How much do headphones cost?

Everything on sale today is marked-up exhorbitantly, from grocery items to shoes to clothes to headphones. Yes, someone does know how much they cost (and cost to develop, distribute, support in various territories worldwide) but I doubt they'd be giving away any secrets here.

Rest assured, you will pay for it [and the retailer wants their margins too, or no sale for you]
If there is someone with enough capital to challenge the major players, they are free to do so

There is no one correct answer of course.

I did read recently that production cost of audio equipment might be somewhere in the neighborhood of 20% of MSRP, but that's a pretty sweeping statement.

When I worked in electronic manufacturing, the accounting department added something in excess of +150% to the workers hourly pay rate, just to figure in-house hourly labor cost. Material cost was even worse. You have to pay for manufacturing overhead somehow. Figuring a true cost of production can be tricky, but you can bet they aren't operating at a loss.

I don't know. But i wouldn't get too upset about it. In addition to what deny said. You are paying for research and development past and to some extent present and future.

No, people bash Bose for providing cheap sound and charging too much for it.

No manufacturer of anything is going to breakdown their overheads and profit margins for anyone. If people continue to buy their products and they're successful, that's their own business.

And if they can make something cheaper than the competition and sell for more, that's just more gold-plated toilet seat lifters they can buy for themselves.

I see this thread taking a nose-dive right... now.

C'mon: Everything we consume that is purchased is marked-up to some extent. And the world keeps on spinning. Next thread.

Let's see you develop a new driver technology and sell your HD800s for materials cost! A lot of audio cost is R+D. You are paying for someone else to figure out how to make something you like plus the materials, PR, shipping costs as well as a decent mark-up.

BOSE = Bloated Overpriced Sound Equipment.

i am very sure a headphone's BOM cost must be cheap,
but so what?

What he said!

A lot of time, R&D and money went into designing, making, testing and redesigning, remaking and retesting drivers, housings, cables etc and putting them all together to make the perfect sounding pair of headphones. The companies, for the most part are charging you for the effort, time and R&D they put into the unit. Naturally though, Brand Name and Materials are going to come into play a lot too.

There are different pricing methods. Top of the line phones do not have cost based pricing. I don't know what Sennheiser and other headphone companies do in their price analysis but I'm sure there is some kind of value based pricing in their model. It's priced as it is because that is what it is worth to the community. For such luxury items, production costs rarely play a role in the final price. If Sennheiser were to make a HD900 and price it as 10 000USD, I'm sure their marketing team would get sacked as the community doesn't value it so highly etc. There is a lot of play in the model of course, but going to some crazy price isn't included in the theory.

Do you really think an air plane ticket is really free? Nope, example of competition based pricing.

R&D is only a small part of it.

Look at all the costs of running a business, any business. You have to rent or buy a place to make stuff. That ain't cheap. You have to pay for repairs, upkeep, power, water, insurance, maintenance, and so on just for the property.

Employees don't just get paid their wages or salaries, you also have to participate in the anal rape that is the payroll tax. Then there's training employees, replacing them now and then, insurance for them, possible workplace injuries, and so on.

There are corporate income taxes, costs to have materials shipped, marketing, advertising, and much, much else.

I could go on, but there are lots of expenses for running a business. Each seems reasonable and rational, but when you add everything up, you are usually stunned by how expensive things can be. Even trying to squeeze a 10% profit on something (and profit is fair - otherwise there's zero incentive to make anything) is tough.

If you want to save money, buy used or go DIY. DIY lets you buy the same parts from the same distributors. If you look at Digikey, Mouser, et al., you'll see the price breaks for ordering large quantities. You'll notice that you'll save maybe 40 cents per cap if you order 1,000 instead of just two. So businesses don't really have much advantage if you're just building one unit.

Anyhow, while it might seem like companies are making immense profits off headphones and other gear, they usually don't make as much as you think.

Now, I'm not talking about the snakeoil stuff. Most of that gets knocked out by some guy in his garage, without the expenses, and monstrous profit margins.

that's a nice story Erik, but most companies are selling +50 yo technologies.

let's take the DT770/Pro as an example...it sells for 110 EUR w/o tax in Germany, BD prolly sells it for half that price to distributors? Drivers are prolly made in China, and then assembled in Germany...now, how much can a DT770/Pro cost to beyer? don't tell me about R&D, the ROI was reached AGES ago...ok let's say 10/15 EUR grand max(we have to pay for the german employees etc)...so we're talking about a mark up of 40 EUR a pop? that's $60, and that's their most sold model ever(several hundred thousands?).

companies like Ultrasone are different, they invest in new technologies in their $200/$300 models(S-Logic/S-Logic Plus musta cost money at some point)...but selling +50 yo technologies for $200 means huge markups IMHO, same goes for Grado/Denon etc etc

All I can add to this thread is the dealer cost of grado sr125's is a bit more than 80 dollars. Making the production cost lower than that.

Please explain Grados then...those things can't cost more than 3-5 USD to produce, including the cost of labor, were designed who-knows-how-long-ago, and the money sure as hell ain't going toward marketing, or website...I think it comes down to an even more basic economic principal: supply v. demand.