The HD800 Pricing: Some thoughts
May 27, 2009 at 2:17 PM Thread Starter Post #1 of 125

mbd2884

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I wonder about how to make the most profit with the HD800 for Sennheiser.

How much do you all think it costs Sennheiser to manufacture the HD800? Now we know it's made of polymer. Granted seems good choice, very hard, durable, and almost not reverberations, good for sound. The drivers will still be about the same using some very nice powerful magnets. The diaphragm coming with new technology that may set the standard for dynamic headphones, very cool. But the material probably still very cheaply made.

So overall, I'm just musing, the HD800 looks like a well designed headphone that can be manufactured at a reasonable price. As it seems Sennheiser learned from the HE90 failure, profit wise.

So they priced it at $1,400 realizing from Head-Fi, Ebay, and other places where headphones are sold, that people have been willing to spend over $1000 for their headphones.

But how many people are REALLY willing to spend that much on headphones.

Now if Sennheiser decided to price the HD800 between $500-600 instead... I wonder in the long run would Sennheiser make more money. If these headphones are truly as good as the reviews have said and they claim. Think of all the HD650 and HD600 and HD580 owners who would say, yeah it's worth the extra $200 and I'll buy it. I mean with HD600 owners, many said, it's not worth it to upgrade to HD650, but with HD800's already famous reputation, I think almost anyone who spent $300 or more on their headphone be willing to upgrade.

Just hypothetical. The few who can afford, and even less, the few willing to spend $1,400. Instead, GIGANTIC, LARGEST, BIGGEST smash hit headphone beating every single headphone in the market for the Cost/Value @ around $500-600 making this not just a headphone affordable, but worth it to so many more listeners to buy!

I wonder....
 
May 27, 2009 at 2:26 PM Post #3 of 125

mbd2884

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The other part is longevity of sales.

So for the HD800 @ $1,400, initially with the craze and hype, you will get the attention of the high rollers and they buy it.

But overtime, how many new Headphone aficionados willing to spend $1,400 be found and accumulated. I think with many headphones that were made before at these prices being limited was for good reason. There just aren't that many people willing to spend that much and doesn't make sense for the company to keep manufacturing the headphone.

Now at $600, I think may be worth it for the long run also. Plenty of new people each year discover HiFi headphones. They start small and do their research. How many be new customers be willing to pay that $600 price each year when they read about this is the "BEST" dynamic headphone with the best technology? Because I think for many, when we hear this is the "BEST" dynamic headphone to date, we drool. But then hear $1,400. We think, who cares at that price, no way. Even if we had that money to spend on headphones, still no thank you. We can enjoy our music plenty with our current setups, thank you. But if we hear $600, how many of us who said no thanks, instead think, hmm what can I do to stretch my budget to buy this?

Lots to think about and start to wonder how Sennheiser came to that price and their thinking.

Are they really looking to make the HD800 for the long term like the HD600/HD650 or is it just going to be another among the Limited Editions that just become myth and folklore? This was asked before and I'm thinking the HD800 was meant for limited edition.

And maybe that's why it went from HD650 to HD800 because Sennheiser has plans for a more modest HD700 for the general public. The HD800 being the showcase of their new technology using the best possible to generate the most attention to their new technology first?

Hmm maybe not.
 
May 27, 2009 at 2:33 PM Post #4 of 125

Blackmore

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I would say, dont wonder, but stop consuming. What Sennheiser makes as an profit isnt interesting to me at all, the price for their products, thats what you have to be interesting in. And if thats to high, read the first line.
 
May 27, 2009 at 2:40 PM Post #5 of 125

mbd2884

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Quote:

Originally Posted by Blackmore /img/forum/go_quote.gif
I would say, dont wonder, but stop consuming. What Sennheiser makes as an profit isnt interesting to me at all, the price for their products, thats what you have to be interesting in. And if thats to high, read the first line.


I think it's interesting. Did Sennheiser's initial polling and testing discover that the number of people willing to spend $500-600 is about the same number as people willing to spend $1,4000 and went for the maximum price?
 
May 27, 2009 at 2:42 PM Post #6 of 125

AmanGeorge

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They may think they can get a decent crop of initial buyers at $1,400 then gradually bring the street price downwards to something more humane - probably not $600 but maybe $800 or so
 
May 27, 2009 at 2:47 PM Post #7 of 125

mbd2884

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Is there somewhere we can find the total number of HD600s and HD650s sold? Because I do think think HD650 owners would probably be willing to spend around $500-600, but not even the $800.
 
May 27, 2009 at 2:50 PM Post #8 of 125

AmanGeorge

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I don't think $800 is that absurd. It's in the same general ballpark as the D7000 and the W5000, and far less than the Ed. 8 or more expensive 'stats.

Although, of course, $800 is just a number I pulled out of thin air - who knows, maybe it will never get down that low (or maybe it will get even lower?).
 
May 27, 2009 at 2:50 PM Post #9 of 125

Blackmore

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I do see one thing at the moment and thats PS1000 vs HD800, so, who is going to win, thats the question...

Quote:

Originally Posted by mbd2884 /img/forum/go_quote.gif
I think it's interesting. Did Sennheiser's initial polling and testing discover that the number of people willing to spend $500-600 is about the same number as people willing to spend $1,4000 and went for the maximum price?


 
May 27, 2009 at 3:07 PM Post #11 of 125

toxic888

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Fewer people would take it as seriously if it were priced lower. Besides, the cost to engineer them is also a factor.

I'd say the biggest reason is because they can get enough people to buy it at $1400; maybe thats the strategy here and the reason why so many flagship phones have come out in the past few months, during these 'hard' times. If they can get a very high net profit and enough people to buy them, why wouldn't they sell them above $1000.
 
May 27, 2009 at 3:09 PM Post #12 of 125

Blackmore

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I think you know very well how to spend such money if you have it, don't you
wink.gif


If I have to trust those very limited HD800 and PS1000 impressions, no way HD800 are going to loose, especially with that pre-order price at the moment. Sennheiser do realise and know very well about 30 days retour policy in US, so, their strategy in Europe is understandable, cos we simply don't have such one. And when you have to pay full bill of EUR 1200 up here, man, its just to high for general use, don't you think? Why general? Cos these aren't limited production and they want to sell it bunch of them, means less profit more quantity, at least in the beginning. This way they simply push the other manufactures to do the same or just stop producing their expensive lines...

Quote:

Originally Posted by AmanGeorge /img/forum/go_quote.gif
Take the $3000 plunge and answer that question, blackmore!


 
May 27, 2009 at 3:13 PM Post #13 of 125

intoart

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Makes sense to me. I bet that for every pair they sell for $1400, they could sell 10 or more for $500-$600 if they are actually as good as they claim (of course, I am highly skeptical about that!)
 
May 27, 2009 at 3:25 PM Post #14 of 125

AmanGeorge

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Sure, but can they sell a few pairs for $1400 now and then more pairs later for less? In that case, they've maximized their profits through effective price discrimination. Especially if as more positive reviews come out from the people who bought them at $1400, people only willing to pay $500-600 start thinking "wow... people say this will be the last pair of headphones I will ever need to buy... maybe I can spend a little more than I originally said was my limit" (this will be deja vu for many of us...)
 
May 27, 2009 at 3:35 PM Post #15 of 125

pabbi1

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The issue at the moment is NOT how many they can sell, but, rather, how many can they make? Over time, as economies of scale kick in, and the engineering costs are amortized down, the price may go down. But, elasticity of demand - at what point does the willing consumer step up?

I'm guessing it is at least another year before 'price maintenence' is even an issue, as demand will continue to increase IFF these live up to the anticipation. And, looking at long term demand for Hd6x0, the trend will be flat for many years to come.

So, if this phone is manufacturing limited to (their estimate) 5000 units per year, does $5m ($1k each) sound as appealing as $7m, given their actual cost is (currently) in the $700 range? Even driving the cost to $500 still yields a $1k street price, with reseller markup.

As a CPA and an Economist, Senn seems to know well what their interests are, and how to meet the market profitably. I also believe they have better economists than all us here, and this has been modeled ad infinitum down to the very last Euro.

Finally, they have similar product experience, with historical demand curves, and there is no reason to believe this product will behave any differently than any others.
 

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