Quote:
Originally Posted by
hodgjy 
It's actually price tiers made by the manufacturer. The prices they set have nothing to do with actual supply, demand, R&D costs, or costs of production. The prices are set to give the illusion of premium quality. They are false prices. They are creating a market where one was not before. Every industry does it.
I think that is taking it to the extreme. I mean nothing to do with supply, demand, R&D costs, or costs of production? It would be an irrational decision, because if that was so they would also consider pricing it at a loss. And Demand and Supply will certainly have a factor, a firm will never price it's product whilst disregarding demand, otherwise for all they know they could be selling 0 units. They will estimate the amount of demand accordingly to different points in price, and went with $999 as the sweet spot.
I think they priced it as: cost of producing 1 unit + R&D + Brand name . How much your paying for the Brand name is impossible to tell unless you work for Sennheiser, I'd guess at $999 for the HD700, you'll be paying $400 for the Brand name.