View Full Version : Component costs
hifi_dave
23-01-2013, 13:28
I'm intrigued to know the cost of top of the range components found in Hi-Fi equipment.
I get Hi-Fi News, Stereophile and HFW every month and looking inside some products which sell for telephone numbers I am constantlt amazed at how little there is inside.
Now, I realise that, occasionally, there might be a custom component or two but how much does a no-holds-barred capacitor, reistor or transformer cost ?
because I'm having trouble understanding the pricing of some of the exotica..:scratch:
We have trouble understanding because, in a lot of cases, the pricing is just plain nonsense. I suppose one of the most sensational examples is Goldmund charging $8900 USD for a *very* minimally touched Pioneer DV-300:
http://lampizator.eu/lampizator/REFERENCES/Goldmund/goldmundizator.html
However, I don't think that component costs are necessarily relevant to the price of the product. For example, LFD products are *extremely* minimal, might use some fancy obsolete components, but what you're really paying for Dr. Richard Bews' decades of experience in obsessive component selection, experimentation and hand craftsmanship.
I think that some specialised or bespoke components will have quite surprising unit costs. For example, if, say, Conrad Johnson specify polystyrene capacitors and there is only one international supplier of the right type of polystyrene film and a capacitor manufacturer needs to make them in low volume batches by hand (as the volumes don't justify full tooling) then the component cost could be huge (>$100).
You then need to factor in the usual 10:1 ratio between your BoM and manufacturing/distribution costs and the wholesale price. The retailer will need to take margin on top of that. You also need to consider how to price your intellectual property, take into account R&D costs and the low volumes to amortise them and you have some idea of why we have the sort of 'high-end' industry pricing that we do. Even so, I can't understand why products containing bespoke components often cost twice as much as they did 10 years ago, adjusted for inflation. There is clearly an element of knowing what your target market will bear at work here.
This is, at least, partially justifiable. What companies like Goldmund do effectively taking a white-labelled OEM product, slapping their name badge and a nice front panel on for 10x the price is extremely cynical and completely unjustified. It would probably also be unjustified even if they were laying out their own board based on standard ICs - where is the material cost or R&D cost to justify that?
hoopsontoast
23-01-2013, 15:21
Supply, demand, production volume and R&D.
Also exotica is low volume / high demand so they price it at what they can sell it for. At the end of the day, they have to make money, they have people to pay etc.
If something is made by one person over a period of a week using bespoke components, the cost goes up.
If its made all on printed circuit boards by an army of people and takes an hour to assemble the cost goes down.
Simples.
However, I don't think that component costs are necessarily relevant to the price of the product. For example, LFD products are *extremely* minimal, might use some fancy obsolete components, but what you're really paying for Dr. Richard Bews' decades of experience in obsessive component selection, experimentation and hand craftsmanship.
I was about to post then saw this, I was pretty much going to say the same but throw in the Croft name. There doesn't appear to be a lot in there, but you know how good it sounds. Now putting a Croft/whatever design into mass production is quite another matter I dare say !
I suppose the bottom line is are you happy with the sound you have for the money you've spent ?
Interesting post/thread Dave. You can certainly throw some serious money about in this hobby (is hobby a sufficient word ? Obsession !). Having said this I understand you're more likely talking about really high entry fees for gear in the many thousands of pounds.
johnwhit
23-01-2013, 15:36
We have trouble understanding because, in a lot of cases, the pricing is just plain nonsense. I suppose one of the most sensational examples is Goldmund charging $8900 USD for a *very* minimally touched Pioneer DV-300:
http://lampizator.eu/lampizator/REFERENCES/Goldmund/goldmundizator.html
However, I don't think that component costs are necessarily relevant to the price of the product. For example, LFD products are *extremely* minimal, might use some fancy obsolete components, but what you're really paying for Dr. Richard Bews' decades of experience in obsessive component selection, experimentation and hand craftsmanship.
Most high end DVD players started out as Pioneer units in the early days. IIRC
the 757 was a popular choice for modifying.
John
hifi_dave
23-01-2013, 16:34
A few years back, when I had my shop in St.Albans, we sold a fair amount of what I would call " high end " with Levinson starting a £5K a piece, up to £35K for a pair of mono-blocks. Revel Ultima speakers went up to £18K or so and similarly for Martin Logan, Focal etc, etc. Turntables at £5K, cartridges at up to £2K and so on.
To my mind, that was and still is " high end " prices but flicking through my monthly mags and these prices are now " mid " prices when speakers at £200K, monos at £200K, turntables at £60K (plus arm) and cartridges appear at £6-7K.
Lookimg inside some of these products and allowing for 'design and development', casework etc, the component count adds up to a tiny fraction of the total price. I used to have an idea of component costs but am a bit out of date now and would really like to have some idea when scanning the mags.
Haselsh1
23-01-2013, 17:14
It is my understanding from being in hi-fi trade that most of the cost of a piece of kit goes to the retailer in that magic word 'margin'. So what is the true value of high end audio...?
hifi_dave
23-01-2013, 17:18
Hardly " most of the cost " goes to the dealer. The manufacturer often times the cost price by 10 to make the trade price. If there is a distributor in the chain, he will add 50% or so.
What I want to know is the cost of 'top end' components.
Hardly " most of the cost " goes to the dealer. The manufacturer often times the cost price by 10 to make the trade price. If there is a distributor in the chain, he will add 50% or so.
What I want to know is the cost of 'top end' components.
IIRC, and it is 35+ years since I worked in the business, the most expensive components in a product were the instruction manual, power supply and enclosure. The PCB can be dear if the production quantity is low, too.
FWIW I am a mechanical engineer and have designed a lot of low volume production items (racing cars). A friend asked me to get a quote for getting a CNC machined case made for a small run of high end pre-amps. He wanted a fully machined item with no visible fastenings, not a folded steel box with ally faceplate bolted on.
The manufacturing and assembly cost for the enclosure in the quantities predicted, 20 off, was around £6000 each.
The manufacturing quality reference was, amusingly given earlier posts, to be as good as Goldmund...
Made like a Krell type of enclosure reduced the price to under a grand, but he thought he wouldn't then be able to sell them to his target market and dropped the product
FWIW when I worked for Garrard the biggest margin was the dealers, second biggest the wholesaler and smallest was Garrard - which surprised me considering the relative levels of investment, employees and risk.
A few years back, when I had my shop in St.Albans, we sold a fair amount of what I would call " high end " with Levinson starting a £5K a piece, up to £35K for a pair of mono-blocks. Revel Ultima speakers went up to £18K or so and similarly for Martin Logan, Focal etc, etc. Turntables at £5K, cartridges at up to £2K and so on.
To my mind, that was and still is " high end " prices but flicking through my monthly mags and these prices are now " mid " prices when speakers at £200K, monos at £200K, turntables at £60K (plus arm) and cartridges appear at £6-7K.
Lookimg inside some of these products and allowing for 'design and development', casework etc, the component count adds up to a tiny fraction of the total price. I used to have an idea of component costs but am a bit out of date now and would really like to have some idea when scanning the mags.
I think a lot of what you quote is just snob appeal. Plenty of customers assume anything more expensive is better, plus the bragging about the cost. Some of the "high-end" makers have more than trebled their prices for the same stuff possibly only for this reason.
The most absurd IMHO is the price charged for pickup cartridges, next arms, next turntables.
It seems to me to be more of a fashion business than before, with appearance being the most important feature of a turntable. I have seen some very expensive ones which will be adequate but are clearly more aimed at eye than ear.
I do worry when I see a US amp manufacturer introducing a Reference model, supposedly state of the art, and then doing an SE upgrade for it regularly costing around $1500 or so to make for an audible "improvement" and then doing another and another... Just how "bad" was the original, since a pair of well supplied op-amps will do a perfectly transparent job of buffering a signal to very wide bandwidth these days with little need for loads of Clarity Caps, or whatever the current fad is.
In the world that these people live in, Croft gear isn't even "entry level," despite its equal or superior performance. Why? because it doesn't look the part, and I suspect this latter aspect is where most of the costs go in the Top End confectionary such as Dave aludes to.
F1eng, pretty similar model in other businesses as well. iSainsbury as a dealer fronting the customer has the biggest margin vs Cadbury as a chocolate manufacturer and intellectual property holder. But the IP holder would still be better off than the farmer growing cocoa in Ghana.
I know for a fact that one major hi-fi manufacturer would sell something to a dealer at around 55% RRP. This was a unit retailing at £4.5K, leaving £2.5k profit minus any discount.
I make no criticism of any dealer whose overheads must be significant and whose expertise and time is valuable. In fact I doff my cap to any such retailer, especially during these times. I just want to throw this in the mix. If it weren't for dealers there'd be nothing down the chain 2nd hand. Fair play to them/you Dave.
Dealer margins on electronics typically were 30%, plus another 5% and possibly another 5% depending on how much is ordered and how quickly payment is made. Some mass-market speaker manufacturers offer rather more than this to the dealer chains, who work heavily on commission "tiers" depending on the margins offered. Cables and accessories usually offer the largest margins and these can be used either as freebies, or to claw back some profit on a discounted system.
hifi_dave
23-01-2013, 19:52
The chains make that on the highly touted gear. It gets great reviews, the chains make 60% and everyone is happy. Specialist, independant dealers make nothing like that. Unfortunately.
I know for a fact that one major hi-fi manufacturer would sell something to a dealer at around 55% RRP. This was a unit retailing at £4.5K, leaving £2.5k profit minus any discount.
I make no criticism of any dealer whose overheads must be significant and whose expertise and time is valuable. In fact I doff my cap to any such retailer, especially during these times. I just want to throw this in the mix. If it weren't for dealers there'd be nothing down the chain 2nd hand. Fair play to them/you Dave.
Mr Kipling
23-01-2013, 21:21
Well, Dave, not exactly top-of-the-range now, but 30 years ago (God. . . That long ago. . . ) they were more so and Vishay resistors cost £5 each and today cost about £4.20. Holcos, a cheaper item, used to cost 99p each and can be had for 25p now.
I've really no idea how the price of stuff you're referring to is arrived at.
daytona600
23-01-2013, 23:18
new $115.000 boulder amp with a five quid 32a 230v
BS4343 ceenorm connector as fitted to a fifty quid site transformer on small honda genny
Dave,
Just to give some indication of 'normal' quality parts, ROHS compliant from the likes of Panasonic, Wima, Vishay of the type found in yer typical box of Brit SS electronics:
- 1% metal film 0.6w resistors - 5p
- Small electro caps - 5p
- Large electro caps eg 10,000uf - £10
- Small film caps £2
- Large film caps £2-£5
- Op amps 50p-£2
- 500va toroidal - £50
- 60VA toroidal £15
- standard quality pots and switches £2-3
- Good Alps quality pot/switch £10
- 3 pin regulator - £1
- Small signal transistor/diode - 20p
- 100x100mm double sided screen printed pcb - £500 for 100 boards - ish
Those are typical for small bulk prices - typically packs of 10/20 for the small parts. Obviously less if bought in large quantities.
In amps and dacs the power transformer is almost certainly the most expensive component by some margin.
Rob
You mean 5p for a dozen resistors or so? Bought in bulk or on a drum, they really are ten a penny and I'm sure Clarity cap and expensive relatives would do a good bulk order too in quantity.
Ricardo once said that it was wrong to deny rich people the chance to buy up from what was then the UK top system (Linn/Naim) and I suppose in a way he's right. Looking at Ricardo's "new" HiFi Salon (the revamped KJ W1), I can see that I dare not soil my shoes ever setting foot in such a place now. At least Walrus are just around the corner for the likes of me :lol:
Hi Dave,
No, that's each for good 1% parts in packs of 10-50 from Vishay and the like sourced in UK.
You can of course go much cheaper sourcing lower grade parts from China.
Ricardo owns KJ W1?
Well I never.....but it does look very snazzy.
Rob
Hi Dave,
Ricardo once said that it was wrong to deny rich people the chance to buy up from what was then the UK top system (Linn/Naim) and I suppose in a way he's right.
Could you clarify what you mean by that? Sorry, for me, it's rather vague.
As for "snazzy" looking dealerships, sorry, but I'd rather buy my gear from someone I knew was a skilled audio designer (and who was in the business for the right reasons), selling his kit out of a bus shelter, than paying a ridiculous mark-up for 'hi-fi jewellery', simply because it's being sold inside a glorified tart's boudoir!
That sort of shit impresses me not one iota - and I have the funds to buy a lot of the overpriced 'badge-fi' that KJ sell... ;)
It's bullshit, and precisely what is wrong with the high-end audio industry today: pandering to the badge snobs, instead of addressing the needs of genuine enthusiasts!!
Marco.
In the dark days of the 1980's, Linn and naim was the be all and end all for most HiFi people in the UK, any mention of genuine UK or imported alternatives was dismissed out of hand by much of the popular UK press.
I remember Ricardo wanting our London store to sell his product portfolio and at least some of the staff were keen, since there were a number of clients who'd gone the Linn/Naim six-pack Isobarik route and were hungry for more. "we" were able to get the Naim-centric sales director to allow Koetsu and Sonus Faber, but never ARC or Krell, let alone Aogee speakers, despite us being well able to install - and service - them seamlessly to an extremely high standard having dedicated experienced staff for just that purpose.
In a trade article, Ricardo seemed to feel that many better-off audio enthusiasts felt strangled by the Linn/Naim dealers, these doing well at the time and becoming lazier fat-cats as the 80's went on. My feeling is that the introduction of the Linn amp in 1985 and the eventual dealer-purge that Linn made in the early 90's (I think it was) opened up the market in the UK I feel, giving other manufacturers. I can guarantee that some of the long standing clients at our London Linn/Naim store abandoned "us" by the late 80's and went elsewhere for their upgrades - such short-sightedness and the beginning of the end for this particular company, which couldn't survive for many years in that locality on Naim and B&O alone - and didn't! :(
Ah, I get what you're on about now, daftee! Sometimes, you take it for granted that everyone here is as au fait as you about what happened in the industry in the old days... We're not all that ancient, you know! :eyebrows:
;)
Marco.
hifi_dave
24-01-2013, 16:57
Dave,
Just to give some indication of 'normal' quality parts, ROHS compliant from the likes of Panasonic, Wima, Vishay of the type found in yer typical box of Brit SS electronics:
- 1% metal film 0.6w resistors - 5p
- Small electro caps - 5p
- Large electro caps eg 10,000uf - £10
- Small film caps £2
- Large film caps £2-£5
- Op amps 50p-£2
- 500va toroidal - £50
- 60VA toroidal £15
- standard quality pots and switches £2-3
- Good Alps quality pot/switch £10
- 3 pin regulator - £1
- Small signal transistor/diode - 20p
- 100x100mm double sided screen printed pcb - £500 for 100 boards - ish
Those are typical for small bulk prices - typically packs of 10/20 for the small parts. Obviously less if bought in large quantities.
In amps and dacs the power transformer is almost certainly the most expensive component by some margin.
Rob
Pretty much the figures I had in mind but what about 'funky' parts like Clarity caps and Alps Black, Blue pots etc ?
Even taking out profit, tax, shipping etc, I am still struggling to understand why some amps are tens of thousands of Pounds. When you look inside some of the US esoterica, they could sell for a few grand and everyone would still be happy but £100K and more..:eek:
What tipped me over the edge was a friend having his phono stage upgraded with a handful of caps and some silver wiring for the princely sum of £2K direct from the manufacturer.
Even taking out profit, tax, shipping etc, I am still struggling to understand why some amps are tens of thousands of Pounds.
Greed for gold, Dave, on behalf of certain 'high-end' manufacturers pandering to idiots, who buy hi-fi equipment more on looks and 'prestige value', than on sonic performance.
Marco.
I'm told that in Hong Kong, the already UK expensive Tron 7 phono stage at the thick end of £3K is beer-budget over there, since "serious" phono stages there cost £12K apparently. The Tron is likely to be at least as good as any of them and price apart, I love what it does on the occasions when I've heard it.
Mr Kipling
24-01-2013, 20:27
Alp's Blue pot can be had for as little as £10. Their "Black Beauty" (RK40) was discontinued some time ago, apparently. Switched attenuators cost more with Audio Note's being about £250.
If people have more money than sense, (and some obviously do) others will see it as an opportunity to take advantage of. You only have to view Ebay to see this.
What's wrong with Dact attenuators - there's another US one of good quality I remember (but can't remember the name - blast :() - Goldpoint? These aren't totally silly, under £150 for a stereo one although the latter ones have to be made by the end user of say 500K is needed.
My HH amp has some well used Noble attenuators on. Still working fine after twenty plus years of heavy use in a broadcast editing suite, the only sign of wear is the missing decals on the front panel around them and maybe there's a coupling cap or two needing replacement due to noise some days when the pots are adjusted.
I'm told that in Hong Kong, the already UK expensive Tron 7 phono stage at the thick end of £3K is beer-budget over there, since "serious" phono stages there cost £12K apparently. The Tron is likely to be at least as good as any of them and price apart, I love what it does on the occasions when I've heard it.
Can't comment on the phono stage, but I had a good listen to the Tron preamp recently in a friend's system. All I can say is that it wasn't that special, and was certainly outperformed by my modded Croft and Anthony TD's Soul Mate!
Marco.
What's wrong with Dact attenuators - there's another US one of good quality I remember (but can't remember the name - blast :() - Goldpoint? These aren't totally silly, under £150 for a stereo one...
I use a DACT stepped attenuator on my modded Croft, with superb results. Basically, it's negative impact on the music signal is minimal, which is all one can ask from such a component.
It's certainly better than the Alps Black it replaced, although the Alps carbon film ones, used on the Croft 25RS, appear to be excellent and every bit as good as the DACT :)
Ian and I are having some fun at the moment with the 25RS. The big 'shoot-out' between it and my 'race-tuned' Charisma is tomorrow ;)
Marco.
There might be some more factors that can make the cost for a component very high: 1) A research team has been putting hours in developing the product to get out the highest potential. This will be added to the component cost. 2) Handmade products that need several people for many hours to complete it will yield a higher cost, like a handmade acoustic guitar (of which I have some), and 3) The product has a long production time and is produced in low number because of pt. 2.
Pretty much the figures I had in mind but what about 'funky' parts like Clarity caps and Alps Black, Blue pots etc ?
Even taking out profit, tax, shipping etc, I am still struggling to understand why some amps are tens of thousands of Pounds. When you look inside some of the US esoterica, they could sell for a few grand and everyone would still be happy but £100K and more..:eek:
What tipped me over the edge was a friend having his phono stage upgraded with a handful of caps and some silver wiring for the princely sum of £2K direct from the manufacturer.
If I rebuilt my tube phono stage with Mudorf electrolytics, AN PIO and Clarity film caps - I could probably be looking at £300.
Arguably poorer performance than £50 spent on parts from RS though.
Look to Croft for a perfect example of how to do it.
The cash goes into the stuff which really matters (the transformers and tubes) with good quality but non boutique resistors and caps selling for silly money. At least thats what I saw when I last peered into one.
Rob
That's been my experence with my DIY amps,I have always used motor start caps in the power supply and. Maplins resistors, but spent money on the very best valves, transformers, coupling caps etc. I think it the right way for me, I'm not saying that there is not a difference by using say expensive resistors, it just that when I've tried, the difference was so slight say compared to getting the best of what I consider the important parts.
In my experience the best way i've found to improve performance in my amps, is to use less components in the signal path, but there is a fine balance, as parts and components seem to work like a sponge, soaking up some of the sound quality as the signal passes through......
Resistors I've yet to play about with, as I don't feel that I need to, given how happy I am with the sound of, for example, my heavily-modded Croft preamp (the item in my system, out with of my T/T, I've tweaked the most), which already uses good quality metal-film resistors.
However, experience tells me that there are definitely fundamental sonic gains to be had by fitting what some may call 'boutique' components, available from the likes of Hi-Fi Collective, *BUT* what matters most is implementation and synergy...
Both Rob and you may like to read my post here on the subject: http://theartofsound.net/forum/showpost.php?p=405457&postcount=30
:)
Marco.
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