HiFi: The pricing structure
- Thread starter Alonso1973
- Start date
Thetiminator
Painfully virile
Rack Kit
pfm Member
Traditional hifi manufacturers have done a terrible job when it comes to appealing to the younger market. They need to get into the cans & the headphone amp space and then try and lure them into affordable domestic kit IMO.
Not sure I agree with this. People with a significant interest in high quality sound can buy high technical performance hardware for significantly less in real terms than in the golden age you cite. Of course it tends to be pro-audio type equipment rather than the modestly performing for the price somewhat outdated designs intended for hi-fi shrines. A pair of well designed 3 way DSP active monitors, a few DSP subs plus some room treatment will offer a higher technical performance than anything from the golden age and is within the financial reach of far more enthusiasts than it was in the golden age. The modest price relative to "hi-fi" indicates that this stuff is getting bought in numbers.
Is high fidelity almost dead or just hi-fi?
John Phillips
pfm Member
I think it got another re-branding into "high end" quite some time ago.
Alonso1973
pfm Member
Please pardon my ignorance. What is COG and ‘distros’?
James
Lord of the Erg\o/s
About ten years ago, I designed the Ergo E-IX mini monitor. It was a fully bespoke design, using high quality drivers and carefully designed crossover. By most accounts from PFMers who have built their own examples, it is a coherent and musical loudspeaker system. There was some consensus I should batch manufacture them for sale. So I got quotes from local mass-production cabinet makers (minimum quantity was 100 sets) and driver manufacturers. I did the cost-accounting math, and weighed up the risks (capital costs, poor sales, returns etc.)
It was a non-starter because I would have to sell them for way more than most people are prepared to pay. Shipping from New Zealand was prohibitive. I only ever made one pair for full retail. That was shipped to USA, where I believe the proud owner enjoys them everyday. So I published my design here and gave permission to Stefan to build and sell them as he pleased.
I'm not surprised that new and good hifi kit is becoming both scarcer and more expensive.
It was a non-starter because I would have to sell them for way more than most people are prepared to pay. Shipping from New Zealand was prohibitive. I only ever made one pair for full retail. That was shipped to USA, where I believe the proud owner enjoys them everyday. So I published my design here and gave permission to Stefan to build and sell them as he pleased.
I'm not surprised that new and good hifi kit is becoming both scarcer and more expensive.
I have sold consumer product once, production price for a box in the supermarket can be as low as 1-5% of the selling price. So I don't think that the HIFI marked is that bad actual.
When I change my gear ( in the 1-3000 £ range) I usual get it custom build by a local hi-fi producer, it is so much more value for money.
When I change my gear ( in the 1-3000 £ range) I usual get it custom build by a local hi-fi producer, it is so much more value for money.
I don't know where you live but the prices that bespoke engineering needs to charge in the UK to remain in business puts them in a different league to standard designs produced in reasonable batches. Not as large as it used to be but still a different league. It is one of the brighter spots though for an industry that is not in good health at the moment in the UK.
Nagraboy
Ausculta fili
What gets to me is that expensive hi-fi is no more reliable than most cheap kit. I’ve had so much gear have problems over the years and it’s usually the most expensive stuff with the ‘great reputation’. I find cheaper gear is less stressful to own now because of this.
I’ve gone for a Rega turntable hoping it’ll be reliable and easy to service, as they’re UK-based. I’m keen on Croft amps for the same reason, but my Leben amp has been good the last 5 years until recently having issues with the source selector.
As for digital, I have a Chromecast Audio plugged into an Arcam DAC to play music from my Roon Nucleus. I can’t see any reason to spend big on a HiFi Brand streamer/player. I do worry a bit about the Nucleus as it’s a computer so will need replacing one day.
I’ve gone for a Rega turntable hoping it’ll be reliable and easy to service, as they’re UK-based. I’m keen on Croft amps for the same reason, but my Leben amp has been good the last 5 years until recently having issues with the source selector.
As for digital, I have a Chromecast Audio plugged into an Arcam DAC to play music from my Roon Nucleus. I can’t see any reason to spend big on a HiFi Brand streamer/player. I do worry a bit about the Nucleus as it’s a computer so will need replacing one day.
Mike Reed
pfm Member
This is, of course, quite irrelevant to audio chain pricing except inasmuch as you may think that more expensive components outlast cheaper ones. I can see an analogy with cars here; £50K + Porsches, Range Rovers et al generally have lower scores for reliability than cheaper vehicles (Skoda, e.g.).
I'm always amazed at how well those 70s, 80s and 90s Japanese (or other; NAD, e.g.) kit seems to just go on and on. Were their trannies and cap's infused with Lotus blossom and Mt. Fuji dust?
The basic audio scene now has incorporated so much digital trickery it's a world apart from those offerings say, 40 years ago, despite doing the same job; possibly no better in some instances. Vinyl kit may be something of an exception here but not even so sure of that. One thing's for sure, though; prices have risen inexorably and new stuff/models keep appearing.
This is as good a summary as you will get.
It's not though, is it? Your pint of beer is made in the millions and a large part of its cost is unavoidable duty, tax and if you drink it in a pub the cost to deliver it to you, heat the room and all the rest. The actual beer probably costs pennies at the factory gate. The TV is sold in lower numbers but is still mass produced. They have development costs, the brewers don't as their manufacturing process is very well established.
It's important to draw a distinction between mass market stuff and boutique goods. I work in food, the margins on basic foods are tiny. 4 pints of milk for £1.09? You are having a laugh, that raw milk in a tanker is worth about 80p delivered to the factory gate. That leaves 29p to pasteurise it, package it and retail it. Absolutely nobody is making a killing, but it just about works because thy are manufactured in millions and it's the same job every day. Same goes for loaves of bread at 50p and tins of beans. Now consider the opposite extreme, a perfume that may cost pennies will go in a bottle costing a few pounds and another couple of pounds worth of expensive packaging. The retail may be £50, maybe 10x - 20x costs, but that's because they have to consider:
- Brand construction
- Celebrity endorsement
- Nobody buys it every week
- In 2 years it's out of fashion and they have to do it all again with a new package, a new brand, a new celeb, more advertising and all the rest of the crap that makes £2 of material worth £50. You aren't selling perfume, you are selling a means of making someone feel good.
- Retail shops need lots of employees (expensive) and lots of heat and light (expensive) and lots of maintenance to be clean and attractive (expensive) who have to give the stuff away in testers (expensive) and so on.
Look up Veblen goods for further insight into how pricing can work.
Low volume sales and niche markets notwithstanding, there's also clearly an aspect of rinsing some folk, or a certain market segment - just how much is a remote for a Lavardin amp? Yeah, no thanks.
Sometimes it's a case of just charging what the market permits. I'm a fine with that personally, but it turns me right off some brands that I might otherwise have considered.
For young(er) folk, the pro market will indeed set you free. Well, not quite free. But relative to traditional hifi, it's free in every sense of the word.
Sometimes it's a case of just charging what the market permits. I'm a fine with that personally, but it turns me right off some brands that I might otherwise have considered.
For young(er) folk, the pro market will indeed set you free. Well, not quite free. But relative to traditional hifi, it's free in every sense of the word.
Thetiminator
Painfully virile
Exactly, you prove the point further.
As with most things that go to market, the actually cost of producing the goods is, more often than not, a fraction of the retail price that the customer pays. The reasons do vary, but aren’t relevant, or of any concern to the consumer.
Jim Audiomisc
pfm Member
Back circa 1980 when I worked at HiFi the working estimate for what I worked on was a multiplier of between x5 and x8 the cost of the components. But there are many 'howevers' lurking in that. The key questions are: 1) How many will you sell, and at what rate? 2) What kind of 'factory' do you have and are its startup or basic costs already amortised?
Then add in that some 'components' cost more than others. It is easy enough to buy simple rectangular metal boxes or bend them. But something like ye olde Armstrong 600 needed a lot of specific tools and dies to make. Which then had to be paid for to *make* the parts. The 700 range needed an impressive set of heatsink casing and a big special transformer, etc. None of it 'off the shelf'. Then having some nutcase like me spend years developing the thing.
The end result is you need to work out what quantity/rate you can sell, and assess the price to be able to recover all that, plus pay the wages, etc. But of course, the price also affects how many you can sell...
Its a minor miracle that *any* small startup in audio succeeds without charging a fortune per item. The days when hifi was 'the thing' are long gone, alas.
Then add in that some 'components' cost more than others. It is easy enough to buy simple rectangular metal boxes or bend them. But something like ye olde Armstrong 600 needed a lot of specific tools and dies to make. Which then had to be paid for to *make* the parts. The 700 range needed an impressive set of heatsink casing and a big special transformer, etc. None of it 'off the shelf'. Then having some nutcase like me spend years developing the thing.
The end result is you need to work out what quantity/rate you can sell, and assess the price to be able to recover all that, plus pay the wages, etc. But of course, the price also affects how many you can sell...
Its a minor miracle that *any* small startup in audio succeeds without charging a fortune per item. The days when hifi was 'the thing' are long gone, alas.
Sorry, I think that you have missed the point.
4 pints of milk, cost to manufacture about £1. Sells for £1.09.
Bottle of perfume, cost to manufacture about £2. Sells for £50.
One of these has a 9% markup, the other 2500%
Casio watch, cost to manufacture about £2. Sells for £10. Maybe 5x markup, only made possible by manufacturing and selling millions.
Rolex watch, cost to manufacture £100 (say). Sells for £5000. Maybe 50x markup, sold in expensive boutiques that may only sell one or two items a week.
The reasons are absolutely relevant. If I could sell Rolex milk I would sell a bottle for £50 instead of £1.09. This is "of no concern to the consumer"?
This simply isn't true for consumer, pro-audio and the bottom end of home audio. This stuff is substantially more affordable relative to an average wage. Other stuff that an average wage gets spent on has got significantly more expensive in real terms but electrical gizmos is not one of them. In fact, I think I recall a graph looking at how the costs of things have changed over the decades back to the big change in the 70s and electrical gizmos were right at the bottom (but I am relying on memory so please check). Cheap gizmos are perhaps the biggest benefit of neoliberalism and they are pretty much certain to get more expensive when whatever succeeds neoliberalism takes hold.
What has also changed is that the number of people able to spend £100k on a hi-fi without a registerable impact on their finances has grown greatly. This is why there is so much expensive hi-fi about. Not because it costs more to design or manufacture, quite the opposite, but because there are far more people able to spend these sorts of sums on hi-fi.