maverickronin
Headphoneus Supremus
- Joined
- Apr 5, 2010
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The ratio is about right, but not to "parts cost".
It's more like a 1:5 ratio between manufacturing cost and retail price - so that includes all the overheads and labour costs in making the product ans well as the raw parts cost. The raw parts cost can be quite low when compared to this.
The manufacturing cost is:-
Cost of parts
Cost of labour
Cost of building and upkeep
Business Tax and insurance
Power costs (gas and electricity)
IE: everything it costs to to actually make the product before you make any profit.
THEN
You have to add a profit margin
You have to add a Distributor margin
You have to add a dealer margin.
The Dealer margin alone will be 30 - 40% of the retail price for a consumer product (sometimes more - but less for a pro product).
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Interesting thread! Everything I have ever built and sold is at 2 to 3x the cost of parts. I've always been told that's too low. It seems to work but efficiency and maintaining low risk is key.
if you start out at the top of the line you'll never know how good you have it.
But it sounds like you are a small business, building yourself and selling direct.
I assume you have a very low advertising budget and don't employ people.
Do you make these at home and don't bay business rates and all the other stuff that a business working in commercial premises have to do?
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I found this thread enlightening and confirming some of my experiences in listening to source and signal gear that range from mid tier to high-end. My experience has been that one should pay more attention to the quality of the first and last parts in the sound chain, namely the source gear, be it a CD player/DAC or a vinyl rig and the sound reproduction end, e.g., the speakers/headphones. One way of looking at it: this is where one can more readily discern differences between products at various price points and apportion their expenses according to their listening preferences.
There is definitely a point where price and performance approach dimnishing returns with source and sound gear. As for amplification components lying between the two, it has been my experience that the differences are much less noticeable and then for those to whom it matters, it is one's personal idiosyncracy in play. Some people seek high resolution, analytical over warm and forgiving components and others love tubes with the note decays and softer transients for jazz but would not for orchestral works.
This is where the expense in the hobby lies, the upgrading and the tweaking. There are the low-aspirers and then there are the Asperger's types.
Then there are the rich....