I don't think speaker makers are "profiteering." I think it's a very difficult business you have to love to be in. But I am comfortable saying that high end speakers have to sell for around 10x the driver costs to be worth making.
10:1 is the minimum I see for using top quality drivers from OEM makers. That is based on retail cost of drivers. My numbers hold up based on analysis I’ve done from a few brands that I know the drivers for. But let’s take this through how retail works instead.
The ratio can be MUCH higher when the drivers are made in house (Monitor, Focal), or the drivers are bought in bulk or speakers are sold direct.
There are a number of reasons. First of course is that if you buy retail you are at least 3-4 layers away from the driver manufacturer.
- Speaker maker
- Distributor
- Retail store owner
The retail markup is 40%. The speaker / electronics maker doesn’t sell speakers for the cost of manufacture, that’s a zero gain situation. They have to build crossovers, pay for those parts, have cabinets made, etc. All this adds up.
So, a $10k speaker pair in the store sold by the manufacturer for $6k. That is $3k/speaker. Figure they want to make 2:1, they must build for no more than$1,500 a pair. That includes cabinets, crossovers, assembly, testing, not to mention normal business overhead.
So, $750 to put a single speaker out the door. Assume 2/3rds of that is drivers, with the rest going to everything else discussed above. We are at $500/speaker in drivers, and there is not a lot of room for decent crossover parts.
This is why, for the same budget, a DIYer can assemble a speaker with much higher value parts than you can from the retail store. However, this is no guarantee at all that it will sound good. If you need validation from the retail marketplace that your speakers are high-end you’ll never get it.
That’s fine, I’m sitting here listening to $3k speakers I’ve not heard the better of in a very long time. :)
Best,
E
