will the price rises be permanent?

[admin_exported]

Most manufacturers have made price rises over the last year, in some case nearly 50 percent, eg Roksan on the caspian integrated from 1000 to 1450, Cyrus are the same, 250-300 quid extra.

Do you think the prices will stay at this level until inflation catches up with them or are component prices relaxing so that there is scope for price falls. eg Rega dropped the price of a CD player recently. Cyrus were doing a reduced price upgrade (to get the magnesium cases back?).

What do you think?

 

[hammill]

I think the problem is the weakening of the pound. Until the pound strengthens, I don't see prices coming down.

 

[Andrew Everard]

Well, given that the Japanese yen is currently seriously strong, especially against the US dollar, and that Sterling is on its knees against the yen (around the Y140 mark) and the euro (?1.07 or thereabouts), can't see much scope for price reductions on imported goods for the moment. Even against the S.Korean won the pound is having quite a turbulent time.

And of course that affects British-made goods, too, as components and sub-assemblies are bought in from overseas.

 

[chebby]

zzgavin:
Most manufacturers have made price rises over the last year, in some case nearly 50 percent, eg Roksan on the caspian integrated from 1000 to 1450, Cyrus are the same, 250-300 quid extra.

Do you think the prices will stay at this level until inflation catches up with them or are component prices relaxing so that there is scope for price falls. eg Rega dropped the price of a CD player recently. Cyrus were doing a reduced price upgrade (to get the magnesium cases back?).

What do you think?

I think you should prepare yourself for some more - even steeper - price rises.

 

[Anonymous]

True the pound is weak at the minute, but with US rates back up to 1.65 rather than 1.35, whereas it was at 2.10, it has eased. I track this pretty well, as I get paid in dollars for the book I've written.

I was curious to note the price falls, if the price of a system stays high more people will just not bother upgrading. I know of several friends who've packed away their amp and speakers and are using a dock system than buying new. Not sure the prices are influencing this, but the cyrus6 se and 6xp are ~900 each and highly recommended, the equivalents were about 600 each. That is a big combined jump in price. At a glance it can seem an expensive game to get into

 

[Anonymous]

reading replies from Andrew and Chebby you are probably right.

Roll on a stronger pound...

 

[Clare Newsome]

zzgavin:
True the pound is weak at the minute, but with US rates back up to 1.65 rather than 1.35, whereas it was at 2.10, it has eased. I track this pretty well, as I get paid in dollars for the book I've written.

I was curious to note the price falls, if the price of a system stays high more people will just not bother upgrading. I know of several friends who've packed away their amp and speakers and are using a dock system than buying new. Not sure the prices are influencing this, but the cyrus6 se and 6xp are ~900 each and highly recommended, the equivalents were about 600 each. That is a big combined jump in price. At a glance it can seem an expensive game to get into

Interestingly, the most notable sales action in the hi-fi market at the moment is at the @£1000 price point - now, whether that's down to the £600 kit now costing £900, or enthusiasts being undeterred by the recession....

I'm writing a blog on the latest industry sales figures - should be online in next day or so.

 

[Anonymous]

Thanks Clare

I remember from previous posts that the hifi separates market is pretty small compared to the overall CE or even TV market.

Data on units sold corresponding to the best buy system price points that you create would be interesting. IIRC they are about 900, 2000 and 8000, but I suspect that will rise next month eg eb acoustics not B&W 685 is a 150 price rise.

I'd also love to see if DACs have made an appreciable influence yet.

 

[The_Lhc]

zzgavin: as I get paid in dollars for the book I've written.

Hold up! What's this? You can't just throw away a line like that! Details man, details, inquiring minds want to know!

 

[chebby]

"Will the price rises be permanent?"

Well, a Linn Sondek LP12 was around £75 (no arm) in 1973 and a decent arm about the same amount (Hadcock, Grace, SME etc.) so an LP12 + arm + cartridge set-up would probably total around £200 those 36 years ago.

Today the most basic 'entry level' Sondek (Majik LP12) will cost £2250 + cost of lid (£140) and comes with a Project arm and Linn MM cartridge.

So yes, I would say that good specialist hifi equipment will never go down in price - barring the odd 'blip' like Rega's aforementioned CDP price cuts.

 

[Messiah]

chebby:
"Will the price rises be permanent?"

Well, a Linn Sondek LP12 was around £75 (no arm) in 1973 and a decent arm about the same amount (Hadcock, Grace, SME etc.) so an LP12 + arm + cartridge set-up would probably total around £200 those 36 years ago.

Today the most basic 'entry level' Sondek (Majik LP12) will cost £2250 + cost of lid (£140) and comes with a Project arm and Linn MM cartridge.

It's all relative though Chebby isn't it?? How did that cost compare to earnings at that time?? (I am making an assumption on wage levels all those years ago but you normally have an answer and I'm sure you understand what I am getting at)

 

[sometimesuk]

I don't think its got as much to do with the strength of currency than what people will lead you to believe.

At the end of the day, the whole world, manufactures, suppliers etc, buys and sells in US Dollar's. So as its already been mentioned the strength of the pound against the dollar has already improved by about 40 - 50% from its lowest level, but we have not see any savings past on.

In my opinion its the distributors, shops etc who decide not to pass on these savings and pocket the money.

If people remember, when the pound was at its highest, say a Cyrus CD player costs £600 in the UK. You would expect it to be about $1200 in the US, but no in the US the same CD player would be $600. Making the true equivalent cost £300.

The hifi press said this difference was to cover transport and distribution cots. Rubbish. They have those costs there in the US too.

They also argued that is was to protect consumers against fluctuations in the currency market. Well from the recent price increases we all know that argument was a load of bull.

As the pound gets stronger against other currencies don't expect any price reductions. If any, they will be £50 off.

Don't forget that compared to other countries Britainis known by manufactures as "Treasure Island" because they can charge so much for their products here, which they wont be
able to get away with in other countries.

 

[Clare Newsome]

Whereas in the TV market.. .Just looking at the Award 2004 issue, where flatscreen product of the year was a 42in Panasonic plasma costing £3300! Even the best-buy small set - a 20in LCD - cost over £1000

 

[basshound]

Messiah:chebby:
"Will the price rises be permanent?"

Well, a Linn Sondek LP12 was around £75 (no arm) in 1973 and a decent arm about the same amount (Hadcock, Grace, SME etc.) so an LP12 + arm + cartridge set-up would probably total around £200 those 36 years ago.

Today the most basic 'entry level' Sondek (Majik LP12) will cost £2250 + cost of lid (£140) and comes with a Project arm and Linn MM cartridge.

It's all relative though Chebby isn't it?? How did that cost compare to earnings at that time?? (I am making an assumption on wage levels all those years ago but you normally have an answer and I'm sure you understand what I am getting at)

Goods costing £200 in 1973 would cost £1812.83 in 2008 (latest available data) according to the BoE inflation calculator.

 

[Messiah]

That's the answer I was looking for. Cheers!

 

[chebby]

Messiah:

It's all relative though Chebby isn't it?? How did that cost compare to earnings at that time??

Well I was a child back then so my recollections of full-time wages/salaries are hazy and based purely on our own circumstances.

A quick check of some Govt stats from a Hansard of November 1973 would indicate average male (manufacturing) weekly earnings before tax were £36 - £39. However, inflation was 7.4 - 9.8 percent through that year and climbed to 16 percent in 1974 and 25 percent in 1975.

Anyway probably about a month's (Gross) earnings - including overtime - for a reasonably well paid (male) worker in the manufacturing sector to buy an LP12 + arm + cartridge in 1973. Six weeks of net earnings given the high taxes at that time.

I would need more time to find a better picture of wages/salaries across more sectors then and now.

 

[chebby]

We need a person was who earning the average income in 1973 and bought a Linn Sondek when they first came out!

The trouble is that house prices, taxes, inflation and expectations* have changed wildly since then. A simple price calculator is not telling the whole story.

* People in 1973 generally expected to live in smaller homes and have less cars per household than now and mortgages and loans were far harder to obtain.

 

[Andrew Everard]

sometimesuk:I don't think its got as much to do with the strength of currency than what people will lead you to believe.

At the end of the day, the whole world, manufactures, suppliers etc, buys and sells in US Dollar's. So as its already been mentioned the strength of the pound against the dollar has already improved by about 40 - 50% from its lowest level, but we have not see any savings past on.

Yes, but right now the £ stands at about $1.58 - agreed it's up from where it was, but it's not so long ago that it was at $2 or thereabouts, so we have some way to go to recover.

And a lot of business is done in Euros, not USD, and that's a real problem at the moment.

Bear in mind, too, that price rises and falls don't happen as fast as currencies move - products are ordered and priced way ahead of them appearing on the shelves, so price changes are pretty laggy. Companies also buy and sell currencies ahead of when they need it, which also distorts the effect

We didn't get the full impact of the growing value of the Japanese yen - companies didn't increase prices as much as they should have done if they'd simply followed exchange rates. And I don't think we've seen the full effect of the Euro strength yet, either...

 

[Messiah]

chebby:
Messiah:

It's all relative though Chebby isn't it?? How did that cost compare to earnings at that time??

Well I was a child back then so my recollections of full-time wages/salaries are hazy and based purely on our own circumstances.

A quick check of some Govt stats from a Hansard of November 1973 would indicate average male (manufacturing) weekly earnings before tax were £36 - £39. However, inflation was 7.4 - 9.8 percent through that year and climbed to 16 percent in 1974 and 25 percent in 1975.

Anyway probably about a month's (Gross) earnings - including overtime - for a reasonably well paid (male) worker in the manufacturing sector to buy an LP12 + arm + cartridge in 1973. Six weeks of net earnings given the high taxes at that time.

I would need more time to find a better picture of wages/salaries across more sectors then and now.

Marvelous! New I could rely on you for a detailed answer like that!

Just helps to put it into perspective.

 

[Anonymous]

well, I dont want to put a damper on things, but think there will be another major stockmarket crash very very soon ... the USA is basically bankrupt and have been 'propping up' the market since the last crash and the dollar is 'doomed' ... they have been 'printing' money zimbabwe style (trillions of dollars)

Even the chinese government have adverts on their national tv urging people to buy gold ...

 

[Anonymous]

then .... add the swine flu pandemic and forced swine flu innoculations + the fact that israel may be planning to attack iran .... prices will rise (so buy good 2nd hand gear)! (LOL)

 

[Anonymous]

Andrew Everard:
Bear in mind, too, that price rises and falls don't happen as fast as currencies move - products are ordered and priced way ahead of them appearing on the shelves, so price changes are pretty laggy. Companies also buy and sell currencies ahead of when they need it, which also distorts the effect

We didn't get the full impact of the growing value of the Japanese yen - companies didn't increase prices as much as they should have done if they'd simply followed exchange rates. And I don't think we've seen the full effect of the Euro strength yet, either...

The lag in this is significant, 90-180 day terms, plus manufacturing and shipping make things things months I guess.

Interesting that you say many things are in Euros, is that completed products or components. My understanding of the component market is that many things are priced in USD, particularly from China. If it is Euro that affects many things then that explains a lot.

Have the pricing bands for the awards issue gone up much?

 

[JoelSim]

zzgavin:Andrew Everard:
Bear in mind, too, that price rises and falls don't happen as fast as currencies move - products are ordered and priced way ahead of them appearing on the shelves, so price changes are pretty laggy. Companies also buy and sell currencies ahead of when they need it, which also distorts the effect

We didn't get the full impact of the growing value of the Japanese yen - companies didn't increase prices as much as they should have done if they'd simply followed exchange rates. And I don't think we've seen the full effect of the Euro strength yet, either...

The lag in this is significant, 90-180 day terms, plus manufacturing and shipping make things things months I guess.

Interesting that you say many things are in Euros, is that completed products or components. My understanding of the component market is that many things are priced in USD, particularly from China. If it is Euro that affects many things then that explains a lot.

Have the pricing bands for the awards issue gone up much?

I can't imagine a French manufacturer buying German components in USDs, can you?

 

[Anonymous]

JoelSim:
I can't imagine a French manufacturer buying German components in USDs, can you?

No, but what is the balance of country based sourcing of components. Are there major suppliers of audio components in Europe compared to the USA and China? Curious really, I see a fair amount of designed and built in the EU, but is that all from components sourced in the EU?

 

[Andrew Everard]

Quite a lot of the major Japanese brands have European HQs in - well, the Eurozone!