Headphone cost breakdown? Markup? Materials? Assembly? R&D?
Mar 11, 2006 at 10:58 PM Thread Starter Post #1 of 16

AdamP

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Does anybody know how the pie splits according to these categories?

I've always just been curious for example how costs split up...for instance a $1000 headphone vs. a $100 headphone.

I can't really fathom a $1000 headphone costing a ridiculous amount to build. I'd guess more of the money would go into the grey area of pricing such markup or R&D. Maybe I'm wrong.
 
Mar 11, 2006 at 11:31 PM Post #2 of 16

Mercuttio

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I would think a pricier headphone WOULD cost a lot more to build (materials calibrated for sound), but R&D would notch up equally. I think it's a balance, most of the way up. But, I wouldn't be at all shocked to discover that the R&D for the HD201 (figuring out inexpensive materials, build quality, etc) cost a ton.
 
Mar 12, 2006 at 4:59 AM Post #4 of 16

muckluck

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I remember one thread where they found out the driver in the UE 10 Pro ( a $1000 IEM ) only cost $10. I don't think R & D and the cost to put the driver in a mold that you supply can cost $990.
 
Mar 12, 2006 at 5:06 AM Post #5 of 16

Skrying

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Quote:

Originally Posted by muckluck
I remember one thread where they found out the driver in the UE 10 Pro ( a $1000 IEM ) only cost $10. I don't think R & D and the cost to put the driver in a mold that you supply can cost $990.


R&D cost a ton, especially for a relativly small company. You also must remember that a company wants to make a profit, and wants to make a larger profit margin if it doesnt sell a large amount of said item.

I'm guessing actual material costs in a UE 10 Pro would be about $100 at most, and then total cost to off set R&D would be another $100, then add to how much you must pay your employe's.
 
Mar 12, 2006 at 5:11 AM Post #6 of 16

jbloudg20

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Quote:

Originally Posted by muckluck
I remember one thread where they found out the driver in the UE 10 Pro ( a $1000 IEM ) only cost $10. I don't think R & D and the cost to put the driver in a mold that you supply can cost $990.


Geez, there is more to the selling price of an item than the material cost of supplies.
 
Mar 12, 2006 at 5:19 AM Post #7 of 16

muckluck

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Quote:

Originally Posted by jbloudg20
Geez, there is more to the selling price of an item than the material cost of supplies.


Well yeah, but if something costs 50$ to build, the company doesn't really market much, but has a decent amount of people willing to buy it, is the $750+ price really justified?
 
Mar 12, 2006 at 5:22 AM Post #8 of 16

zancxia

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Quote:

Originally Posted by muckluck
Well yeah, but if something costs 50$ to build, the company doesn't really market much, but has a decent amount of people willing to buy it, is the $750+ price really justified?


Yes... if people/psychos are willing to pay for it.
icon10.gif
 
Mar 12, 2006 at 5:34 AM Post #10 of 16

Duggeh

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I think in general the higher priced headphones do require much more expensive materials to begins with. This will be especially true for electrostatic and AMT headphones, youve also got to employ a skilled workforce to produce the units as well (think the wood techs at grado, nevermidn the guys in customer service, delivery, rnd, marketing, managment, etc).

In general most companies make a huge mark up on their top of the range models. This has been especially true in recent times with computer graphics card and CPU manufacturers.

At the end of the day, if there is a market for a product, someone will produce that product, the art lies in getting as much out of the buyer as is possible to get away with.

Isnt capitalism great?
 
Mar 12, 2006 at 7:07 AM Post #11 of 16

apnk

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Quote:

Originally Posted by muckluck
I remember one thread where they found out the driver in the UE 10 Pro ( a $1000 IEM ) only cost $10. I don't think R & D and the cost to put the driver in a mold that you supply can cost $990.


I think it was the Shure e5. They use Knowles drivers which cost like $13 each.
 
Mar 12, 2006 at 9:11 AM Post #13 of 16

Mercuttio

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So where do Grado drivers come from? They're not made in Brooklyn, are they?
 
Mar 12, 2006 at 2:49 PM Post #14 of 16

jbloudg20

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Headphone companies, just like any others, have overhead, and a desire to actually earn money. Assuming you didn't build your computer... by god do you know the money you just threw away! Or lets say you don't know basic car maintenance... Do you know what an oil change from the dealer costs?

Someone is providing a service, that you cannot (or choose no to) perform yourself. You ARE going to pay a premium for that.
 
Mar 12, 2006 at 3:27 PM Post #15 of 16

braillediver

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Too bad they don't teach economics anymore.

How about the cost of mandatory Health Insurance for every employee Unemployment benefits, Social security, they probably would like to heat the building the product is made in.

You might want to get that $10 part actually delivered to your plant if you intend to use it. You may want to have some one test the part when it arrives to make sure it works? Some one has to pay for defective or damaged parts that fail screening or are just unusable. 100% of the parts are not always usable. There's probably a desire to have light in the assembly area and maybe a building to house everything?

Oh the employees want a paid vacation. Taxes, Licenses. Those troublesome employees actually want a desk and chair to work on.

You mean companies actually have to pay local taxes and federal taxes on the sale, materials and inventory?

Some customer might want to return the item- who pays for all the work that was spent on that order? Or call customer support or have a question they need answered. If they want to call customer support then you’ll need a telephone. Oh you want that product put in a box for safe shipping.

And some one somewhere expects to make a profit.

Haven’t even touched the surface. Figure a person could put the money in a safe investment and not risk the moods of customers. Some one has to pay for the additional risk to the money invested.

Generally speaking think 4X actual cost as a minimum.


Mitch
 

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