Well we're all in it for the money, unless we're monks of course. Everyone's already said it before me, R&D, material cost, cost of labor, and then on top of that you need to make enough money to perpetuate your company. I'd say that the rate of return, percentage wise falls pretty steeply after about $200-500. I haven't done any real research, so it'd be cool if we got all the numbers and rated headphones based on their cost to make related to their sound ratio, but I'm gonna guess it'd be a pretty hated and disputed graph, made up almost entirely of personal opinion. Are 1K and above headphones worth it? If you're willing to spend the money, yup, and in comparison to audiophile speakers, absolutely.