You must've wondered this at one point, and I still can't figure it out. Short of lack of popularity, which could explain it. Somehow, we're able to buy complicated CD playing units, surround sound receivers, power amplifiers, preamps, all at relatively cheap prices. Though the quality at around $250-300 isn't that great, theres a large heap of components in a complex order at a resonable price.

Now, shopping for a decent headphone amp, I'm finding that even the cheapest headphone amps are $250-300, consisting of op-amps and off the shelf 25 cent capacitors and so forth. With far fewer components than that of other obtainable equipment in the same price range, and limited complexity, why the heck are they so pricey?

Cause someone has to build them?

md

First off, try building your own amp. You'll see that the costs mount quickly if you want to keep your amp quality reasonably high (ie I didn't use 25 cent caps in mine)

Secondly, headphone amps are a product that only someone in search of very high fidelity would be looking for. Therefore, there really isn't that much of a market for a $25 headphone amp.

Sure, if sony mass produced headphone amps, they'd be much cheaper. Due to the small market, when you buy a headphone amp like the Corda or the Little you are getting a product created by small businesses with high attention to detail and therefore higher quality than your average mass produced stereo.

Anyway, ask someone who owns a cosmic if it was worth their money, and they'll probably say yes. Then again, they're probably crazy as well

Here are a few related links, including the exact same thread from a few months back:

http://www.head-fi.org/forums/showth...threadid=10278

http://www.head-fi.org/forums/showth...?threadid=2519

http://www.head-fi.org/forums/showth...?threadid=3240


Here is a summary of a few things I wrote in those threads:

The true cost of a product, especially one made by a commercial company, is not just the cost of materials. Lots of products can be built for cheaper than their retail price. The true costs of producing and selling a product commercially include:

Products/materials (the obvious one)
Production costs
Research & Development
Rent
Salaries/wages for employees (not just for the salespeople/engineers, etc., but also for the admin people, the security people, the cleaning people, etc.)
Benefits (health insurance, 401k, etc. for employees)
Insurance (to cover property, stock, accidents, etc.)
Utilities (electricity, water, phones, etc.)
Technology (computers, training, repair/upkeep)
Supplies
Advertising
Misc business expenses (licenses, accountants, lawyers, etc.)
Coffee grounds

These are all the "ongoing" costs. In addition, you have various one-time costs like improvements/remodeling, travel, sales promotions, etc.

After all of that, you have "profit."

In addition, for every step you add to the chain, you have to add in another layer of costs like those listed above (one for the manufacturer, one for the retailer, etc.)


The final thing to consider is what are known in economics as "economies of scale." If the product in question is a "necessity" or something hugely popular, the manufacturer AND the retailer can get by with minimal profit on each item because they will make up for it in quantity. Conversely, if there is a very high demand for a product, it generally costs MUCH less per unit to manufacture that product than to manufacture a similar product which has much less demand (and does not sell in as great numbers). So for niche markets (like the market for headphone amps), where a relatively small number of products are sold, it costs more to make each product than a product similar in components and materials cost (like a CD player or radio) that sells millions of units each year; and at the same time, the revenue on each product has to be much greater in order for the business to be sustainable.

Quote:



Complex order does not necessarily equate high performance.

In any industry, "high performance" is always expensive (or laborious) to achieve because it is a relativistic term that implies "significantly better than average". Despite the wonders of mass production which has raised the common bar very high, there will always be "higher", meaning that it will cost that much more to significantly exceed it. Few of us will choose to continue along the path as the bar is pushed higher still. We'll say things like "good enough for me... I'm outta here", etc.

Believe me, if Sony made $200 headphone amps that performed on par with Headroom's stuff... well... I like Tyll but I'd recommend he get a job with Sony at that point. In the meantime, there's quite a lot of "Headroom" left in the hi-fi pole vault competition. As long as that gap remains wide enough... niche manufacturers, hobbyists, and message forums like this will continue to thrive.

(goes back to Ear+ construction...)

having just passed my cost accounting class, i can say it's a pretty damn complicated area.

Everything costs money, parts & labor.

Generally, you pay cheap, you get a cheap product in return. But not all $250-$300 headphone amps are simply medicore. I just recently got a new custom DIY amp made of some of the best parts called the META42, this thing sounds amazing, it can take portable sound to a whole new level, and really shines with better sources (and yes cables matter!)...

Quote:



As MACdef said it's mostly the economies scale. For example if there was an annual market demand for 200,000 headphone amps they might sell for something like 25% of what they sell for now, maybe even less. As another example lets look at PCDPs. If instead of the bazlilion PCDPs sold each year there was an annual market damand for only 2500 PCDP units then the cheapest one might cost $2000 or more. I kinda pulled these numbers out of the air, but you get the idea.

Regards, Nick

This question typically annoys the piss out of me but Xander seemed to be pretty sincere and asked in a way that wasn't as insulting as it typically is.

Part of the reason it tends to annoy me is because the question itself makes a statement. It already says, "headphone amps are expensive" which I disagree with. On an absolute scale, yes, you can spend a lot of money on a headphone amp. However, the word "expensive" to me conjures a cannotation of comparison and this is where I disagree--compared to other things, headphone amps are not expensive. More explicitly, compared to other electronics headphone amps are NOT expensive. Still more specifically, compared to other electronics, headphone amps are not expensive FOR WHAT YOU GET.

Simply put, most consumer electronics retail for four times the cost of parts and materials. This is the basic formula that drives the electronics industry. It allows manufacturing, distribution and retail all to make basically the same profit margin. Most headphone amps are sold direct--so there's no distributor and the price is lower to reflect that. Tyll spelled this out explicitly for Headroom's model stating that his HeadRoom amps are priced at 3x manufacturing cost. For the amps that do go through a distributor (AudioValve, Sugden), the retail outlet is typically mail order and web meaning that both retail and distribution have taken a hit to lower the price. Rarely will you ever see anyone's stuff online at full retail.

The only point you could make to call them overpriced is this one--typically in consumer electronics, manufacturers will produce a flagship product. Some notable Flagship products include Sony's XBR TVs, their SCD-1 CD player, etc. On a flagship model, the product is "excused" from the formula so that higher quality parts and construction can be used. The manufacturer sacrifices his profit on the flagship product to establish a name for the company, the product line and sometimes for the technology itself (ie, DVD, SACD, etc). These products tend to sell for closer to 2-3x the total cost of parts and manufacturing at retail.

In so far as I am aware, Headphone amp manufacturers do not take a hit on their flagship models in order to promote the line. By that reasoning, one could perhaps call the Blockhead "overpriced." The fact of the matter is, though, that Headroom is the only company with an entire "line" of headphone amps and thus they are the only ones with a flagship model to begin with (I don't think Stax counts here).

Another point I'm going to argue is the DIY market. Now, I can't sit here and detail out to you the exact part and labor costs but I'd be willing to bet that JMT and people like him sell at below Headroom's 3x margin. DIYers circumvent both the distributor and the retail and don't really have a lot of overhead--they also tend to undersell their labor costs because they consider it a fun hobby. These amps strike a phenomenol value.

Striking a balance is the "modification" market. Aftermarket mods, like the DIY market, tend to be sold for far less than the 4x parts/labor formula. Even when you factor in the "throw away" parts from the upgrade process, you're still looking at a total lower priced component than if a large company had offered the high end product originally. Thus, it is possible to buy an amp and have someone mod it and still come out on top value-wise.

Xander, this may not be the angle you were looking for. I realize in absolute terms, money is money and audio is not a cheap hobby. I also realize that you've seen behind the curtain and have a better view of how much the parts actually cost than the average consumer does. I encourage you, however, to consider that these are businesses that have to adhear to normal business strategies to remain in business. I think you'll find that if you look at the costs relative to what you actually get compared to other electronics (or even to other industries), you'll find headphone amps are actually an excellent value.

I wish I got paid for my word counts.

Kelly,

Very nice explanation. Thanks!

Kelly, that's a very well-written response. Maybe it should be included in the 'reference' section of headfi...?

well we can talk about cost and allocating overhead, labor, and material costs all day long (i spent hours and hours per day over the last few months learning about cost allocation), but lets not forget the obvious. first thing you learn in econ101 is that price is set by the market... the interaction of the supply and demand curves, not necessarily the cost of goods sold. amps are priced the way they are because people are willing to pay that price.

Kelly, I'm glad my question wasnt seen as an insult. I can see how it could be. As for those who commented about the DIY scene, I already have built several OpAmp and MOSFET based amplifiers.

I've never stated that they were overpriced, though. Just expencive, and when you consider how little money I make at the moment, it becomes an issue.

Then again, I know nothing of marketing. This is why I asked. I wasn't aware of what it was, minus parts and so forth, that made them cost what they do, and I've never run a company before either, so that pretty much finishes off explaining as to why I'm completely clueless in that aspect. I have respect for the companies marketing these products, as I know they arent terribly popular, making things a lot harder than they would normally be with any other given product.

Another thing I'd like to add:

A lot of people think mass production is bad for quality. This is not true, to the contrary.
Take for example car manufacturers. The tolerance between pistons and the engine block has to be very tight. It would be very expensive to order and manufacturer pistons and blocks to the tight specs. Fortunately cars are manufactured in high quantities allowing car manufactures to order parts with pretty low tolerances at pretty low prices and then those parts are measured, classified and matched with their counterpart. Because of mass production you get high quality at low prices.

I would make a similiar argument to electronics products, especially high end products. I'm not sure whether mass producers do it or not, but mass producers can probably achieve a higher quality product by measuring and matching high quantities of electronics components instead of having to buy tighter tolerance more expensive substitute products.

That might be another reason why the low quantities of headphone amplifiers hurt prices, there's not enough quantity out there to mix and match lower quality parts to yield high quality product. It's a double whammy.

Just an addendum to jopi's above post: Headroom's 'reference' module includes improved parts, but it ALSO includes matching. The other modules are made, and then just paired up randomly. They are all good, so its not like there are any BAD matches going on, but its not perfect. For the reference module, they cook up a big batch of modules, 30 or more, and then hand test each one, and match them based on similar performance characteristics, to a maximum of .1dB difference, often much closer. The mass production improves the quality, but in this case, the increased time involved in the hand-matching ends up increasing the cost by a reasonable amount. But if you want the best, you have to be willing to pay for it.

I agree with most everything said above, kelly's post was right on the money.

peace,
phidauex