[Hutnicks]

Ever heard of the HD700, 800 and 800S? have you any idea how much it costs Sennheiser to make those headphones?
But the HD600/650 are no longer Sennheisers most advanced headphones. I think the The HD600/650 are actually overpriced.

I would actually love to hear what it does cost Slammhammer to manufacture an 800. I think that would shed some very interesting light on the industry as a whole. No nonesense, no BS, Senni, Focal, tell us what you actually pay in raw meterials and labour costs to knock one of those up and spare us the inbred marketing costs and other ancillary tropisims.

Or to put it in short. Have any of you ever heard of Michael Dell?

 

[yangian]

Ever heard of the HD700, 800 and 800S? have you any idea how much it costs Sennheiser to make those headphones?
But the HD600/650 are no longer Sennheisers most advanced headphones. I think the The HD600/650 are actually overpriced.

Exactly. If SHP9500 is ~$70, a ~$300 HD600/650 is definitely overpriced.

 

[Audioholic123]

"The value of money is in proportion to the quantity of the necessaries of life of which it will purchase. That of the necessaries of life is all together independent of the quantity of money which can be had for them."

~ Wealth of Nations by Adam Smith

The amount of money that has been printed over the last number of decades is astonishing. When the U.S. detached itself from its monetary anchor (gold) in 1971, it began printing currency in earnest to fund its deficits. As a global reserve currency, this money liquidates the world; not to mention other currencies that peg themselves to the dollar. Financial institutions utilizing fractional reserve banking models, loans, and derivatives create even greater supplies of currency (M1, M2, M3, etc). Fresh currency entering market circulation is often intuitively spent by consumers instead of saved for reasons that they may not be fully aware.

Low interest-rates (i.e. cheap money) incentivize spending cash today because it'll be worth less tomorrow. In contrast, high interest-rates incentivize saving money because it'll be worth more tomorrow.

So we understand how low interest-rates lend to cheap money which is often readily spent creating what economists call an increased 'velocity of money' in the market place. This velocity of money enters various markets for purchasing goods and services. The supply of goods relative to the demand paid for by a rapidly growing money supply creates a system for which prices must rise. Even the most ethical, philanthropic producers/sellers are unable to swim against this economic current of price growth.

If you doubt this economic model then try selling your house, car, or labor for what it would sell for in 1950 and see if you can remain solvent.

Moore's Law, Cooper's Law, et al., contributes to our understanding of how developing technology and commoditization leads to better efficiency. This efficiency in labor/production reflects economically as downward pressure on costs, but depending on any particular market or niche, the upward pressure of inflation could still be greater resulting in a net positive increase in prices.

This is not to say that price gouging doesn't exist, but this is only possible if a buyer is willing to participate (i.e. purchase a product). For every seller needs a buyer to validate the asking price. If not, then prices must be lowered or the services discontinued. Yet, for all practical purposes, a buyer may only purchase goods if they have access to a supply of capital (medium of exchange). This rapidly-growing supply of capital is cheap money which contributes to the inflation we're witnessing in this hobby.

People often cite Sennheiser HD580/600/650's price decrease over the years as examples of how your dollar has not lost value. Contrary to this notion, this is more of an example of the laws or commodity principles I mentioned earlier. Sennheiser produced the first iteration of this series for over 23 years (HD580, circa 1994). They've become pretty efficient at manufacturing this series. Reduced manufacturing costs and little to no further research and development costs in a particular product can help a company outpace inflationary pressures (net negative) to help maintain a competitive pricing advantage with said product.

Can the same be said about a new-fangled flagship fresh out of the R&D department?

So, this post simply brings awareness to the term 'Money/Price Illusion' which is loosely defined as the tendency of people to think of currency in nominal rather than in real terms. Hence, the purchasing power of a $1 bill may actually be 50¢. despite the number on the note. When a seller prices their goods, they must account for this diminished value in purchasing power and accordingly charge double the price of the note.

-----------
IMO, this post is just a very clever attempt at convincing people that TOTL headphones are a waste of money.
So not true!..

 

[Currawong]

Without knowing in detail what is involved, you can hardly look at one pair of headphones, manufactured in one country, and compare it to another manufactured elsewhere, and declare it "overpriced".

Likely the way the costs are calculated would vary from year to year. Early on, the R&D would make up a significant amount of the cost, but this would eventually balance out over time with a successful product being continually mass-manufacturered. Usually when people ask about the actual "cost" they are asking about the materials alone. Factoring in labour time, from R&D through to actual manufacture maybe somewhat difficult especially if engineers and managers are overseeing multiple products.

This brings up another interesting thing that came up during the interview with Stax just after they were bought by Edifier, a Chinese company. There was a fear that manufacture would be moved to China, especially considering how much cheaper manufacturing is there compared to Japan. However a major part of the appeal of Stax is that their products are made in Japan, so changing that was out of the question. Maybe they could make an SR-009 that retails for $1000, but would it be the same?

AKG have gone the way of moving manufacture of what may be their most famous headphones, the K7XX series, to China. For some people that will have removed their appeal. Would people consider a Sennheiser HD800 made in China? I think that it would lose a lot of its appeal if that happened.

 

[Hutnicks]

Exactly. If SHP9500 is ~$70, a ~$300 HD600/650 is definitely overpriced.

Problem here is nobody actually knows what the cost to manufacture is. It's all volatile speculation based on guesswork backed up by hope and predudice.

Be slick as all hell if in fact some agency had the guts to say, sure MSSRP, and whatever is OK go for it, but you have to publish your unit cost to manufacture in that same price statement.

Taken another way. Pricing and the allmighty dollar, dinero, euro, quid, peso, zloty, yuan, whatever seems to have gotten a quality control pass in the whole process. IE If you have to publish anMSMDS and all the other data sheets in order to sell your product. Why does cost get a free pass? Is that not at least as important as hazardous material ratings or safe handling specs or country of origin status?

How can a consumer conceivably be expected to make an intelligent choice if in fact they are denied the essential data that shows how efficient a manu is by stating product costs?

Before the apologists jump in with the spend more so we get better stuff sometime in the future. Let me simply state one very simple fact. Every contract any government RFP's specifically states that unit production cost will be made available and all production will be overseen by financial scrutineers.

So. My simple (simpleton perhaps) question to all the proponents of apologisim for exhorbantly priced consumer goods is a very simple enquiry. Why on earth are you so willing to engage in a practice and encouragement that no one would accept were it a mass buy from your elected government?

 

[Usagi]

Going to extreme lengths to avoid the simple truth which is actually easy to understand.

I'd love to delve into U.S. monetary strategies and their roots (English Mercantilism) but this proves my point. These topics of truth you claim I'm avoiding are actually superfluous in regards to grasping the simple concept that inflation from various currencies play a significant role in overall price growth with many sectors to include niche hobbies like headphone audio. No bias, just facts.

Ever heard of the HD700, 800 and 800S? have you any idea how much it costs Sennheiser to make those headphones?
But the HD600/650 are no longer Sennheisers most advanced headphones. I think the The HD600/650 are actually overpriced.

Could you clarify. I'm unsure how your comment applies to my premise you quoted. After reading this thread in its entirety, a common theme with the HD600 series price reduction was used to support the absence of inflation. My original post you quoted addressed that specific issue. You mention Sennheiser's newer models and their recent R&D costs. This is supposedly reflected in their original sale price which is roughly triple the cost of a HD650. What's the issue?

 

[Hutnicks]

Without knowing in detail what is involved, you can hardly look at one pair of headphones, manufactured in one country, and compare it to another manufactured elsewhere, and declare it "overpriced".

Likely the way the costs are calculated would vary from year to year. Early on, the R&D would make up a significant amount of the cost, but this would eventually balance out over time with a successful product being continually mass-manufacturered. Usually when people ask about the actual "cost" they are asking about the materials alone. Factoring in labour time, from R&D through to actual manufacture maybe somewhat difficult especially if engineers and managers are overseeing multiple products.

This brings up another interesting thing that came up during the interview with Stax just after they were bought by Edifier, a Chinese company. There was a fear that manufacture would be moved to China, especially considering how much cheaper manufacturing is there compared to Japan. However a major part of the appeal of Stax is that their products are made in Japan, so changing that was out of the question. Maybe they could make an SR-009 that retails for $1000, but would it be the same?

AKG have gone the way of moving manufacture of what may be their most famous headphones, the K7XX series, to China. For some people that will have removed their appeal. Would people consider a Sennheiser HD800 made in China? I think that it would lose a lot of its appeal if that happened.

Amos Laddie, Have you bumped your head?

 

[Dobrescu George]

You must understand one - two things... The cost to manufacture something is not the same thing with how much must a company make for it to still be profitable to run.

You can never expect something to be sold without making a gain for a company, or else people who own it will just sell their actions and invest in something else.

Costs... Marketing is a cost. RD is a cost. Packaging and designing is a cost. Graphic elements are costs. Everything is a cost to a company, and the unitary cost of each piece is not really relevant, as much as their value is.

I am honest, if audio companies weren;t making or expecting to make some profit, the laws of business state that they'd simply move to another business, good things are supposed to cost a ton. Does Samsung note8 really cost 1000 EUR to make, when Xiaomi Mi Max 2 costs barely 250$? It doesn't matter how much something costs, what matters is how well it performs relative to that cost, relative to what people are willing to pay for, relative to how other things perform.

Simple scenario: If HD650 were priced 1000$, with every other headphone staying at the same price, would they still sell? Probably, but the numbers would be much lower. If they were 200$ instead of their actual price, would they sell? Probably, not not that probably to sell that many more pieces, price is defined by only one thing, the meeting of the demand and offer, nothing else. You can't impose a price to someone, you can't tell someone what to do, offer and demand.

This is the backbone of what defines the value of something. Whilst keeping this in mind, you can always vote with your wallet if you dislike a price or if something doesn't have the relative value to you...

 

[Audioholic123]

I'd love to delve into U.S. monetary strategies and their roots (English Mercantilism) but this proves my point. These topics of truth you claim I'm avoiding are actually superfluous in regards to grasping the simple concept that inflation from various currencies play a significant role in overall price growth with many sectors to include niche hobbies like headphone audio. No bias, just facts.

Are you sure you're not biased?!.

 

[Usagi]

-----------
IMO, this post is just a very clever attempt at convincing people that TOTL headphones are a waste of money.
So not true!..

I think you've completely misread/misinterpreted my post. There was no allusion to wasting money on any tier of headphones. What you need to understand is that money is a commodity just like audio gear. Its value goes up and down relative to supply and demand. In this case, I've explained to readers wholeheartedly convinced that headphone companies are violating some moralistic anti-trust with TOTL headphones pricing is that the value of your dollar has gone down relative to the products you seek (TOTL headphones). Hence, why prices appear to increase relative to sticky wages, etc....

Please reread:

"The value of money is in proportion to the quantity of the necessaries of life of which it will purchase. That of the necessaries of life is all together independent of the quantity of money which can be had for them."

~ Wealth of Nations by Adam Smith

The amount of money that has been printed over the last number of decades is astonishing. When the U.S. detached itself from its monetary anchor (gold) in 1971, it began printing currency in earnest to fund its deficits. As a global reserve currency, this money liquidates the world; not to mention other currencies that peg themselves to the dollar. Financial institutions utilizing fractional reserve banking models, loans, and derivatives create even greater supplies of currency (M1, M2, M3, etc). Fresh currency entering market circulation is often intuitively spent by consumers instead of saved for reasons that they may not be fully aware.

Low interest-rates (i.e. cheap money) incentivize spending cash today because it'll be worth less tomorrow. In contrast, high interest-rates incentivize saving money because it'll be worth more tomorrow.

So we understand how low interest-rates lend to cheap money which is often readily spent creating what economists call an increased 'velocity of money' in the market place. This velocity of money enters various markets for purchasing goods and services. The supply of goods relative to the demand paid for by a rapidly growing money supply creates a system for which prices must rise. Even the most ethical, philanthropic producers/sellers are unable to swim against this economic current of price growth.

If you doubt this economic model then try selling your house, car, or labor for what it would sell for in 1950 and see if you can remain solvent.

Moore's Law, Cooper's Law, et al., contributes to our understanding of how developing technology and commoditization leads to better efficiency. This efficiency in labor/production reflects economically as downward pressure on costs, but depending on any particular market or niche, the upward pressure of inflation could still be greater resulting in a net positive increase in prices.

This is not to say that price gouging doesn't exist, but this is only possible if a buyer is willing to participate (i.e. purchase a product). For every seller needs a buyer to validate the asking price. If not, then prices must be lowered or the services discontinued. Yet, for all practical purposes, a buyer may only purchase goods if they have access to a supply of capital (medium of exchange). This rapidly-growing supply of capital is cheap money which contributes to the inflation we're witnessing in this hobby.

People often cite Sennheiser HD580/600/650's price decrease over the years as examples of how your dollar has not lost value. Contrary to this notion, this is more of an example of the laws or commodity principles I mentioned earlier. Sennheiser produced the first iteration of this series for over 23 years (HD580, circa 1994). They've become pretty efficient at manufacturing this series. Reduced manufacturing costs and little to no further research and development costs in a particular product can help a company outpace inflationary pressures (net negative) to help maintain a competitive pricing advantage with said product.

Can the same be said about a new-fangled flagship fresh out of the R&D department?

So, this post simply brings awareness to the term 'Money/Price Illusion' which is loosely defined as the tendency of people to think of currency in nominal rather than in real terms. Hence, the purchasing power of a $1 bill may actually be 50¢. despite the number on the note. When a seller prices their goods, they must account for this diminished value in purchasing power and accordingly charge double the price of the note.

 

[Hutnicks]

You must understand one - two things... The cost to manufacture something is not the same thing with how much must a company make for it to still be profitable to run.

You can never expect something to be sold without making a gain for a company, or else people who own it will just sell their actions and invest in something else.

Costs... Marketing is a cost. RD is a cost. Packaging and designing is a cost. Graphic elements are costs. Everything is a cost to a company, and the unitary cost of each piece is not really relevant, as much as their value is.

I am honest, if audio companies weren;t making or expecting to make some profit, the laws of business state that they'd simply move to another business, good things are supposed to cost a ton. Does Samsung note8 really cost 1000 EUR to make, when Xiaomi Mi Max 2 costs barely 250$? It doesn't matter how much something costs, what matters is how well it performs relative to that cost, relative to what people are willing to pay for, relative to how other things perform.

Simple scenario: If HD650 were priced 1000$, with every other headphone staying at the same price, would they still sell? Probably, but the numbers would be much lower. If they were 200$ instead of their actual price, would they sell? Probably, not not that probably to sell that many more pieces, price is defined by only one thing, the meeting of the demand and offer, nothing else. You can't impose a price to someone, you can't tell someone what to do, offer and demand.

This is the backbone of what defines the value of something. Whilst keeping this in mind, you can always vote with your wallet if you dislike a price or if something doesn't have the relative value to you...

Sure all those are ACCRUED costs and not in any way relevant to to the manufacturing cost. Where things went sideways is when we let marketing people take control of the process.

Let me give you a very precient quote from one of the most single successful niche marketed goods in the last 3 decades.
Cervello bicycles came out of literally nowhere and moved into a disproportionate position in international cycling by stating and living up to one simple axiom. We figured you would rather have a product marketed by engineers than a bike designed my marketing people.

Take heed. They are a disruptor, as was Michael Dell. Huwai in China. The paradigm has in fact changed and glomming on to a pricer is better attitude with all the supporting graphs you can possibly conjure up is as dated as snail mail.

The business models are all there. Those who adopt them will stamp this market into the ground with immediate service, full warranty and rapid response to the consumers wishes.

Within 20 years and most likely if the stats are to be believed. Names like Focal, Audeze, Hifiaman all the boooteeeek players will be extinguished in the same manner as Marantz, Quad, Fisher etc and will be nothing more than brand names bought out by more efficient companies.

Why would someone buy a 5k item on name alone if an equal performing item can be had for less than one fifth the cost.

Look through the Monoprice site. You can see the wave that is coming.

 

[Audioholic123]

I think you've completely misread/misinterpreted my post. There was no allusion to wasting money on any tier of headphones. What you need to understand is that money is a commodity just like audio gear. Its value goes up and down relative to supply and demand. In this case, I've explained to readers wholeheartedly convinced that headphone companies are violating some moralistic anti-trust with TOTL headphones pricing is that the value of your dollar has gone down relative to the products you seek (TOTL headphones). Hence, why prices appear to increase relative to sticky wages, etc....

Please reread:

Well quality audio gear will always be expensive, so it doesn't really matter..
sound quality does play a part in the final price too. Obviously.
I still think you are biased though lol.

 

[Muinarc]

You can find some hints in actual cost from wholesale prices. Focal just knocked $1,000 off the price of the Utopia and the dealers aren't rioting. Now, Focal may be subsidizing the price cuts but if they can sell something at $1,000 off, I'd be willing to bet there's at least $1,000 profit in each unit sold at it's original $4,000 retail price.

We know from history the dealer markup in audio gear has traditionally been 2x. I bet Focal sells their Utopia to dealers for, what, $2.5k? And Focal makes profit on every one sold to a dealer, then the dealer makes their cut at msrp or retail pricing. Luxury items have A LOT of margin.... but they sell in far fewer numbers so I'm reticent to say they're ripping people off.

There are market forces at work, the Utopia sold well and thats created a flooded used market, I've seen them for sale for $2,200 already so we see what the used market will bear.

 

[Hutnicks]

You can find some hints in actual cost from wholesale prices. Focal just knocked $1,000 off the price of the Utopia and the dealers aren't rioting. Now, Focal may be subsidizing the price cuts but if they can sell something at $1,000 off, I'd be willing to bet there's at least $1,000 profit in each unit sold at it's original $4,000 retail price.

We know from history the dealer markup in audio gear has traditionally been 2x. I bet Focal sells their Utopia to dealers for, what, $2.5k? And Focal makes profit on every one sold to a dealer, then the dealer makes their cut at msrp or retail pricing. Luxury items have A LOT of margin.... but they sell in far fewer numbers so I'm reticent to say they're ripping people off.

There are market forces at work, the Utopia sold well and thats created a flooded used market, I've seen them for sale for $2,200 already so we see what the used market will bear.

Bingo. Amazing what a few reviews contesting qc can do to a "Pinnacle product" if no one bites on that can we expect a 2 or 3 k discount or at what point does damage control rear up and they introduce a new model at the 2 k point which gets hailed by all the pundits as better than the Utopia and geez thanks to you allmighty gods of audio for gracing us with this product.

Spin, is in.

 

[Dobrescu George]

Then again, you could do that more friendly.

If a company could do that for cheaper, then by all means, they should do it. I haven't seen anyone do it yet, so I highly doubt anyone will. Audio is evolving, any place where you don't invest in R&D is a place where the whole niche dies...

P.S. Please remember that the only economic mentality that ever linked cost of production to prices has been communism, and we all know how that ends. If you haven't lived through it, better stop talking now, Romania has been communist until 1989, you don't know what hell means until you go through communism.

Welcome to capitalism, this is the basic backbone of it, whether we like it or not.