Extreme Luxury Pricing in Audio

[Lee]

please link the site. thanks.

I posted the link earlier.

 

[Lee]

You guys don't have much of a sense of humour.

It's an inside joke from Herve

Bespoke service
Limited lifetime warranty.
Dedicated custom installation by Hervé Delétraz himself

How do you know It’s an inside joke?

 

[microstrip]

I got off the audio merry go round quite awhile ago. I have heard too many uber expensive systems that have left me cold, not just at shows either. I am sitting here listening to a modest system and can’t believe how wonderful the sound is. Vandy 3A Signatures from 1997, a rebuilt McCormack amp with a gravity base system , a Spectral pre from 1986 fed with a Schit Yggy LIM DAC with a MacBook Pro M1 chip and LaCie drive, cabling from the 1990’s with ESP power cords and power. I just sit here with my eyes closed enjoying the hell out of what I am hearing.

I fully believe you - many report similar experiences. But the critical question in this thread is: in the uber expensive systems you have listened was there ONE you would prefer to be listening?

 

[Elliot G.]

In the relatively short time (about 12 yrs) that I've been a part of the Audiophile world, I've noticed an accelerating trend in high-end gear pricing that has only the most tenuous relationship to actual value. The economics term for this is Veblen Pricing where, in the luxury marketplace, demand increases as price increases. Extreme examples of this are found in luxury items created for the super-rich: "designer" jewelry, perfume, yachts, cars, watches and high end audio.

We see it most commonly in some cables and fuses. And now we see even a phono cartridge, from a highly respected audio company, listed for $1million (phono pre included). As far as I can see, what separates this companies phono cartridge/pre from their other models, which retail at approximately $50k, is..... $950,000 -- and not some mind-blowing revolutionary technology.

I don't bring this up to rag on companies that choose to exploit this market. But I do wonder how it effects the industry and consumers who support high end Audio. Even though there is a healthy high-value segment in Audio, I believe the extreme pricing we're seeing is pushing a significant segment of the high-end market into the luxury-priced irrational stratosphere. As this type of pricing becomes more common, I wonder if some manufacturers actually feel they need to inflate their prices to be taken seriously in the marketplace. This is bad news any way you slice it imho.

I have asked myself many of the same questions throughout my audio career. Who is going to buy this? or where is this going to be sold?
I think this is not a High End question but rather an expensive or high priced question. The last ten years or so has fostered huge price jumps on almost all manner of audio gear. I know there are many reasons for such but I agree that maybe they are self induced as well.
As someone in this business for a long time and having some background as to how manufacturers work some of this pricing is just the way of the world and reflects as to the huge excalations in costs for small business.
Audio is by nature small and very small business. There have been a few that might not be considered small but they are mostly gone at least as far as the high end is concerned ( Harman) The rest are small, even the largest of the small are small.
Let's examine the cost structure:
Real Estate- has had huge increases
Labor- up
Insurance 4 to 5x over the last 15 years
Transportation- double and more over the panedemic
Energy
Parts - both shortages and suppliers all have the same escalation factors
Almost no audio company is vertically integrated and the few that might be close have invested huge amounts into CNC machines, Paint booths etc. Even those have to buy stuff to make products whether its raw materials or partially or fully finished parts.
So when you want to build something, lets say a speaker for example, these small companies are basically buying parts at retail and paying retail plus transportation to get these required items.
Since all of this is bought in small quantitites to be built in small quantitites.
Audio truly is tiny and volume is tiny thats why this is factual.
Example last year- the largest Corvette dealer in the country sold almost 1500 cars and located in N.H. of all places. This is still a small business. GM made over 40,000 Corvettes, a boutique high end sports car. No one in the Audio Industry sells 1500 pairs of 75-85k speakers in one year.
THis is part of why things are expensive however the other part may not be for good reason and I too believe that some products are priced for other reasons as to make them seem like they matter more.
The prices wont change until the sales dont happen and so far it seems that has not happened. I go to shows every year and there is more and more and more new products, new companies and ever escalating prices.
I still dont know where it goes and who buys it !!!

 

[Ed.P]

Oscar Wilde said very well; “A cynic knows the price of everything & the value of nothing.”

Lord Darlington: What cynics you fellows are!

Cecil Graham: What is a cynic?

Lord Darlington: A man who knows the price of everything and the value of nothing.

Cecil Graham: And a sentimentalist, my dear Darlington, is a man who sees an absurd value in everything, and doesn’t know the market price of any single thing.

Lord Darlington: You always amuse me, Cecil. You talk as if you were a man of experience.

Cecil Graham: I am.

Lord Darlington: You are far too young!

Cecil Graham: That is a great error. Experience is a question of instinct about life. I have got it. Tuppy hasn’t. Experience is the name Tuppy gives to his mistakes. That is all.

Dumby: Experience is the name every one gives to their mistakes.

Cecil Graham: One shouldn’t commit any.

Dumby: Life would be very dull without them.

 

[Another Johnson]

How do you know It’s an inside joke?

I don’t think it is.
The meaning of bespoke is that the item is custom made to the order. Bespoke clothing is fit exactly to the person.
I’ll bet that if you add it to your cart, once Herve has vetted you as a capable and serious player, he will begin work. Maybe he’ll subcontract it to a famous cartridge craftsman.
In any event, unless you’re the one who buys it, you do not have a dog in the hunt … and you definitely don’t understand free markets and how they work if you whine about this sort of opportunity.

 

[wil]

I have asked myself many of the same questions throughout my audio career. Who is going to buy this? or where is this going to be sold?
I think this is not a High End question but rather an expensive or high priced question. The last ten years or so has fostered huge price jumps on almost all manner of audio gear. I know there are many reasons for such but I agree that maybe they are self induced as well.
As someone in this business for a long time and having some background as to how manufacturers work some of this pricing is just the way of the world and reflects as to the huge excalations in costs for small business.
Audio is by nature small and very small business. There have been a few that might not be considered small but they are mostly gone at least as far as the high end is concerned ( Harman) The rest are small, even the largest of the small are small.
Let's examine the cost structure:
Real Estate- has had huge increases
Labor- up
Insurance 4 to 5x over the last 15 years
Transportation- double and more over the panedemic
Energy
Parts - both shortages and suppliers all have the same escalation factors
Almost no audio company is vertically integrated and the few that might be close have invested huge amounts into CNC machines, Paint booths etc. Even those have to buy stuff to make products whether its raw materials or partially or fully finished parts.
So when you want to build something, lets say a speaker for example, these small companies are basically buying parts at retail and paying retail plus transportation to get these required items.
Since all of this is bought in small quantitites to be built in small quantitites.
Audio truly is tiny and volume is tiny thats why this is factual.
Example last year- the largest Corvette dealer in the country sold almost 1500 cars and located in N.H. of all places. This is still a small business. GM made over 40,000 Corvettes, a boutique high end sports car. No one in the Audio Industry sells 1500 pairs of 75-85k speakers in one year.
THis is part of why things are expensive however the other part may not be for good reason and I too believe that some products are priced for other reasons as to make them seem like they matter more.
The prices wont change until the sales dont happen and so far it seems that has not happened. I go to shows every year and there is more and more and more new products, new companies and ever escalating prices.
I still dont know where it goes and who buys it !!!

Elliott, all the factors you state above are valid and essential for small companies like we have in high-end Audio. This kind of product is going to be expensive compared to more mass produced products.

This is not what I'm addressing in the op. I'm talking about what seems to be a trend towards irrational, over-the-top, luxury Veblen pricing aimed at very wealthy people interested in spending crazy money for the sake of spending crazy money. This is the world of $25 million watches, multi-million dollar handbags...

When (if?) a phono cartridge is marketed for buyers willing to spend a million dollars, or a fuse is marketed for buyers at $20k, or a power cable at $80k, I believe we're leaving the world of the business structures you're speaking of and entering a radically different marketing/pricing world.

I think this has the unfortunate effect of inflating prices overall beyond the costs of running a successful business.

 

[DaveC]

This is the same discussion you can have with any hobby or any retail goods, and comes up on audio forums every 6 months. But with audio, there's a lot more indignation.

As far as value, you can do worse than the highest-end audio. Look at fashion, 5-6 figure handbags and dresses, totally normal and nobody laments about how dress prices are ridiculous or that Hermes just raised the price of their bags again. Or $1000 perfumes made up of $5 worth of synthetic chemicals, the packaging often costs more than the product.

With cars, nobody looks at hypercars like La Ferrari, Porsche Carrera GT, Konigsegg or McLaren Sennas and the first thing out of their mouth is their own modded Corvette will beat it around a track and the owners are crazy for not just buying a Corvette. Everyone would look at you like #1. You're naive and have a childlike view of the subject, #2. You're just jealous. Few people I know in the car world, either racing or show cars, would respect the opinions of a person after they make a remark like that.

The highest end audio systems are cheap compared to expensive hobbies like racing cars and yachts. For some, buying a top-end audio system just isn't a ton of money.

The world is made better by creativity unencumbered by cost constraints for many reasons. This applies to art, architecture, vehicle and aircraft design, and certainly audio systems. We all benefit from seeing or experiencing cost-no-object design, and we all benefit from the lessons learned from such endeavors. Few can afford to buy and race a F1 car, but it's still fun to watch F1 racing and a lot of tech from F1 has made it's way into cars we actually own.

I have no idea why people can't appreciate high end audio in the same way, without feeling such negativity. I often hear about it being "fake luxury" but that also applies to everything else too. The Cadillac Blackwing CT5V for $125k rides on the same chassis as a $25k base Camaro, it just has a larger engine and fancier interior trim. That $20k dress is just fabric sewn together like any other garment. I think some consider the folks who buy these products idiots who are being ripped off and simply don't know any better, but imo that's coming from a place of naivety and sour grapes.

People can make their own choices, there are options. I often sell my cables to people who can afford anything they like, but would rather have something that works well without the dealer-sale luxury goods experience. Others may go all-out and spend $250k on top-end Siltech. Both options are available and folks are free to choose how they want to spend their money. For a lot of people that difference between spending $250k vs $25k just isn't a big deal. The dealer will bring it all to their house and offer setup and and other services I simply can't offer. Despite the fact I make a living on offering the high-value non-luxury route I don't judge the folks who buy top-end dealer-sale brands either. It's all good.

 

[Another Johnson]

Example last year- the largest Corvette dealer in the country sold almost 1500 cars and located in N.H. of all places. This is still a small business. !!

This is driven by two factors. First, there is no sales tax in NH, so if you want to buy a Corvette to squirrel away as an investment, it is cheaper to ship it or drive it home on a NH temporary tag than to pay sales tax which would be collected on registration in your home state. And second, vehicle allotments and kickbacks are often tied to past order volumes. This dealer has a great order history, so he gets the best deal from GM and can give you the best price. I’ve gone to NH with my trailer many times for vehicles.

 

[Another Johnson]

This is the same discussion you can have with any hobby or any retail goods, and comes up on audio forums every 6 months. But with audio, there's a lot more indignation.

Word, Brother!

 

[Elliot G.]

Elliott, all the factors you state above are valid and essential for small companies like we have in high-end Audio. This kind of product is going to be expensive compared to more mass produced products.

This is not what I'm addressing in the op. I'm talking about what seems to be a trend towards irrational, over-the-top, luxury Veblen pricing aimed at very wealthy people interested in spending crazy money for the sake of spending crazy money. This is the world of $25 million watches, multi-million dollar handbags...

When (if?) a phono cartridge is marketed for buyers willing to spend a million dollars, or a fuse is marketed for buyers at $20k, or a power cable at $80k, I believe we're leaving the world of the business structures you're speaking of and entering a radically different marketing/pricing world.

I think this has the unfortunate effect of inflating prices overall beyond the costs of running a successful business.

Wil, I get it but I just don't know clients that spend crazy numbers just because its expensive. In fact none of my clients do that and today it seems everyone negotiates like crazy for the best deal. I'm not sure that a Million dollar cartridge is a real thing and not someone making a joke.
There is a lot of status in fashion, watches and cars which IMO does not exist in Audio at least here in the USA.
I do think that the there are no experts and everyone is an expert leads to this kind of runway pricing as a measuring stick to those who think they know. THis is the internet and the society we live in today. The press is loosing its position and the internet has given rise to numerous "opinions" and maybe this is a partial cause for the price excalations as the YOUTUBERS seem to be fascinated by the pricing more so than the performance

 

[Elliot G.]

This is driven by two factors. First, there is no sales tax in NH, so if you want to buy a Corvette to squirrel away as an investment, it is cheaper to ship it or drive it home on a NH temporary tag than to pay sales tax which would be collected on registration in your home state. And second, vehicle allotments and kickbacks are often tied to past order volumes. This dealer has a great order history, so he gets the best deal from GM and can give you the best price. I’ve gone to NH with my trailer many times for vehicles.

That wasnt my point. My point was he sells almost 1500 cars. He sells over 100 cars a month starting at around 80 k a vehicle and Chevy sells over 40k. Comparing Cars to audio is just silly. Volume or total lack of it is what Audio at the High End is. No speaker company sells 1500 pairs fo 80k speakers a year and I doubt they sell anywhere near that in the whole products life.

 

[Lee]

This is not what I'm addressing in the op. I'm talking about what seems to be a trend towards irrational, over-the-top, luxury Veblen pricing aimed at very wealthy people interested in spending crazy money for the sake of spending crazy money. This is the world of $25 million watches, multi-million dollar handbags...

I don't really see a lot of over the top spending in audio. I know two guys who bought the Wilson XVX loudspeakers and it was a very considered purchase based almost entirely on the sonic performance. Even Jacob buying the TechDAS Zero was a very considered purchase with a focus on the sound quality. Same with Hugh on the Gryphon Kodos.

 

[Lee]

Speaking of turntables, would there be an Obsidian if we had no Caliburn? Would there be a Doehmann Helix if we had no Caliburn? Would there be a Prime Signature if there was no HW40?

All these products involve accumulating knowledge. There is a reverse snobbery in audio that largely is absent in cars and watches. We hear:

"If you spent more than me then you spent too much."

"My $2,000 DAC sounds just as good as your reference DAC."

I would argue we should fully embrace the ultra luxury segment. In many ways, it is the venture capital provider for the industry.

 

[Another Johnson]

That wasnt my point. My point was he sells almost 1500 cars. He sells over 100 cars a month starting at around 80 k a vehicle and Chevy sells over 40k. Comparing Cars to audio is just silly. Volume or total lack of it is what Audio at the High End is. No speaker company sells 1500 pairs fo 80k speakers a year and I doubt they sell anywhere near that in the whole products life.

Of course it wasn’t your point. But it’s still why the guy in NH has such a volume.

 

[Another Johnson]

I’ve seen oil heirs in the Middle East who’ve bought exclusively on the higher price because it was a statement system and a competition with another equally deep pocketed player. You see this with Oligarchs too. It’s not routine consumers. The existence of the hyper high end does not harm the regular high end. As Lee points out, it can actually help.

The owner of an elite brand of electronics has told me on more than one occasion that his greatest revenue comes from his ultra high end. People complain that he doesn’t offer entry level anymore. He thinks about it on the way to the bank.

 

[Another Johnson]

Speaking of turntables, would there be an Obsidian if we had no Caliburn? Would there be a Doehmann Helix if we had no Caliburn? Would there be a Prime Signature if there was no HW40?

Matt Weisfeld was on a panel at a conference once. I’ll see if I can find it. I think MF was the moderator, but he may have been on the panel. MW said “Anything over (he named a mid level model that retailed for about $6k iirc) is audio jewelry.

While I disagree with this, it was a good point about the law of diminishing returns.

I am in the camp that believes that everyone should buy at the price point that matches their budget and values. I would not dictate to another what their budget or values should be.

 

[wil]

I’m all for audio companies pushing the tech forward and getting paid for it. Sometimes there are huge expenses in R&D which can necessitate huge prices for low volume sales.

Again, what I’m talking about is bs luxury pricing that has nothing to do with anything other asking a huge price of luxury minded consumers. If this becomes more than a rarity, I believe it leads to more of the same.

Personally, in the interest of great music reproduction, I’d rather see Audio resemble the luxury fashion industry as little as possible!

 

[Joe Whip]

I have heard better systems than mine, but when you factor in what else I could do with that extra $$, I am good with what I have. Certainly not worth the extra $ to me anyway. YMMV of course.

 

[RCanelas]

Again, what I’m talking about is bs luxury pricing that has nothing to do with anything other asking a huge price of luxury minded consumers. If this becomes more than a rarity, I believe it leads to more of the same.

I understand the sentiment, but evidence at large points in the opposite direction. Even with a thriving luxury and ultra luxury industry, we never had as many options regarding clothing, cars, watches and any other non-essential product offers.

In audio, I've never seen so many reasonably priced offers, even if you disregard Asian products. I sincerely don't understand how a lot of European companies survive with the price points they practice. The answer might be that they don't in the mid/long term, but we can't complain about lack of decently priced options IMO.