[Mr.Sneis]

Do you guys ever stop to wonder how much the manufacturers are really paying in order to manufacture/craft our beloved phones?

 

[lindrone]

Although I can't speak for anything directly, my friend used to work in the QA department of Sony. He was able to get most home audio equipments, speakers, components and such for half the price as opposed to retail price.

Even then, Sony was *still* making money from the employee sales, it's not like they were taking a loss as some sort of employee benefits.

 

[00940]

Quote:

Originally posted by Mr.Sneis Do you guys ever stop to wonder how much the manufacturers are really paying in order to manufacture/craft our beloved phones?

I never wonder about that. I cannot build a pair of headphones. Only quality-price ratio matters to me.

 

[Ticky]

A related question is how much the distributors pay for the phones when purchasing them from the manufacturers. Similarly, how much do retailers pay the distributors for those phones.


I suspect that, at the end of the day, the manufacturers probably do not have a wide profit margin for their phones. There are plenty of competitors in the market. As such, price competition is likely to be high.

 

[gradofan]

This is an interesting question... Back in the day, when I just began at Circuit City, we were able to buy everything in the store at CC's cost (which is about 40% higher now, allegedly because the original cost didn't factor in shipping, handling, and overhead ::ahem:

.

Anyways, I priced out a lot of headphones at the time (but didn't buy any ::shakes head sadly:: because I had no money):

Sony stuff: typically 20-30% off
Sennheiser HD-477 39.99 retail/$19-something
HD-570 129.99 retail/49.99
PXC-250 129.99 retail/59.99
Bose Triport 149.99 retail/69.99 (maybe 59.99, I don't remember)

Other brands varied, with audiobahn having some phat discounts and less markup on Philips.

What's a shame is, they didn't have many good phones there. Imagine, cost on some HD-650s, RS-1s, or a nice amp

Anyways, I hope this helps!

 

[Steve999]

I think the marginal cost of production (the cost to produce each additional unit) would be shockingly low. Of course this doesn't include R&D costs and advertising and whatnot. However, considering you can get a fricking 20-inch color TV for $100, I would guess that it only takes pennies (less than 10 cents) on each dollar charged to actually make a good pair of headphones. I think it's got to be a huge profit item for the manufacturers, but it's what the market will bear, so I guess that's that.

 

[wallijonn]

like everything else, it costs about 10% of the actual cost.

 

[lan]

Quote:

Originally posted by wallijonn like everything else, it costs about 10% of the actual cost.

That still would make the R10s more $ that most headphones haha.

Since there are so many "middle men" I would imagine the price does get jacked up.

 

[Mr.Sneis]

well I think most of the money we pay goes to r&d and dealer markups. It'd be kinda cool to find out how much retailers are actually paying per item, but I guess that's a trade secret.

 

[RulyS]

My bet is that 50% is the wholesale price at Sennheiser.

 

[Canman]

Quote:

Originally posted by RulyS My bet is that 50% is the wholesale price at Sennheiser.

That's probably in line with what retailers pay for the headphones, although this will vary depending on where the product is in its life cycle. Older designs will be discounted further, especially if there are replacement models.

You can probably estimate the parts cost of a product but the actual profit margin on any product will vary wildly from company to company. It would be pure speculation to say otherwise.

In general, a manufacturing company will make more money off the product than a distributor since the distributor adds little value to the product. It also has more potential to profit from the product since retailers have tough price competition however I would guess that audio products may act differently in the marketplace, giving most of the profit per item to the retailers.

 

[RulyS]

Well said Canman. Something tells me you got an A in your college economics class.

 

[jefemeister]

Quote:

Originally posted by Canman In general, a manufacturing company will make more money off the product than a distributor since the distributor adds little value to the product.

I'm not so sure. Without distribution a product is worthless.

 

[markl]

Materials cost is only a tiny fraction of the real cost of anything you buy, oftentimes it's actually the smallest factor in the totality that determines cost. There's so much involved in bringing a product to market, there's all the development costs, the costs of the engineers that design and test the products, the cost of getting all the required governemnt approvals around the world to be able to sell that product in their markets, the cost of all your facilities where products are made, and where your sales/marketing/support/human resources etc. organizations are housed, the cost of said groups to your overhead, the costs of advertising, marketing, packaging, distribution, and... OK, get the picture?

 

[danaa]

Don't know about headphones, but I do know the markup on speakers can be ridiculously high, especially when you take into account dealer and distributor costs. That's why I buy all my speakers from online only companies. I have yet to hear any speakers which I prefer over mine for twice, and sometimes more than twice, the cost. A lot of people who really know audio equipment have the same opinion with regard to the price spent/preformance value ratio in online only products. Haven't heard of any online only companies for headphones though.