Modern Linestages

Everything is priced at what the manufacturer thinks the market will bear as long as it is sufficiently above costs and a sufficient profit. If it doesn't sell either he lowers the price or goes out of business.

I think 5X parts and labor is the old retail price giving points to the retailer.

Atmasphere,
There are many exceptions to your statement regarding fair market markup.To name a few, Lamm,Kondo,Audio Note UK upper levels,Wavac,Burmester,Magico,Tidal etc. Or are these bad examples?

“Is it not a fair question to ask what prompts a tripling in price for what essentially should be a fairly simple electronic device?"

Some preamps are not simple in design and are SOTA accomplishments that push the whole industry further. The current issue of Stereophile is a great example with the review of the Constellation Altair preamp for $65,000. Please read the review if you get a chance. They have taken some technology spoken about on many Agon threads, including this one, to the next level. Many "experts" say this is perhaps the finest sounding preamp available. It is certainly reasonable to suggest this preamp and others pushing for SOTA performance have obtained it with something other than a simple design. In fact it is also reasonable to say these units outperform some simple units when plugged into many top end systems.

Simple it not the only way to fidelity and I suppose these SOTA units can be found to recreate music better than some of the best simple units available. If you ask First Sound, Pass Labs and others which preamp they make that sounds the best, they will not tell you it is their entry level design or passive they offer. No, they will tell you it is their top of the line active that is their SOTA effort. Is it because they are liars are just want to make more money? The answer is no as they have a passion for audio and design with that passion.

What does it cost to develop a product like the Constellation Altair preamp? I do know this; many a company has gone out of business because they do not understand (fail) to account for all the real costs involved in the sale of their products. Selling a $65,000 preamp will carry with it many needed costs for sales and marketing in addition to R&D and manufacturing.

C osts such as doing all the shows, travel, sales demonstrations, advertising, developing relationships, total media campaigns, advertising agency work, the considerable R&D time and expense and on and on.... I can tell you companies spend millions developing rather simple food products in R&D alone!

I see nothing wrong or evil with all of the marketing and sales costs involved. They are a must if a company expects to bust through and sell a modest number of $65,000 units.

How many $65,000 units do you think they will sell? This is not a volume business opportunity, but rather a very small number of units will be sold and the modest number sold will need to cover the costs mentioned above. So yes the margin made on the sale is and must be very high. The business model dictates this.

There will always be some examples of products priced at SOTA levels that are really a sham that is unfortunately the reality of humans and life. So beware, but to dismiss honest examples of SOTA passion combined with the needed business model is short sighted. Some attempts at SOTA will not be simple and that is both OK and needed as we all strive towards fidelity.

Applause to Charles1dad for actually backing up his convictions by naming names.

At this point I may be talking out of both sides of my mouth but I think it comes down to what the consumer thinks he is paying for. I believe that Atmasphere's comments are correct when the consumer is focused on sonic issues. The consumer has many choices and the competition is fierce. In accord with basic microeconomic theory a manufacturer in this situation would have a hard go if he tries to price his product significantly above the competition. The situation changes radically if sound quality is not a high priority. If the consumer is buying because of, let's call it exclusivity, then the manufacturer has far more leeway in what he can price his product. The consumer has to believe that the product cannot be easily substituted for by another product of equal or better quality. In their mind there is something unique or exclusive about that particular product. If you want to buy the model of car that won the 1962 24 LeMans, that's one thing. If you want to buy the actual Ferrari that won the race, it's a whole other thing.

Based upon the responses to this thread by actual owners of high cost linestage they very clearly state that they purchased based upon sound quality.

I am not familiar with every company you mention, but I suspect Kondo and Audio Note fall into the exclusivity camp. That's not to say these companies aren't making superb products -- it's only to note that there is heavy mystique surrounding them. Magico has clearly moved into the sound quality camp. When they were doing one-off horns they might have be exclusivity sellers, but that's not the case now. Their product line has diversified and they freely admit that their newer, less expensive products are better than what they sold before.

Correction - Absolute Sound has the Constellation Altair preamp review not Stereophile.