[dallan]

Quote:

Originally Posted by Seamaster /img/forum/go_quote.gif well siad. I worndering HD800 recabling will divide to two groups: copper/ plated copper Vs. silver/plated silver

I am truthfully amazed at the difference between the copper and the silver plated sound with these, I had to actually hear it to believe it.

 

[PhilS]

The comments on this thread about cable vendors or other audio manufacturers making exorbitant profits always make me chuckle. Is economics a legitimate science? I thought it was. People often trumpet how there is no "scientific proof" that one cable sounds different than another, or that one audio component sounds different than other, and yet they freely make accusations about exorbitant profits being made in circumstances where even the most elementary economic analysis would tell you that this simply cannot be the case. I guess you only have to insist on "scientific proof" when you believe it supports your position.

 

[scootermafia]

All exorbitant profits aside, if you think you can do it better for less, get all the supplies you need and head on down to the DIY forum.

 

[Steve Eddy]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif The comments on this thread about cable vendors or other audio manufacturers making exorbitant profits always make me chuckle. Is economics a legitimate science? I thought it was. People often trumpet how there is no "scientific proof" that one cable sounds different than another, or that one audio component sounds different than other, and yet they freely make accusations about exorbitant profits being made in circumstances where even the most elementary economic analysis would tell you that this simply cannot be the case.

I must have missed that part in economics class.

What most elementary economic analysis would tell you that exorbitant profits simply cannot be the case?

se

 

[Uncle Erik]

PhilS, if you have the numbers to back yourself up on your statement, please share.

If you take the market prices of cable components and add labor, overhead, etc., you are going to find a wide margin between the cost and retail.

If you have an explanation of where that money goes besides a back pocket, you need to tell us.

 

[skyline889]

Quote:

Originally Posted by Koyaan I. Sqatsi /img/forum/go_quote.gif I must have missed that part in economics class. What most elementary economic analysis would tell you that exorbitant profits simply cannot be the case? se

In theory, economic profit is unsustainable under monopolistic competition. While this may be true in the long run though, this has not proved true thus far with these aftermarket cables. Though the prices for DIY Sennheiser cables have fallen significantly, this is because of an ever decreasing standard for workmanship and an influx of builders out to make a quick buck, not because of competition forced price reduction. Prices for actual business venues have continually increased in price for the past few years.

I don't begrudge people for making a profit, there are opportunity costs and overhead costs that need to be factored in with full time enterprises however, the profit margin of some of these companies is atrocious.

 

[PhilS]

Quote:

Originally Posted by Koyaan I. Sqatsi /img/forum/go_quote.gif I must have missed that part in economics class. What most elementary economic analysis would tell you that exorbitant profits simply cannot be the case?

Without going into laborious detail, the fact that the markets we are talking about are extremely competitive, and the barriers to entry would appear to be extremely low (virtually non-existent in the case of cables).

 

[PhilS]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif PhilS, if you have the numbers to back yourself up on your statement, please share.

Why do I have the burden of proof? Shouldn't the folks who are asserting exorbitant profits are being made have to back up their statements with the facts? After all, aren't these the same folks who rely on the "numbers" to assert that cables don't sound different, etc.? Again, if one is going to be an "objectivist" or "scientist" and look at the "data," where's the data to support the claim of exorbitant profits?

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif If you take the market prices of cable components and add labor, overhead, etc., you are going to find a wide margin between the cost and retail.

Boy, that's pretty non-specific. In addition, it pretty much sounds like what they call "anecdotal evidence," isn't it? I thought that anecdotal evidence wasn't worth anything in talking about cables; how come it's valid when we're talking about profits of cable vendors, etc.?

Let's see some hard data from the people who are always demanding hard data.

 

[Steve Eddy]

Without going into laborious detail...[/quote[

Well I should hope not seeing as you said it was "most elementary."

Quote:

...the fact that the markets we are talking about are extremely competitive, and the barriers to entry would appear to be extremely low (virtually non-existent in the case of cables).

But they're not competitive in the typical sense where competition tends to drive prices down. Quite the contrary. The competition tends more toward who can dream up the best pseudo-science ******** with which to try and justify ever higher prices in a market that tends to associate quality with price.

And don't confuse revenue with profit.

If I take $100 in labor and materials and make a cable that I sell for $5,000, that's an exorbitant profit even if I only ever sell one of them.

se

 

[PhilS]

Quote:

Originally Posted by Koyaan I. Sqatsi /img/forum/go_quote.gif Well I should hope not seeing as you said it was "most elementary."

I was trying to be polite the second time. In any event, it should be elementary for someone of your intelligence . . . , if you put aside your biases.

Quote:

Originally Posted by Koyaan I. Sqatsi /img/forum/go_quote.gif But they're not competitive in the typical sense where competition tends to drive prices down. Quite the contrary. The competition tends more toward who can dream up the best pseudo-science ******** with which to try and justify ever higher prices in a market that tends to associate quality with price.

Competition does drive prices down in a competitive market, everything else being equal. But, IMO, you're making value judgments and introducing normative concepts that are "non-economic" when you start assuming that people are over-valuing certain qualities or that people are being fooled -- and that this is relevant to the issue. You're also ignoring concepts of supply and demand, and economics does not consider whether the "demand" is rationale. That's for other sciences or disciplines to evaluate. If you start adding into the equation the types of non-economic factors you're talking about, you can make an argument that a whole lot of products yield exorbitant profits.

Quote:

Originally Posted by Koyaan I. Sqatsi /img/forum/go_quote.gif And don't confuse revenue with profit.

I'm not. Maybe others are.

Quote:

Originally Posted by Koyaan I. Sqatsi /img/forum/go_quote.gif If I take $100 in labor and materials and make a cable that I sell for $5,000, that's an exorbitant profit even if I only ever sell one of them.

Are we really talking about that situation? Again, you guys seem so willing to toss out anecdotal evidence and hypotheticals when it suits your purposes. But I don't see the data. It seems to me that some of you wouldn't see your hypocrisy if it walked up and bit you on the nose.

 

[Steve Eddy]

Quote:

Originally Posted by PhilS /img/forum/go_quote.gif Competition does drive prices down in a competitive market, everything else being equal.

Then I would simply say that high end audio in general isn't a price competitive market. Companies in general are not competing with each other in a race to the bottom to see who can offer the lowest prices.

Quote:

But, IMO, you're making value judgments and introducing normative concepts that are "non-economic" when you start assuming that people are over-valuing certain qualities or that people are being fooled -- and that this is relevant to the issue.

The only judgment I am making is that when the price of an item bears no rational relationship to its cost to produce, I consider the profit to be "exorbitant."

Quote:

Are we really talking about that situation?

There's no reason we can't be.

Quote:

Again, you guys seem so willing to toss out anecdotal evidence and hypotheticals when it suits your purposes.

Ok. Two realworld examples.

JPS Labs buys some $40 Eupen power cords. Slaps some Techflex and heatshrink on them to hide the fact that they're $40 Eupen power cords. Sells them for $400.

Mark Levinson buys some integrated amplifiers from Korsun that sell for $200 retail in China. Has his Red Rose brand slapped on them and sells them here for $2,000.

I can mention these two instances because they're already public knowledge. But I've been involved in this industry for going on 30 years and have seen and been privy to quite a lot. Things that I'd probably be prohibited from talking about here as a MOT and other things that I can't divulge because I gave my word that I would not.

Suffice to say, there was nothing about my previous "hypothetical" that is out of line with reality.

se

 

[scootermafia]

Yep, it's pretty obvious why the market isn't price competitive. When it comes to proving that a product is good, typically people guesstimate its quality based on its price. Perceived value is pretty important - people could sell headphone cables for $50 and make a $10 profit, but most would think the cable was a piece of crap based on that.

 

[Steve Eddy]

Quote:

Originally Posted by scootermafia /img/forum/go_quote.gif Yep, it's pretty obvious why the market isn't price competitive.

And that's not necessarily a bad thing.

For example, it doesn't put pressure on manufacturers to export labor to China as price competitive markets tend to do.

Of course that doesn't stop anyone from sourcing from China anyway and then pricing as if they're paying Ph.D.'s from MIT to assemble them.

se

 

[scootermafia]

Hey, I'm a Ph.D. from MIT....shh....

 

[Steve Eddy]

Quote:

Originally Posted by scootermafia /img/forum/go_quote.gif Hey, I'm a Ph.D. from MIT....shh....

You can't fool me. That pocket protector looks as fake as a three dollar bill.

se