Why Some Loudspeaker Designs Will Always Cost More than Others

I'll open with a leading question - what are the reasons that one loudspeaker costs $10,000 while another costs $100,000? The obvious answer is that the $100,000 loudspeaker costs more to produce. But why it costs more is the real question... 

AR-prodcosts2a.pngUsually when audiophiles are discussing final costs the old six-to-one costs-to-final price equation gets trotted out. And for some kinds of products, such as electronics, this formula may even still be valid, but for loudspeakers? Not really...the next question is "why not?" 

Parts are not the only expense rolled into the category of "production costs." The other expenses include costs of labor, costs of facilities, costs of advertising, and the ancillary costs involved in keeping a businesses' doors open. Let's look at the costs of labor first... 

The cost of labor will vary drastically depending on several factors. The first factor is where is the labor located. An hour of a skilled labor's time in China is far less expensive than in Europe or the United States. So, obviously those overall labor costs will be less in many Asian countries for the same quality of work.

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The second, and equally important aspect in the costs of labor is how much labor, or how many hours are involved in the production of the finished loudspeaker. A large "box" loudspeaker that has a multi-layer piano-finish mirror-gloss will require far more hours to build than one that has a one-coat textured finish, for instance. Also, how long the production process takes plays into final costs - if a loudspeaker requires two months to complete, that means the manufacturer needs the space in their factory for the loudspeaker during that time which involves rent costs. 

This brings us to the alternate way that quite a few loudspeaker companies price their products - based on production... 

By this I mean that to determine a price the manufacturer must decide how many pairs of loudspeakers they plan to produce, figure out the total factory expenses and divide that number by the production total to determine their aggregate costs for each pair of loudspeakers. That total can end up being far more than merely the costs of parts. 

AR-prodcosts3a.jpgSo, in theory, two loudspeakers that have the same parts costs can end up being priced at very different final MSRPs. If one speaker can be produced in one single day, from parts to finished goods, while another requires two months, (not uncommon for parts to finished goods) the second loudspeaker will be quite a bit more expensive than the first example. It has to be... 

This is why the "superstar" loudspeakers from U.S. based firms including Magico, YG, and Wilson, all cost so much - they are all designs that require extended production times by highly skilled workers to become finished products. 

Is it even possible to make high-performance loudspeakers built in the United States that don't have at least six figures attached to their price tags? Yes, but only if they can be made very quickly. 

AR-prodcosts2a.jpgI know of one United States loudspeaker manufacturer who can assemble one of their flagship designs in one day - Spatial Audio. And their prices reflect that. But there are trade-offs to this - customers only have a few (if any) color and finish options. Also, since the Spatial open baffle designs require far less finishing and curing times because they do not have multi-coatings of paint to apply to a large box; less production time means lower labor and storage costs, and a lower final MSRP. 

So, the next time you look at the cost of a loudspeaker, consider how much the design and finishing of that loudspeaker will impact the final cost. If the only thing that will keep you happy is a large, impeccably-finished, full-range floor-standing "box" loudspeaker, and it must have been made in the United States or Europe, expect to pay far more than merely 6x parts costs for the privilege ...

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