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Where does the money in expensive speakers get spent?

Sibbers

Sibbers

Earthling
Just looking through and comparing various different speakers and speaker types, then recollecting to speakers I've heard either demo'd or connected to friend's systems I do wonder what the extra money ensures you get... Especially when you look at the simpler and more traditional designs, like a two way with box cabinet.

I can understand that a good big chunk of magnet for the main driver is important, and the lightness and rigidity of the driver itself so perhaps exotic materials used there. The. The box should be non reflective and very rigid too, so perhaps you may spend a bit here, but the rest is crossover and design, right?

You would expect design advantages to come down in price with each iteration and a bit of copying, so once you've hit the £1000 mark what extra are you buying in a high end 2 way?

This isn't a loaded question btw, and maybe it's labour/r&d but I'd love to know if there's more to the materials aspect.
 
I would have thought because the construction of the cabinet is often complex and critical, a lot of the money goes there. In most cases I imagine the cutting and assembly is done by hand where the cheaper models are partly or mostly done by machine.
Then there's the R&D which in terms of time could be costly.

Finally there's the laws of economics - A high end design may sell 100 or so, whereas the likes of Wharfedale Diamonds are churned out in their thousands.
 
Wow those caps! Kerching! :)

I'm happy with that idea, that the caps help improve SQ and if you want it then you need something rare and precious to achieve it. Or something heavily engineered. I appreciate hard wood is more expensive and too, hand building in a rich country will cost more.

But if you take stuff like the Dynaudio lines, ProAc lines, ATC etc all of which sticking within the fairly traditional approaches for two way speakers, there are big price differentials and according to reviews they sound distinctly better as you go up the product lines so, is this the magic of the crossovers using better materials or is it better drivers and tweeters due to more money being available for them to invest? Or just plain old economics as you mentioned above?
 
chrisletts said:
Finally there's the laws of economics - A high end design may sell 100 or so, whereas the likes of Wharfedale Diamonds are churned out in their thousands.
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I think that's the most important thing.

If more people were into serious Hifi prices would go down.
 
Sorry to disappoint, but in high end expensive speakers most of the money (I would say 70-80%) goes to the distributors, retailers, marketing, shipping, taxes, etc. The parts and manufacturing cost can be around 10% of the retail price, then there is a little profit for the manufacturer.
 
That's really similar in a few industries. I work in computer games and we make very little per unit, with the splits being typically as you've suggested Teddy. Ah, what a shame. But even replacement parts can end up costing just as much (ie: upgrading or modding to reflect the more expensive thing you couldn't initially afford).

I love my speakers and am toying with moving into the next line (Dynaudio contour to confidence) and thus the question was prompted.

Bummer dude.
 
Traditional ratio for distributor was 60% off recommended retail, which again traditionally was split 40% for the retailer ,20% for the distributor.
Retail has changed massively, we have manufacturers selling direct, manufacturers becoming the 'distributors' and appointing retailers in each country and the traditional method which is probably still valid in geographically large areas.
Keith.
 
Up to a point, it's simple economics.

A fairly simply two-way ported standmount is possibly seven pieces of MDF, some BAF wadding, two drive units, a simple crossover, a few pence worth of wire, terminal blocks, and some vinyl wrapping. The most expensive thing in the box is the box itself.

Simply swap a pair of cheap drivers for top Scanspeak Illuminators and Revelators and even if by some chance you didn't have to change any other component in the design, you've just gone from a loudspeaker with a Bill of Materials of less than £50 to a loudspeaker with a BOM of more than £800 unless you are buying in significant number. If you changed them to Accutons, you could easily double or treble that figure. Increase the size and complexity of the enclosure, or change materials, increase the sophistication and component roll-out in the crossover, the quality of the finish, and the inevitable demands for high-performance cable, and you can increase the costs still further.

A loudspeaker that replaces 10kg of medite with 100kg of Corian or aluminium as a cabinet is also probably more likely to require crating instead of boxing, which means packing and shipping costs escalate. This automatically limits the number of people who would buy such a loudspeaker, so there are no economies of scale.

When you get to something like the Marten Coltrane Supreme 2, the BOM is huge, and the costs of shipping six large flight cases containing 600kg of loudspeaker mount up too. Then there's the need for piano movers to ship the boxes to the client and the day or two build-up and fine tuning in the home to factor. All that and R&D time and all the other overheads involved to be paid for.

I'm not sure these costs alone justify the price tag, but I think if you had 600kg of custom made kitchen appliances freighted to you in flight cases, the price tags would be pretty extreme. Maybe not €390,000 extreme, but fairly frightening.
 
When big and heavy the transportation costs can be huge indeed.

Perhaps that is the most important factor to explain why people who want an 18" driver subwoofer go for DIY.
 
teddy_pardo said:
Sorry to disappoint, but in high end expensive speakers most of the money (I would say 70-80%) goes to the distributors, retailers, marketing, shipping, taxes, etc. The parts and manufacturing cost can be around 10% of the retail price, then there is a little profit for the manufacturer.
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Teddy,
You are so wrong there man on all counts.
 
I'd say he's right up to a few grand, beyond that the numbers change, but I doubt there's a 10k speaker on the market that cost 35% of mdrp.
 
Alan Sircom said:
Up to a point, it's simple economics.

A fairly simply two-way ported standmount is possibly seven pieces of MDF, some BAF wadding, two drive units, a simple crossover, a few pence worth of wire, terminal blocks, and some vinyl wrapping. The most expensive thing in the box is the box itself.

Simply swap a pair of cheap drivers for top Scanspeak Illuminators and Revelators and even if by some chance you didn't have to change any other component in the design, you've just gone from a loudspeaker with a Bill of Materials of less than £50 to a loudspeaker with a BOM of more than £800 unless you are buying in significant number. If you changed them to Accutons, you could easily double or treble that figure. Increase the size and complexity of the enclosure, or change materials, increase the sophistication and component roll-out in the crossover, the quality of the finish, and the inevitable demands for high-performance cable, and you can increase the costs still further.

A loudspeaker that replaces 10kg of medite with 100kg of Corian or aluminium as a cabinet is also probably more likely to require crating instead of boxing, which means packing and shipping costs escalate. This automatically limits the number of people who would buy such a loudspeaker, so there are no economies of scale.

When you get to something like the Marten Coltrane Supreme 2, the BOM is huge, and the costs of shipping six large flight cases containing 600kg of loudspeaker mount up too. Then there's the need for piano movers to ship the boxes to the client and the day or two build-up and fine tuning in the home to factor. All that and R&D time and all the other overheads involved to be paid for.

I'm not sure these costs alone justify the price tag, but I think if you had 600kg of custom made kitchen appliances freighted to you in flight cases, the price tags would be pretty extreme. Maybe not €390,000 extreme, but fairly frightening.
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If you were buying new from a dealer are there in your opinion some obvious sweet spots where the price you pay is likely to offer decent value for money.

Nic P
 
sq225917 said:
I'd say he's right up to a few grand, beyond that the numbers change, but I doubt there's a 10k speaker on the market that cost 35% of mdrp.
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Still well off when you look at the R&D that goes into some quality speakers.
Quality finished special designed and finished boxes cost a fortune to have made now.
Just ask Derek about his new Kudos mega Titans cabinets?
 
If you work on the basis that the company involved at any point in the chain, from manufacturer to retailer, needs to make a living. Then, you can shift thousands of boxes with a small markup or a few with a monster markup to get your money. Everybody in the chain does their own maths, and I suspect that Teddy is about right. The fewer in the chain, the better it is for the consumer. You want the big money with the manufacturer, you want him to design new stuff, investigate new technology etc. You don't want the money in the pocket of some warehouse manager who adds no value either today or tomorrow.
 
Sibbers said:
You would expect design advantages to come down in price with each iteration and a bit of copying, so once you've hit the £1000 mark what extra are you buying in a high end 2 way?
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I would suggest approaching nothing in terms of technical performance. A 2 way is a compromise that makes a lot of sense in a budget speaker but very little sense in an expensive speaker. Even if you are pushed for space a 3 way using a coaxial mid/tweeter makes far more sense above the £1000 mark than a 2 way.
 
high end designs, are probably multi-way, 3 way or more. As h.g. says, 2 way is a big compromise. Well ideally you'd need 1-way speakers, but the perfect driver is a bit hard to locate.

So economies of scale. Low volume of sales. Expensive and bespoke parts. Larger BOM. Much high R&D costs. Attention to detail and fewer construction compromises make it more expensive to make. Stuff may be handmade, possibly in the UK or locally, not machine made and outsourced.

As with most things in life, small improvements get increasingly more expensive to realise and vfm tends to drop away. Still, there's a difference between a maximum vfm system and the best system you can afford within a given budget.

Also though, some new stuff is well marked-up through the chain, that's for sure. You can see that by how much some stuff gets reduced a few years down the line. Still, low volume high end stuff isn't the stuff you tend to find in the clearance sales of large chains.
 
I think 3-way is a good compromise, as a starting point for a design, with present technology. Crossovers are bad and to be avoided. But with 3-way at least you can push one crossover down away from vital vocal frequencies - this makes for a good design trade-off. Fewer than 3 drivers and beaming occurs as one driver or another operates over too wide a frequency range.
 
h.g. said:
I would suggest approaching nothing in terms of technical performance. A 2 way is a compromise that makes a lot of sense in a budget speaker but very little sense in an expensive speaker. Even if you are pushed for space a 3 way using a coaxial mid/tweeter makes far more sense above the £1000 mark than a 2 way.
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I don't want to put words in your mouth, but it does look like you are saying there is no reason to go up a fair few (2 way) speaker lines. The examples I used before rarely cost less than a grand, so are you saying technically there is little or no difference?

The Dynaudio contour and confidence standmounts are almost identical in looks, using the same cabs, stands etc so I can't see why you would upgrade if they sound technically the same.
 
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