The Cost of Cables

JD, excellent post.

It's amazing how people don't factor in actual business costs (rent, etc.), ROI, marketing, salaries for employees, margins for dealers and distributors, etc., not to mention sales volume which has got to pretty insubstantial given the niche market. It's usually a business necessity to rake purchasers of halo products to recoup costs and continue development (as we have seen, technology progresses, those products that do not improve are eventually superseded). At the end of the day, those that afford halo products (don't feel too bad for them, they have the cash) make the technology available to all the rest of us down the line.

Frankly, if it were so cheap to build and market cables why aren't we seeing companies make a superior product to the ultra-expensive cables and then market it at 75% of the cost of the current ultra-expensive crop of cables. That way, it would still be expensive (if you believe that's why people buy certain cables) and protect the company's profit margin but the product would kill the competitors on price with superior performance and the company would clean up.

Jd, as someone who has dealt with you in the past, I purchased speaker cables from you, and as someone who admires your review that you wrote a few years ago on cables, I greatly respect your comments and thank you for taking time to write a lengthy post.

As to your point of why you purchased expensive cables, purchases above 20% of system cost, I don’t argue your reason at all, never have, but rather why these cables had to cost you what they did. (I don’t think this escapes you, but rather you are clarifying something that may be lost by some.)

You mention a $15000 cable by Tara; is it your opinion that possibly a reason for (some) of the high cost is that they are pioneering new ground and it is costly?

Allow me to question some of your costs in starting a new company. Generally someone starting a new company does so at some sacrifice, hopefully temporal, whether it be their time and/or finances. Example, a friend of mine opened a restaurant, he did a lot of labor himself; in this time he was not paying himself $100 an hour (using your example) but rather counted it as part of the cost of starting a business and hoping to reap the rewards down the road, which he has.

You gave a lot of numbers in your cable making scenario; is this to make and sell just one set of cables or can those costs drop dramatically when done on a larger scale?

My sense from your post, correct me if wrong, is that you feel cables are breaking new ground and this costs money. In this thread, I have repeatedly compared cables to the rest of the industry, so in that theme, in your opinion the rest of the industry is not breaking new ground to the level of cable manufactures?

Let me present another angle. A company makes a $300 IC and a $1000 IC, both are “basic” cables, that is, nothing cutting new ground like the Tara cables; the $300 version are copper and the $1000 are silver. This seems plausible in regards to many makes on the market. I’d like to know what makes the $700 difference.

An area that I struggle with, hopefully I can articulate it well. Look at a set of cables, there just doesn’t seem to be much there in comparison to say an amp, CDP, speakers, etc; so how do they do it? A CDP for example, you have to source a transport, DAC chips, electronics, a case, etc., quite a few things cable making doesn’t have to deal with.

This has my head spinning, time to go watch the (re-aired) F1 race. (Don't tell me who won!)

Brian

Brian, I do hope to keep this discussion on track, so I will very briefly comment on the $$$ amounts in my analogy. I used the numbers as an illustration, not a formula. Your friend opened a restaurant and expected to recoup his cost over time. For the sake of argument I put a dollar value to a person’s time, and spread the re-cooped time over two years. The amount could be $50 an hour, and spread out over four years, the point is the same however.

For real life application, I expect a person in the business of audio, which owns his company and feeds his family from the income; $50 would not be worth the effort. Perhaps I am wrong, I am sure my idea of what time is worth is not necessarily accurate, but with attorneys charging $400-500 an hour, and accountants at $300-400 I think $100 was a reasonable number.

Anyway, let us not let the discussion fall to factious numbers. Instead, you asked some very good questions regarding R&D and pushing the level of performance of our equipment. I do not believe cables are the only area advancing; it just happens that cables are the topic here. Cables have however made strides that have resulted in quantum leaps at times, where the components may have been less impressive. The research money and time has gone into power conditioning and cables, because these have been the least understood, and have hardly received any attention until fifteen years ago. They therefore had a lot of ground to make up.

But if we want to look at components, LAMM introduced a new amp at CES this year. It was $250,000. I doubt they expect these to sell too fast, I assume this is more a statement of the time and materials that have gone into pushing the design beyond what was possible before. Wilson Audio has poured copious amounts of money into design of cones, and into resonance research with materials. This has led to new cabinet materials that are completely non resonant, and these materials show up in their $75,000 speakers.

We could find countless examples of multi-hundred thousand dollar components that have pushed the industry to continue to develop. Audio Note for example not only have amps well over $100,000, but they sell quite a few of them! So if the top of the top is $100,000 plus amps, $50,000 pre-amps, $100,000 front ends and $100,000 plus speakers, than the top of the top system must be nearly $500,000. If this is true, and these components represent “The America’s Cup” development, or the F-1 circuit, or… then $100,000 in cables is not out of the range of believability.

I think the problem we quasi audiophiles have is a $5,000 cable is almost in reach, where a $100,000 component is not. It is possible to hear how the best of the best sound in our systems through cables, so we stretch to buy them. Later we are ridiculed for having as much money in cables as we do equipment.

All of this needs to be kept in perspective. To some, money is either spent or used as toilet paper. For others we can get into serious debt trying to chase our passions. I know more than a few people who have taken out large second mortgages to pay for a boat, a car, you name it, is it so crazy to expect some might want to try the best possible in audio too?

Yes it all costs a lot of money, yes the amounts are staggering, but to simply claim it’s all profit and these guys are making a fortune is wrong. This trend is in every passion I know of, why are we so critical? I recommend if the prices do not make sense, then do not pay the price. But please do not criticizes those who what the best they can afford, and please be insightful of how these great advancements have come about.

Jd

Tvad, you had me going, then I look to see who it was. Good one ;-)

Excellent reply Jd.

I think the problem we quasi audiophiles have is a $5,000 cable is almost in reach, where a $100,000 component is not.

Good point and I think there is truth to this.

That said, I continue to struggle with $5000 for "wire", especially if one were to compare it to say a $5000 amp. (Again, I am not denying their performance.)

You have given some very thought provoking responses to this discussion Jd.

Brian

why is there so much of an obsession with the cost of cable ?

consider cable as you would any other expensive object of consumption. if you consider cable "over" priced, don't buy it. why spend so much time and energy on a topic which really is not that important ?

aren't there more significant subjects to discuss ?