell 2000 products then that is £150 per unit. Add the same for marketing, staffing etc etc, then consider that you are only buying 200 capacitors instead of 300,000 and therefore your purchasing power is somewhat limited and you can see how costs add up based on the same thing.

Of course when you then factor in that a capacitor chosen in a hi-end product is probably 3 times the price, so is the transport, so are the cables, so is the power supply etc etc and you can see why costs increase exponentially. It's not a rip-off but someone has to pay the wages.

 

[shooter]

JoelSim: It's not a rip-off but someone has to pay the wages.

And to make an incy wincy bit of profit to put back into the company to make better and more a affordable product, what ever that may be.

No one bats an eyelid when WHF puts 1 big one into the towers demo rooms for our pleasure and i'm pretty sure it wasn't a donation from a wealthy business tycoon!

 

[Anonymous]

Manufacturers will charge it if the market will pay it. So it would seem that the market is quite happy with the current state at the moment, despite inflations due to external factors.

 

[shooter]

igglebert:Manufacturers will charge it if the market will pay it.

Absolutely, supply and demand.

 

[cse]

Andrew's point about £200 per component HIFI is true, but once you move up to mid-market, the prices are ridiculous. I've just purchased some Neat Motve 2Se speakers, for £1325. When you lift them up, they are extremely lightweight, probably made of MDF and are quite small. Sure they look quite nice, but nothing exceptional. The sound is good, but really they ought tio be worth about £400-£500 max.

 

[Andrew Everard]

So why did you buy them?

 

[shooter]

Neat do all the r&d with their drive units cse and get them custom made to their own spec, no one uses a Neat driver in the market bar Neat them selfs. I suppose you have to take into account this and the cabinet design, crossover etc as it all takes time. There are a lot of manufacturers out there that do use off the shelfs drivers including my own beloved Totem's but they still sell. I can understand why people would think they are getting ripped off if they bye off the shelf but if they sound good and the quality of craftsmanship is their?

 

[JoelSim]

Andrew Everard:So why did you buy them?

Quite right. The law of diminishing returns comes in but it does in every market. A 10ct diamond will cost much more than 10 x 1ct diamonds, that's because there are fewer around. Is it better, yes, is it 50 times better, no.

 

[JamesOK]

cse:Andrew's point about £200 per component HIFI is true, but once you move up to mid-market, the prices are ridiculous. I've just purchased some Neat Motve 2Se speakers, for £1325. When you lift them up, they are extremely lightweight, probably made of MDF and are quite small. Sure they look quite nice, but nothing exceptional. The sound is good, but really they ought tio be worth about £400-£500 max.

Isnt the point as I mentioned previously that Neat will have spent a lot of money in R&D to make your speakers? So youre not just paying for the box and the drivers and someone to put them together?

 

[plastic penguin]

JamesOK:

cse:Andrew's point about £200 per component HIFI is true, but once you move up to mid-market, the prices are ridiculous. I've just purchased some Neat Motve 2Se speakers, for £1325. When you lift them up, they are extremely lightweight, probably made of MDF and are quite small. Sure they look quite nice, but nothing exceptional. The sound is good, but really they ought tio be worth about £400-£500 max.

Isnt the point as I mentioned previously that Neat will have spent a lot of money in R&D to make your speakers? So youre not just paying for the box and the drivers and someone to put them together?

Agreed: the perfect example is the Wharfedale Diamond range. They were first conceived in the early eighties....

 

[the_dude2]

Andrew Everard:
Conversation with the owner of a then-prominent chain of mid-end shops a few years back:

Me (grabbing a moment in a seemingly endless tirade about how manufacturers, magazines and consumers were all idiots intent on destroying his business): "So, how's business, then?"

Retailer: "Tough - think I may have to switch to updating the Jags only once a year, rather than every six months. Haven't dared tell the wife, yet - she'll kill me when she gets back from our place in the Algarve..."

this post made by Andrew is quite interesting and has made me think. The manufacturers charge x amount to the dealers then the dealers add their mark up. Ricky EB has said dealers told him the EB1's could go for what, up to 900 pounds if my memory serves. That really is quite a mark up considering how much they are being sold direct, where they still need to make a profit to stay in business.

Look at all the heavily discounted items at the moment going for around half price from a certain hifi chain. Are these half price products being sold at a loss? I doubt it very much, so 50% reduction by the dealers and they are still making a profit?

I of course could be wrong about this as i dont work for this company or any hifi retailer so i am just speculating, but i think there is a huge mark up on products made by the dealers. yes they also have their costs of course.