[PhilS]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif Take a look at the costs. If a cable is $50, well, you can argue that's fair. But the ones that are $3,000 or $4,000 and have $25 of materials in them, you really can't say that. Even a $200 or $300 cable is dramatically marked up.

What about the cost of labor? Is a $200 to $300 cable really "dramatically marked up"? I'm asking a serious question, BTW. I don't DIY cables, so I don't really know how much time is involved in putting together a $200 to $300 cable, and what the other costs of the business operation might be that sells such cables (which also have to be allocated), but it would seem like a $200 to $300 cable would not be "dramatically" marked up (although I suppose it depends on what means by "dramatically").

Also, re the $3,000 or $4,000 cables having $25 of material in them that's pretty shocking, if true. What cables are those? Or is this an instance of the "objectivists" using an anecdote to support their point, instead of factually-based scientific evidence.

 

[greenhorn]

AFAIK, an average mark up for a business is like 200%. I mean, a shop that sells used CDs selles them 10 EUR after having bought them for 3 EUR. Or a shop that sells glasses frames sells them for 200 EUR after having paid like 60 EUR from the producer.

And we are talking here about shops which are actual brick and mortar shops, with a rent to be paid, with actual employees, and all that comes with.

But let's accept that the same mark-up may be used by a garage-producer of cables.

Then a cable whose parts cost like 25 EUR should be sold with 75 EUR max.

Not with 6-7-800 EUR like I have just seen it's the case for some opportunists who are now selling aftermarket cables for HD800.

 

[PhilS]

Quote:

Originally Posted by greenhorn /img/forum/go_quote.gif AFAIK, an average mark up for a business is like 200%.

I suppose the question depends on what you mean by "mark up," i.e., what do the basic costs that are being marked up 200% include? It sounds like you're just counting the cost of the raw material, and ignoring rent, labor costs, insurance, etc. It's pretty misleading to talk of "mark up," without including all of the costs of doing business and selling a product. The relevant figure is not really "mark up" over the costs of the raw materials or product, but the profit margin, after factoring in all of the relevant costs.

Certainly in the U.S. (and I suspect in most free market economies), the "average mark up" over fixed and marginal costs (i.e., profit) is nowhere near 200%; it's probably more in the range of 10 to 15%. I would also suspect that, if you count "mark up" as the ratio of the final price of the product to the raw cost of the product itself, the "mark up" on average is probably less than 100%.

 

[greenhorn]

Yes, you're perfectly right, thanks. What I meant when using the term "mark up" was actually the difference between the price of the "raw material" and the price of the "finite product". Mea culpa

I am using the "..." because the examples I used above do not suffer any alteration between the stage of raw material and the one of finite product

Basically there are cable manufacturers which use a ratio between the price of the finite product and the price of the raw materials of around 100-200 % (e.g. 25 EUR -> 50-75 EUR), which I find perfectly acceptable, and there are other cable manufacturers who use a ratio of around 3000%, or even much more - which I find perfectly unacceptable.

And the latter ones manage to sell their products at such incredible prices because they are very good in marketing. Like Bose

 

[dvw]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif I suppose the question depends on what you mean by "mark up," i.e., what do the basic costs that are being marked up 200% include? It sounds like you're just counting the cost of the raw material, and ignoring rent, labor costs, insurance, etc. It's pretty misleading to talk of "mark up," without including all of the costs of doing business and selling a product. The relevant figure is not really "mark up" over the costs of the raw materials or product, but the profit margin, after factoring in all of the relevant costs. Certainly in the U.S. (and I suspect in most free market economies), the "average mark up" over fixed and marginal costs (i.e., profit) is nowhere near 200%; it's probably more in the range of 10 to 15%. I would also suspect that, if you count "mark up" as the ratio of the final price of the product to the raw cost of the product itself, the "mark up" on average is probably less than 100%

Actually markup of 100 to 200% is quite normal. The mark up is defined as cost of making the product. The other way to measure this is gross margin. GM = (selling price - cost of good sold)/selling price. Most company try to have a GM>50% which is a mark up of 100%.
The cost of printing a $1 bill is approximately 3 cents. So the mark up is about 3200% or a GM of 97%. So if you can do better than that, then you are making more money than printing money.

 

[greenhorn]

Hey, but the cost for printing a 100$ bill should then also be just 3 cents...

 

[PhilS]

All of this is interesting, but if the question is whether the price of a product is "fair" (sort of a ridiculous notion in any event), or "dramatically marked up" (again, the notion that the price is somehow unreasonable), the relevant question is not the "mark up" over the cost of the raw materials, but the total costs of making the product available to market. For example, if the cost of a cable is $200, and the raw materials cost only $50, one can hardly complain that the cable maker is making an exorbitant profit if the other costs associated with the venture, including labor, advertising, shipping, etc., are such that the total cost of the cable is $160, for example.

I think that's what I was really trying to get across earlier.

 

[greenhorn]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif All of this is interesting, but if the question is whether the price of a product is "fair" (sort of a ridiculous notion in any event), or "dramatically marked up" (again, the notion that the price is somehow unreasonable), the relevant question is not the "mark up" over the cost of the raw materials, but the total costs of making the product available to market. For example, if the cost of a cable is $200, and the raw materials cost only $50, one can hardly complain that the cable maker is making an exorbitant profit if the other costs associated with the venture, including labor, advertising, shipping, etc., are such that the total cost of the cable is $160, for example. I think that's what I was really trying to get across earlier.

The problem is not a cable that is sold for $200 while built from raw materials that cost $50, but cables that cost much-much-MUCH more than $200, while their raw materials cost also $50

 

[Antony6555]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif All of this is interesting, but if the question is whether the price of a product is "fair" (sort of a ridiculous notion in any event), or "dramatically marked up" (again, the notion that the price is somehow unreasonable), the relevant question is not the "mark up" over the cost of the raw materials, but the total costs of making the product available to market. For example, if the cost of a cable is $200, and the raw materials cost only $50, one can hardly complain that the cable maker is making an exorbitant profit if the other costs associated with the venture, including labor, advertising, shipping, etc., are such that the total cost of the cable is $160, for example. I think that's what I was really trying to get across earlier.

I think what those who are suggesting that, say a 3000%, increase in price over raw materials is unreasonable is that this far exceeds the likely labor and miscellaneous other costs involved in selling the product. I think they're suggesting that a 200-300% increase is probably enough to take care of all these costs, and that extra tenfold increase is probably just pure profit.

 

[PhilS]

Quote:

Originally Posted by greenhorn /img/forum/go_quote.gif The problem is not a cable that is sold for $200 while built from raw materials that cost $50, but cables that cost much-much-MUCH more than $200, while their raw materials cost also $50

Quote:

Originally Posted by Antony6555 /img/forum/go_quote.gif I think what those who are suggesting that, say a 3000%, increase in price over raw materials is unreasonable is that this far exceeds the likely labor and miscellaneous other costs involved in selling the product. I think they're suggesting that a 200-300% increase is probably enough to take care of all these costs, and that extra tenfold increase is probably just pure profit.

I understand the point, but nobody ever seems to be able to point to solid objective evidence regarding these types of alleged exorbitant prices. I'm not saying they don't exist. But I do find it interesting that some folks from the "objectivist" camp routinely decry the use of "anecdotal evidence" regarding whether cables, for example, sound different, but they freely use anecdotal evidence (or even rank speculation) when lashing out at cable makers who supposedly charge $3,000 for a cable that costs $50 to make. I guess "anecdotal evidence" is only questionable when the "other guy" uses it.

 

[Antony6555]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif I understand the point, but nobody ever seems to be able to point to solid objective evidence regarding these types of alleged exorbitant prices. I'm not saying they don't exist. But I do find it interesting that some folks from the "objectivist" camp routinely decry the use of "anecdotal evidence" regarding whether cables, for example, sound different, but they freely use anecdotal evidence (or even rank speculation) when lashing out at cable makers who supposedly charge $3,000 for a cable that costs $50 to make. I guess "anecdotal evidence" is only questionable when the "other guy" uses it.

Of course it is anecdotal evidence. Unfortunately someone has yet to publish a study on inflated speaker cable prices. However, "anecdotal" is not interchangeable with "subjective." You could easily look up the prices of the materials in a given speaker cable, and then see how inflated the price was. People often do fail to provide specific evidence, however, but it is certainly out there.

On the other hand, the act of listening is very subjective because of all the psychological issues involved.

 

[greenhorn]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif I understand the point, but nobody ever seems to be able to point to solid objective evidence regarding these types of alleged exorbitant prices. I'm not saying they don't exist. But I do find it interesting that some folks from the "objectivist" camp routinely decry the use of "anecdotal evidence" regarding whether cables, for example, sound different, but they freely use anecdotal evidence (or even rank speculation) when lashing out at cable makers who supposedly charge $3,000 for a cable that costs $50 to make. I guess "anecdotal evidence" is only questionable when the "other guy" uses it.

OK. Let's do some research then.

1 feet of Jena Labs "Ultrawire" costs $5: (Ultrawire)

Which means that 10 feet cost $50 (or maybe less if one buys in large quantities).

The black nylon sheath for a 10 feet cable costs $80 (or rather less, since, according to the manufacturer of the cable, one can give up to the nylon sheath and save $80, so maybe $80 is the total price for the sheath AND the labour to cover the wire with it).

I don't know how much costs a Furutech 1/4 jack or a a pair Xhadow XLR connectors because the respective sites don't give the prices. One has to contact them to find out. But let's estimate the price for a 1/4 jack at $20 and for a pair of XLR connectors to $40.

So the prices for the raw materials to build a 10 feet cable would be around:

- with a 1/4 inch jack: 50 + 80 + 20 = $150
- with 2 XLRs: 50 + 80 + 40 = $170

The cables are then sold for $699, respectively $889. The work involved? Maybe 20 minutes of soldering? Other costs? Yes, a sponsored thread. That's all. Except the power consumed by the soldering iron.

699 - 150 = 549
889 - 170 = 719

So ROUGHLY the profit would be between $549 and $719 for a bit of soldering 3 or 4 connectors to solder.

Let's go with an average of $635 for 15-20 min work time. Interesting.

 

[pdupiano]

Quote:

Originally Posted by greenhorn /img/forum/go_quote.gif OK. Let's do some research then. 1 feet of Jena Labs "Ultrawire" costs $5: (Ultrawire) Which means that 10 feet cost $50 (or maybe less if one buys in large quantities). The black nylon sheath for a 10 feet cable costs $80 (or rather less, since, according to the manufacturer of the cable, one can give up to the nylon sheath and save $80, so maybe $80 is the total price for the sheath AND the labour to cover the wire with it). I don't know how much costs a Furutech 1/4 jack or a a pair Xhadow XLR connectors because the respective sites don't give the prices. One has to contact them to find out. But let's estimate the price for a 1/4 jack at $20 and for a pair of XLR connectors to $40. So the prices for the raw materials to build a 10 feet cable would be around: - with a 1/4 inch jack: 50 + 80 + 20 = $150 - with 2 XLRs: 50 + 80 + 40 = $170 The cables are then sold for $699, respectively $889. The work involved? Maybe 20 minutes of soldering? Other costs? Yes, a sponsored thread. That's all. Except the power consumed by the soldering iron. 699 - 150 = 549 889 - 170 = 719 So ROUGHLY the profit would be between $549 and $719 for a bit of soldering 3 or 4 connectors to solder. Let's go with an average of $635 for 15-20 min work time. Interesting.

Dont forget that manufacturers get lower prices, so a lot of the prices you quoted are probably cheaper so the mark up is more. But don't forget that Jena Labs charges a licensing fee to use their wire for commercial purposes. But what about the amount of time it takes to braid the cable? The cost for the rent on the building? Advertising, employee pay and benefits etc.. A lot of businesses are also based on an initial investment and the hopes to pay off those loans.

The point is arguing based on the cost/markup leads you to conclude that you really can't because there are simply too many variables to consider. Further more, if you guys are concerned about a cable getting a 500% mark up, what about fast food or food in general? Anything inside a restaurant is heavily marked up. Anything inside a NYC/LA/FL restaurant is probably marked up at a higher rate than 500%. I mean a Sub at subway for 5 bucks, is still getting something along the lines of a 400% mark up. And what it takes 2 minutes of work to assemble a sub? And any real restaurants would be even worse. I mean, we're all able to make our own subs and burgers right? But we pay the premium for whatever reasons we deem are acceptable (whether its out of convenience, or because we simply don't want to cook). In this case, every single person can simply make their own cables, and guess what.. no one is stopping you. Buy the cable parts, make em and solder them yourself. Soldering isn't that difficult of a skill and in general entering the diy world always helps you out with getting more information about how things work in your rig and you can even fix stuff after it breaks.

On the other hand, if you're not willing to do the work, or take the time to learn, then admit that you are paying the premium for "premium cables" hence the name. Hell we could all fish our own fish, hunt our own meat, grow our own vegetables etc... we could all do a lot of things for ourselves and keep the money, but at the end of the day we don't because we are busy doing other things. If you want cheap cables, buy cheap cables, make em.

And to add to the whole pro/anti debate, both are oblivious to the fact that they are misusing science and misconstrue it to fit their wants/needs.

Take for example the anti-cabler who says that they hear no differences in cables and it is backed up by scientific measurements. Now, what about cardas cables, and low capacitance cables are they buying them? Do they specifically look for those cables? Do they Look for 19N cables (dunno if those exist actually)? Science tells you that purity matters, the type of solder you use matters, hell even digital cables like USB cables matter to reduce the reflections of sending data. But do they spend 5k on a USB cable? Its based on science right? That research in reducing transmission error is scientific. Those 5k usb cables are designed because of scientific research and perfect digital data transmission. ... So where are the anti-cablers with 5k usb cables?

 

[greenhorn]

Braiding a cable. 5 minutes more. OK, 10 minutes more.

And we're not talking about restaurants here, but about one-man enterprises who are braiding and soldering cables in their spare time, in their own house, without employees and so on. Zero additional costs. Oh yeah.

 

[skyline889]

Quote:

Originally Posted by greenhorn /img/forum/go_quote.gif OK. Let's do some research then. 1 feet of Jena Labs "Ultrawire" costs $5: (Ultrawire) Which means that 10 feet cost $50 (or maybe less if one buys in large quantities). The black nylon sheath for a 10 feet cable costs $80 (or rather less, since, according to the manufacturer of the cable, one can give up to the nylon sheath and save $80, so maybe $80 is the total price for the sheath AND the labour to cover the wire with it). I don't know how much costs a Furutech 1/4 jack or a a pair Xhadow XLR connectors because the respective sites don't give the prices. One has to contact them to find out. But let's estimate the price for a 1/4 jack at $20 and for a pair of XLR connectors to $40. So the prices for the raw materials to build a 10 feet cable would be around: - with a 1/4 inch jack: 50 + 80 + 20 = $150 - with 2 XLRs: 50 + 80 + 40 = $170 The cables are then sold for $699, respectively $889. The work involved? Maybe 20 minutes of soldering? Other costs? Yes, a sponsored thread. That's all. Except the power consumed by the soldering iron. 699 - 150 = 549 889 - 170 = 719 So ROUGHLY the profit would be between $549 and $719 for a bit of soldering 3 or 4 connectors to solder. Let's go with an average of $635 for 15-20 min work time. Interesting.

Just would like to point out that the Jena wire is sold per mono foot. So for a 10ft cable, you'd need 40ft of wire so 40ft x $5 a foot would be $200 for the wire alone.