Is High End Gear Just Getting Too Damned Expensive?

[User211]

In my quest to find out as much as possible about Apogees, I found this post on a forum. I just wondered what people thought - do you think this statement is valid?

"What is disappointing is that state of the art is more expensive than ever - don't believe me - YAmaha NS1000M last price £1500 (1995) Apogee Duetta Signature £4200 (1995). Equivalent Focal speaker to NS1000M £10,000 - martin logan apogee eqivalent £20,000. That is appaling - even taking account of index linking."

No - I'm not asking if the Duetta Sig/CLX comparison is valid, but rather if you think that high end in general is losing the plot on the pricing front, especially considering the mess the world is in financially. Ironically, this situation only seems to be raisng prices for new gear even further!

So, do you think prices for new gear are just way over the top, or not?

 

[RichTeer]

So, do you think prices for new gear are just way over the top, or not?

The best has always cost lots of money, but yeah, I do think that the Über High End has become outrageously expensive. But I guess what is one person's obscenely priced item is another's relative bargain (Spires come to mind).

 

[Bernard]

especially considering the mess the world is in financially.

I do think that the Über High End has become outrageously expensive. But I guess what is one person's obscenely priced item is another's relative bargain (Spires come to mind).

The High End has always been outrageously expensive, long before the current financial mess.

But Rich has a valid point in his second sentence, as exemplified by the number of VERY expensive systems on this forum. I don't understand the point about the Spires, though.

 

[Wardsweb]

I think the true audiophile realm has always been a niche market. The people who can afford it, can still afford it. The people who stretch to get there, may not. I believe the gap between the groups will widen as people with disposable income and those who need to watch there money grows.

For myself, I consider myself an audio enthusiast in that while I could spend more, I choose not too because the ROI is just not there; the bank for my buck , if you will. I do realize my system is better than some and not as good as others but I'm happy with it and that is what matters to me.

"Security comes not from what you have, but knowing what you can live without"

 

[marck]

And I think you have to take into account the differences between the varying countries. For example, the CLX's for $13k, whereas in the UK you are lookimg at circ £25k.

So would you say the CLX in the US was a bargain compared to the (rip off) UK price?

But in general I agree. The distributors are very quick to increase prices when the currencies go against them, however have you ever known them to reduce prices when it is in their favour? i don't think so!!

 

[Tube60]

My take on it is this:
As mass-market products, at least at the mid-fi level, sound better and become more versatile and more affordable, the less likely an end-user is going to resort to the high-end for acceptable sound quality. One could throw in general apathy as well, as fewer and fewer people know or remember or care what real, live music is like. As an example, I listened to a mid-level Harman/Kardon A/V receiver in 2ch mode, from a CD, and I was actually quite surprised at how good it sounded. Couldn't hold a candle to what I have at home of course, but not too bad!
With a shrinking market base, and therefore production, manufacturers of high-end gear need to keep prices higher than they would otherwise. All high-end mfrs still try to extract the best sound quality possible, and that's in fundamental conflict to the desires of the bean-counters. Therefore they are forced to pass on higher prices to the end-user due to lower production. Costs are always higher on shorter production runs, either by time spent or numbers produced.

 

[tonepub]

But in general I agree. The distributors are very quick to increase prices when the currencies go against them, however have you ever known them to reduce prices when it is in their favour? i don't think so!!

Actually Naim and Harbeth both decreased their US prices in the last six months by about 10-12% across the board.

I thought it was a nice move!

 

[amey01]

It's getting more and more expensive. 10 short years ago would not have seen the über high-end prices that we see today.

Thing is though - it's working and people are buying. We have a thriving industry of which we should all be proud!

 

[risabet]

The true free-market capitalist would argue that the prices charged simply reflect the demands of the market. The products are relatively rare and therefore command a higher price relative to more pedestrian goods. On the other hand, if the market, didn't keep buying $150,000 speakers and $40,000 amps then manufacturers would stop making them, no?

I would argue that high-end pricing is reflective of the belief, flawed I believe, that the more expensive a piece of gear is the better it is. High-end pricing is thus mostly psychological in nature for the extreme hobbyist has the above stated belief quite often. Not to mention the eye-candy aspect of much high-end gear, some of the chassis in high-end gear must represent 40-60% of the manufacturing cost, yes? Does that pretty face actually improve the sound quality? I doubt it.

Now if money were no object the point of diminishing returns is still at work but once again each has to decide for themselves what price represents the limit they are willing to extend to.

 

[Dreamer]

The price of high-end gear is no higher than it was 10, 20, or even 50 years ago. It's just that the systematic debasement and devaluation of the Dollar, Pound and Mark have caused the APPEARANCE of price increases. Coupled with the trend over the last 20 years of mean income not keeping up with inflation/devaluation, the prices SEEM to be getting high...

--Richard

 

[RichTeer]

The High End has always been outrageously expensive, long before the current financial mess.

What I was getting at there is how much more expensive the most expensive x has become, relatively speaking. The original Goldmund Reference turntable was about £10,000 (roughly $20k) when it was released in the early 80's, and I think it was the most expensive turntable one could buy. I don't how much that would be in today's dollars, but I bet it'd be a bit short of the $300K Goldmund is asking for the Reference Mk 2!

But Rich has a valid point in his second sentence, as exemplified by the number of VERY expensive systems on this forum. I don't understand the point about the Spires, though.

What I was trying to articulate (poorly, it seems!) is that most of my friends think that my Spires are obscenely expensive, but I think their sound quality to price ratio makes them quite a bargain.

 

[risabet]

The price of high-end gear is no higher than it was 10, 20, or even 50 years ago. It's just that the systematic debasement and devaluation of the Dollar, Pound and Mark have caused the APPEARANCE of price increases. Coupled with the trend over the last 20 years of mean income not keeping up with inflation/devaluation, the prices SEEM to be getting high...

--Richard

True, check out the CPI in 1998 and what it has become for a good reason for incomes not keeping up with inflation, actual real inflation, not what the government tells us.

 

[User211]

The price of high-end gear is no higher than it was 10, 20, or even 50 years ago. It's just that the systematic debasement and devaluation of the Dollar, Pound and Mark have caused the APPEARANCE of price increases. Coupled with the trend over the last 20 years of mean income not keeping up with inflation/devaluation, the prices SEEM to be getting high...

--Richard

At the end of the day, I guess the only way to support this argument is to get some real statistics and do some maths. Knowing MLOC, none of us are going to do that, though your point seems reasonable to a certain extent.

1) Devaluation means higher component costs for domestically produced items, since I suspect virtually none are made using 100% home grown parts. But how much has the $/£ devalued relative to the Yen & RenMinBi? Or is that even relevant if the international trading currency is the dollar?

2) Any idea about how real incomes have devalued in percentage terms over the years? Any supporting stats to prove that is even the case? Certainly, a lot of wealth "seemed" to be generated during the late 80s and late 90s.

 

[FISH_MAN]

I think that their are a lot more stepping stones in equipment that are actually worth stepping on than their was in the past.

 

[RUR]

...1) Devaluation means higher component costs for domestically produced items, since I suspect virtually none are made using 100% home grown parts. But how much has the $/£ devalued relative to the Yen & RenMinBi? Or is that even relevant if the international trading currency is the dollar?

Don't know how it's done in the commercial realm, but in my DoD-related experience, contract prices were often in the local currency. This, in fact, caused some serious problems for us when a ~$1M UK product quickly became a $1.3M UK product as the dollar devalued vs. the pound ealier this decade.

 

[Craig]

And I think you have to take into account the differences between the varying countries. For example, the CLX's for $13k, whereas in the UK you are lookimg at circ £25k.

So would you say the CLX in the US was a bargain compared to the (rip off) UK price?

CLX's are $20k and up in the US for new speakers.

 

[David Matz]

Sure, the gear is expensive. There are a variety of reasons, including many excellent ones mentioned above. One of the reasons is that the parts are expensive and they are frequently just passed on to the consumer.

Here's another reason: If ML were to run an experiment for a few months: Charge $5K for the CLX, and see how many they sell...

Why won't they? My assumptions are crude, but I think they get the point across. The CLX at roughly $20K to the consumer probably costs about $1500 in parts and labor to create, at most. The R&D and other admin costs are already sunk and not material here. They probably get to keep $10K or so from every clx they sell after taking the dealer markup out of it.

If they sold the clx at $5K, they would maybe keep $1500 after all costs and dealer markup. That means you have to sell roughly 7 times more clx's at the lower price to stay even with profit. Will they sell 7X more speakers at the lower price? Probably not, as audiophiles are finicky and indecisive, and as great the clx is, it just won't take over the entire market even if they were giving it away. They would also dilute the brand, of course.

By the way, would just about everyone on this site buy the CLX if it were $5K new? Would 30%? 50%?

 

[eknuds01]

At the end of the day, I guess the only way to support this argument is to get some real statistics and do some maths. Knowing MLOC, none of us are going to do that, though your point seems reasonable to a certain extent.

1) Devaluation means higher component costs for domestically produced items, since I suspect virtually none are made using 100% home grown parts. But how much has the $/£ devalued relative to the Yen & RenMinBi? Or is that even relevant if the international trading currency is the dollar?

2) Any idea about how real incomes have devalued in percentage terms over the years? Any supporting stats to prove that is even the case? Certainly, a lot of wealth "seemed" to be generated during the late 80s and late 90s.

This might be hard to quanitfy since Government statistics often don't paint a complete picture. The CPI, for instance, omits energy costs. For some reason, energy is tracked with a different index. When I moved to Maryland 2 years ago, it would cost about $100/month to heat my small apartment. But heating a single family home could easily cost $200-$400/month during the winter. Energy costs never seem to go down and we spend thousands each year in this regard.

I did attend a conference a few years back and Bill Bernstein (author of the four pillars of investing) was a speaker. He did state that over the last 25 years, the american worker hasn't seen a real increase in wages.

That doesn't mean that you couldn't have built up some wealth from 1980-2007, say. The returns from the stock market and real estate sectors were quite generous, even though 2 huge bubbles popped in the last 10 years destroying much of that gain.

In my industry the 'stock' (or typical) raise is roughly 4-5% annually. The CPI from 1802-1997 was about 3.1%. So basically we are breaking even in that regard.

Of course, wealth creation depends on other parameters - not just how much your earn. Your spending habits (or saving habits) are arguably more important. What you do with what you have is more influential than what you make. Stanley and Danko's book hammer that point home.

I haven't been in this hobby for very long, but I would state that the prices seem to reflect demand. I want to say that my aerius i speakers, new, could run about 2 or 3k for a new pair. I don't recall how much the vista was going for when it first came out, but I think it was in 2.5-3k range.

Keep in mind that mild increases in inflation often have significant impacts on prices. The value of the dollar is cut in half with 4% inflation after 18 years. I graduated from Villanova in 2001 - the tuition in 1997 was $21,000. Now it's nearly $40,000. That's about a 5-6% increase/year which doesn't sound like much, but over 10-12 years it really adds up.

Erik

 

[doncirelli]

Bernard is correct - the hi end of audio has always been astronomical in price, for us middle class folks, at least. I don't kick about that too much because no one is forcing me to buy this stuff. If Joe Millionaire wants to spend half a million on a sound system, it's his money.

We "great unwashed", however, do benefit from this indirectly. The audio industry has always worked very hard to perfect its products in order to get those mega-bucks that obsessed millionaires are willing to spend. Ultimately, there is a trickle-down effect on the more reasonably-priced equipment that most of us can actually afford. The rich guys pay for all that research and development and later on down the road, the industry figures out ways to incorporate these innovations into cheaper products. It has always been this way with new technology. The first CD players cost a fortune when they made their debut on the market. They soon became affordable to everyone.

I'm a big fan of "mid-fi" and the getting the best bang for your buck. I can't afford most of the stuff that gets reviewed in Stereophile and other hi end magazines. But I did splurge on a pair of Martin Logan Aerius speakers after auditioning them in the store and reading one rave review after another about them. I have been thrilled with them ever since.

I believe a discerning consumer can put together a system that will give you about 90 percent of the fidelity of a true hi end system for a fraction of the price. There are a lot of outstanding products to choose from in the "mid fi" price range. The lower end Martin Logans, for example. These are serious, hi quality speakers. They're not "cheap" by the standards of Joe Six Pack, but you won't have to mortgage your house to buy them either.

My only real complaint about this hobby is the lack of coverage of "mid-fi" in audio journals. I love to read about new products and technologies, but most of the offerings that are discussed in "Stereophile" and other magazines inevitably fall in the "ridiculous" price range. I know this is mostly "porn" for audiophiles, but I get tired of reading about stuff I could never afford to buy in a million years. I'd rather spend a little more time reading about products that might eventually wind up in my own living room. I am much more impressed by a manufacturer who can make a five-hundred-dollar pair of speakers sound like ten-thousand bucks worth of technology. It takes a real genius to make that happen. Any schmuck can give you a hi end product for a hundred grand. He'd better, for that price.

 

[Mantana]

Have to agree with this post...there doesn't seem to be a lot of
cost in the materials of a Martin Logan speaker. Certainly there
are other manufacturers with much heavier, substantial
speakers, more elaborate woodwork and just as or more
expensive electronics. It's similar to looking at a $20,000
amplifier and comparing it to a new car. The car is way more
substantial and complex. It doesn't have the HUGE markup.
You got to ask yourself...how can they ask so much for this
amplifier? Because they can...because we fools (not me of
course) are willing to pay and line their pockets. That's why
Logans are so cheap in the used market. Hell, one cust even got
a new pair for about $13k didn't they? It's why most
stereo equipment sells for about 50% less used. Yes, i
know.. they don't sell as many items so they need to mark
it up to recoup development and sales cost, but come on,
5 - 10k speaker cables? Price versus performance has gotten
way out of hand.

Sure, the gear is expensive. There are a variety of reasons, including many excellent ones mentioned above. One of the reasons is that the parts are expensive and they are frequently just passed on to the consumer.

Here's another reason: If ML were to run an experiment for a few months: Charge $5K for the CLX, and see how many they sell...

Why won't they? My assumptions are crude, but I think they get the point across. The CLX at roughly $20K to the consumer probably costs about $1500 in parts and labor to create, at most. The R&D and other admin costs are already sunk and not material here. They probably get to keep $10K or so from every clx they sell after taking the dealer markup out of it.

If they sold the clx at $5K, they would maybe keep $1500 after all costs and dealer markup. That means you have to sell roughly 7 times more clx's at the lower price to stay even with profit. Will they sell 7X more speakers at the lower price? Probably not, as audiophiles are finicky and indecisive, and as great the clx is, it just won't take over the entire market even if they were giving it away. They would also dilute the brand, of course.

By the way, would just about everyone on this site buy the CLX if it were $5K new? Would 30%? 50%?