What makes a speaker thousands more...

Generally speaking, more expensive gear does cost more to build. Better quality components are used, more care in assembly and test, etc..From what I understand in talking to several specialty audio customers of mine (I sell semiconductors for a living) the retail price is normally 5 times the actual manufacturing cost. Part of what you're paying for is the research and development time, often years of effort, before the product ever appears on the market. Limited production volumes mean there's rarely economy of scale in specialty audio, and of course a need for the designer (and distributor, and retailer) to make living means this stuff ain't cheap. If you're looking for the biggest bang for the buck, drop down a model or two in the manufacturer's line up and benefit from the trickle-down effect. Jeff

Refinement, better drivers, Better bracing, less resonance,
better sound dispersion, better cabinet construction, nicer finish, in some cases more R&D so you have better driver matching and better coherence. I would say refinement is the most common benefit. The cost vs value is not exponential.
Like cars.. most will get you there.. but some make it exciting and fun along the way..
Mike

One note, I am not submitting this question as a novice, I have a decent system IMO. There are a lot of people on here with much more knowledge than I, not to mention those on the "inside", such as Jeff who mentioned that he supplies parts.

I was curious if the percentage of price increase is do to more expensive parts, R&D etc. I know that they generally are using more expensive parts, BUT, is all the cost reflected in that? Or, do they tack on extra, well, just because it's "better"?

Jeff's post is excellent. One thing I'll add, based on the experience of friends of mine who build speakers, is that the cabinets are a huge portion of the cost of speakers, both the enclosure itself and the veneers. As you get into speakers with superior bass response and non-resonant enclosures, the size of the enclosures and the bracing, etc. grow, and the price shoots up dramatically as a consequence. I think that less goes into internal parts than you'd think, unless the speaker manufacturer is willing to go a cost-no-object route.