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Why are speakers so expensive?

Discussion in 'Archived Threads 2001-2004' started by Anthony Sa, Feb 2, 2002.

  1. Anthony Sa

    Anthony Sa Agent

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    This is a question I have been pondering for quite some time. Why are some speakers so expensive? Is it the quality of the drivers used? The cross-over being implimented? The construction quality of the cabinet? It seems to me that most people could save thousands of dollars by building their own speakers and finishing them to their liking. An Adire Audio K281 kit sells for under $400 a pair and that includes the cross-over. I have heard these speakers being compared to the B&W N805 which is considerably more expensive. So why pay more for a speaker when you can buy a kit a build speakers that will produce the same sound quality?

    I ask this because I am going to be buying a new set of speakers and was looking into a relativly expensive 7 channel paradigm set. all studio series: 100 for front, cc for center, adp for side surround, 40 for rear surround.
     
  2. Lee Scoggins

    Lee Scoggins Producer

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    Couple of reasons...to name a few:

    Speakers are incredibly difficult to engineer and design properly. Computer simulation equipment and anechoic chambers add a lot of overhead and engineers are not cheap.

    Drivers are very expensive. They can be a major component of the cost and often utilize very expensive materials - ferrofluidic cooling, prime metals, specialty chemical and manufacturing processes.

    The speaker box or enclosure must be very rigid, so it absorbs sound from the knocking of a bare knuckle. This improves bass quite a bit.

    There must be an appropriate dealer margin of profit as well and the overhead of a marketing campaign. Often the best, audiophile speakers come from companies that don't spend a lot on marketing such as Magnepan.

    Just a few thoughts...

    Lee
     
  3. PatrickM

    PatrickM Screenwriter

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    I agree with Lee about the cost to design a speaker properly but I disagree about the parts costs. Drivers, enclosures, crossovers are not that expensive when it comes to mass component costs. I remember awhile back I received wholesaler costs on some name brand speakers (I don't want to mention a name but they are a higher end US brand) and I compared it to their MSRP retail. I believe the markup was well over 400%. That's right, four times the cost and that was to a wholesaler. That means its that much cheaper for the manufacturer to build. So for a $1000 pair of speakers (MSRP) the cost is somewhere in the range of $125 max or 1/8th the MSRP.

    Patrick
     
  4. itai

    itai Stunt Coordinator

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    Anthony
    Seems to me like a bit of a naive question by you.
    1)Why does a porsche 911 costs that much if it has the same amount of metal, rubber and glass in it as a honda accord?
    It's sticked toghether better, it's engenired better. It's a higher end machine with tons of expert know how, years of development, tradition and pride to name a few traits that make people want to buy one.
    If people like it, than lets put the price higher!, there you have it; capitalism! free market, freedom of choice.
    2)Also consider this. a guy that has 1000$ to spend on a new HT system versus someone with 100,000$.
    You (as a manufacturer) must provide this rich fellow with some goods to buy, otherwise, you've lost his money!(and you go out of bussines)
    So, you make "high-end" products. (and "low-end")You slice your product line to different zones.
    See B&W's line, It speeks clearly(I'm being theatrical here, dont take me too seriously, B&W fans, no offense)
    300: poor & unfortunate[​IMG]
    600: cool, young, will get richer.
    CM: anonymous (whats with this line? sales! wake up!)
    CDM-NT: getting closer! two steps from god!
    800: you made it, you can rest now.
    Nautilous: When you get bored...
    [​IMG]
     
  5. EricHaas

    EricHaas Supporting Actor

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    I think it is pretty clear that DIY speakers are going to give more bang for the buck. The same is true if I build my own house vs. paying someone else to build it. But some people do want to DIY. The manufacturers assembly of the speaker is worth quite a lot to those people. BTW, the same is also true buying used speakers vs. new - they give more bang for the buck. But some people do not appreciate the risk factors with buying used, like some people do not appreciate the hassle and risk of DIY.

    BTW, never pay MSRP for ANYTHING you buy. MSRP is specifically meant for suckers.
     
  6. Anthony Sa

    Anthony Sa Agent

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    I do not consider this a naive question because of one thing. I understand that it will always be less costly to build your own anything than to buy from a company/installer. What I was trying to say, I agree I should have stated this before, was that if a person where to take the individual drivers out of a high end speaker and compare it to a mid-level driver, would the difference be so significant as to charge thousands more? Or take the cross-overs and subject to the same examination as the drivers, is it really worth that much more? Or are we as the consumers paying much more money for a company to pay high priced engineers to create a new driver only slightly better, if at all?
     
  7. Chuck C

    Chuck C Cinematographer

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    markup and overhead [​IMG]
     
  8. Richard Travale

    Richard Travale Producer

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    Location:
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    Rich Travale
     
  9. EricHaas

    EricHaas Supporting Actor

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    "I do not consider this a naive question because of one thing. I understand that it will always be less costly to build your own anything than to buy from a company/installer. What I was trying to say, I agree I should have stated this before, was that if a person where to take the individual drivers out of a high end speaker and compare it to a mid-level driver, would the difference be so significant as to charge thousands more? Or take the cross-overs and subject to the same examination as the drivers, is it really worth that much more? Or are we as the consumers paying much more money for a company to pay high priced engineers to create a new driver only slightly better, if at all?"

    Well, you are asking a somewhat different question than you asked in your original post. What you are referring to here is what some call the law of diminishing returns. It certainly applies to audio equipment including loudspeakers. Each additional dollar you spend buys you less additional sound quality than the last. Few if any can really dispute this. Most agree that extremely expensive speakers sound better than cheaper ones. However, many also probably agree that a speaker that costs 4 times as much does not necessarily sound 4 times better. But that isn't really the issue. Strict value proportionality is not necessary in a purchasing decision. The real issue is whether the additional quantum of performance is worth the extra money to the individual buyer in question. The answer depends on how important the quality is to the buyer on the one hand, and how much the additional money means to the buyer on the other.

    And yes, markups on high end items are much higher, meaning that the manufacturers profit more per unit sold. But the tradeoff is that they sell less volume. In reality, those who cater to the high end, be it in audio equipment or many other industries, tend to prosper less than those who deal to the masses of consumers. Given that understanding, it is hard to really begrudge their high gross profit margins as long as they are indeed offering something superior to cheaper alternatives, however small the margin of superiority may be.
     
  10. Tom Brennan

    Tom Brennan Screenwriter

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    A good question. The basic design work for loudspeakers was done in the 1920s and 30s, there's nothing basically new since then. Moving coils, electrostats, ribbons, planar-magnetics, singing arcs: all had been done by the mid 1930s. Conventional cone-dome type drivers are cheap, most speaker companies buy them wholesale from driver makers, and even the DIYer can get drivers cheap. Inexpensive computer programs have made system design and testing much simpler, faster and cheaper, even a DIY speaker builder like me has design and testing programs. The boxes are the most costly part of most loudspeakers. Anochoeic chambers are expensive yes, but VERY few speaker companies own them anyway. The comparison to cars is spurious since a car is a complex machine with thousands of moving parts, a speaker is the simplest of machines with very few moving parts. I don't think it's demonstrated that a Porsche is built to a higher standard of quality than a Honda is anyway. The Honda is the one I'd own if I wanted to put 200,000 trouble free miles on, not the Porsche. I know guys with over 300,000 miles on straight-6 Ford pickups, a Ford truck is then in some ways a better quality machine than a Porsche.
     
  11. Bob McElfresh

    Bob McElfresh Producer

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    What you do in your home is not a BUSINESS.

    In business accounting there are several different "costs":

    Manufacturing/production costs (this is what you are talking about),

    Development costs,

    Advertising/Marketing/Sales costs,

    General Cost of doing business

    Add in reseller mark-up and you get why speakers are so expensive.

    A good case study would be the guys at SVS. They loved doing their own subwoofers and eventually started selling their own line. They probably learned a lot about the difference between building your own, and doing it as a business. You might email them or post a question in the Subwoofers section if really wanted to know about "cost" for speakers.
     
  12. Shawn C

    Shawn C Screenwriter

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    I kinda wondered this myself. Where do you get to the point of diminishing returns? For example, a pair of Legacy Focus' costs $5,500/pr and their new Helix speakers cost $38,000/pr.
    Are you REALLY getting $33,000 worth of better sound from the new ones? I dunno. I think it's really a personal decision. Does any casual enthusiast NEED $38,000 speakers? No, not really. Would I buy them if I could afford them, yes I would. [​IMG]
     
  13. Bhagi Katbamna

    Bhagi Katbamna Supporting Actor

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  14. Tom Brennan

    Tom Brennan Screenwriter

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    MacElfresh---Tell me about it, I was in the speaker business myself about 20 years ago. Bought Audax drivers wholesale, farmed out the cabinets, built my own crossovers. I know about the cost of doing business and my costs were high because production was low, too low as it turned out. :) This doesn't change the fact that loudspeakers are dirt-cheap to build as machines go. Why should any speaker cost more than, oh, let's say a speedshop Chevrolet crate-motor? Those businesses sell much more complex machines at cheaper prices than many speakers and those businesses have overhead, advertising etc. too. I see speakers out there that are bargains and other speakers, using the same or similar drivers, that are priced much higher, MUCH higher. Go figure. Many audiophiles just don't want to face the fact that their expensive speakers are simply $100 worth of drivers, drivers not even built to the state-of-the-art standards of 1935, in a box. Nothing is new, nothing is novel but the advertising hype.
     
  15. Brett DiMichele

    Brett DiMichele Producer

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    Tom,

    Amen to that...

    As far as speakers go my AR9's are relatively affordable

    even at full retail ($1000.00/Pair) and I did some research

    to see who made the drivers and how much they cost.

    My AR9's Mids come from HiVi Research (Makers of Swans drivers)

    And they cost about $120.00 each Retail and the Tweeters

    sell for $76.00 each (Not sure who makes the tweeters but

    I called AR to get a price on them anyway)

    So at full retail you have a grand total of $632.00 for the

    Mids and Highs, Figure another $100.00 or so for the 2 10"

    Sub Woofers and you have a total of $732.00 RETAIL into all

    the Drivers.. Crossovers are cheap, say $30.00 each and then

    you have cabinent materials etc..

    The key word is retail.. Wholesale those same drivers cost

    at least 40% less than retail..

    I don't beleive AR is making a "killing" but some other

    companoies ARE!
     
  16. Mike Main

    Mike Main Stunt Coordinator

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    At my train station, some people drive a porsche just to park for 10 hours while others have a 84 Honda. If u got spend it.. u cant take it with you when u go.

    Nike just came out with a $200 pair of sneakers in a metal case..are they better than $19 Kmart sneaks- maybe $40 better. But would u be caught dead in Kmart kicks. NNOOOOO WWWAAYYYY.

    just my 2 cents maybe a penny at that

    Mike
     
  17. Dustin B

    Dustin B Producer

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    Crossovers make or break a speaker. Good drivers don't mean squat without a good crossover. Really cheap crappy drivers can also be made to sound remarkably good with an excellent crossover design.

    If you look into DIY designs just by parts the crossovers can end up costing an aweful lot. Take the Dayton II at speakerbuilder.net. $60 in drivers and the crossover runs another $60. The Audax HomeTheatre speaker set design by Joe D'Appolito uses $360 in drivers and the crossovers run $280.

    The worst (or best depending on how you look at it) for crossovers has to be North Creek.

    Rhythm 9500 Unlimited Project ...$1,499.00 per pair.

    without drivers …$ 851.19 per pair.

    Ariel

    Value project (internal crossover) is $499.00 per pair, the Standard project is $849.00 per pair (external crossover), and the Signature project is $1,079.00 per pair

    The kits can be ordered without the driver for $225.85 per pair, $552.16 per pair, and $673.16 per pair respectively.

    North Creek also has this to say in their FAQ:

    If the drivers are only $300.00, why is the kit so much money? In a word, CROSSOVER. Many people are surprised to discover that the crossover can cost more than the drivers, until they think about it for a while. The fact is that the quality of the crossover network is more important than the quality of the drivers. If you don't believe this, build this system with a bunch of electrolytics, sand cast resistors, and cheap coils. Sure, it will still make sound, but it won't make music. In this system, the woofer coil costs more than the woofer, and the tweeter network more than the tweeter. This is common with the best systems.
     
  18. AjayM

    AjayM Screenwriter

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    Well, it is a speaker system, all of the 3 major pieces have to work together in order to make good music (good x-overs and cabinets but a poor choice of drivers will break a speaker as well, ditto for cabinets). But I agree, don't underestimate the costs of doing the x-over, it is a very expensive piece of the whole puzzle, and as some of the examples Dustin has shown the x-overs can be more expensive than the drivers you buy.
    Anyways, on some of the mid-higher end speakers you could probably say there is a 100% markup on them from the dealer to MSRP. So a pair of $3k speakers probably only cost the dealer $1.5k, that is there so the dealer will actually sell the item, cover his expenses and services, his advertising, etc. After that when you mix in all of the over-head of manufacturing (buying equipment, R&D work, administrative stuff, etc) then the actual cost of the parts (which would be pretty low for a bigger manufacture), it's not that hard to see $1500 being used up (including some money for profit) in a $3k set of speakers.
    Now the above is kind of gross generalization to some degree, there are tons of things that will affect every piece of it, for example there is probably less dealer markup built into a set of Yamaha or Sony speakers (nicer mass market speakers) than there is in a set of Wilson speakers. There's a lot of reasons for that, a big one being volume, if you only sell 50 speakers a year, you will as a dealer need to make more money on them then if you sell 500 speakers a year. In that regards it's kind of a catch-22 situation, the higher the price on your speakers the less you will sell (we're talking in the uber-hi-end stuff here) which means your price needs to be higher to cover the low volume. I talked to my local JM Lab dealer and I think he mentioned he sells around 4-5 JMLab Utopias (around $40k) a year...
    Andrew
     
  19. EricHaas

    EricHaas Supporting Actor

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    I think the bottom line of this discussion is that speakers are not really that different than any other manufactured item. You cannot just consider the wholesale cost of the parts. There is the manufacturer R&D and overhead, the dealers overhead and advertising, shipping from factory to dealer, distributor markups, etc. And of coruse if you build it yourself you will pay a lot less, because you cut out many of these cost elements.

    If you run this kind of analysis on any other item, you will find at least as much discrepancy between manufacturing cost and retail price. And some are much worse. When I look at utensils that my wife wants to buy at Bed, Bath & Beyond, I see a plastic doo-dad which could not have cost more than 50 cents to manufacture retailing for $14. And don't even get me started on women's cosmetics and clothes! (Can you say 10,000% markup?) We should be thankful that most of us buy goods like speakers which are targeted primarily at men, because it is a documented fact that industries producing goods primarily targeted at women have higher markups. I am not suggesting that women are suckers any more than men. I am just stating a fact.
     
  20. ling_w

    ling_w Second Unit

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    People keep bringing up the DIY speakers being cheaper, but the fact that pretty much all the DIY mentioned are self-assembled speakers that has been engineered by somebody else. A big part of speaker cost (especially for low to mid volume speakers) is the designing of the speaker. Making a generic $1000 speaker is pretty straightforward, but for the mfg to come out with $5k, $10k, $20k speaker, they would have to think of ways to improve on their $1k design. So they would have to move beyond the cookie cutter approach and do some tinkering and innovation.

    As far as what goes into the higher priced speakers, usually a very big part of the cost involve cabinet resonance control and resonance isolation between drivers. Many of the more expensive speakers has cabinets that seem to be completely dead accoustically, they are either made out of artificial stone, laminated wood and other material or solid metal. Plus many brands go through so much trouble of driver isolation with elaborate mounts.

    That is why I go with magnepan, instead of spending >60% of the cost in resonance isolation, use that part of the sound to your advantage. Of course, they had to design the driver from scratch instead of going to Madisound and picking their drivers.

    Crossover might be very complex and include wildly insane parts, but they usually do not constitue a very big part of the expense, especially if the speaker is > $10k.

    Some brands also goes into specific wiring inside the speaker, with brands like Kharma that has 100% silver wiring inside the speaker, from the cable, inductor, capacitor & resistor lead, all the way to every winding in the individual drivers. Couple that with the Kharma electronics and cables, you literally have 100% silver along the whole path of the sound.
     

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