What makes a $20,000 cd player cost 20,000?

Jsala, I can extrapolate Howard's point to the extreme, i.e. the $20,000 CD player may just be a $500 CD player with a fancy case, some upgraded parts and $10,000 in marketing and overhead.

Perhaps my use of the word "arbitrary" was not correct. I'm sure the manufacturer of a $20,000 CD player has valid reasons for justifying the retail cost. But, I don't believe half the cost goes into marketing and overhead. And, if we're talking about a one man operation, then R&D should be included in the "salary". Anyway, this is not a business course. The only way the price of a $20,000 CD player can be justified is if, as you say, the manufacturer sells only a handful of players a year...and if that's the case, I'd recommend a new business model, because the current one is doomed.

Its simple the 20k product is designed as a statement! They will never generate the high profit margin large quanity sales of this product.. it's used as a design exercise that typically some of this technology becomes less expensive to produce and ends up in lower level products that make for a good value (and more importantly larger volumn for the manufacture)

Look at the Ford GT40, compared to the Mass produced Mustang... you can mod the mustang to be as fast if not faster for less but it will never have the finesse of a product originally designed to excel! A lot of modded mustangs perform worse, break things, etc... as they exceed specs..

I've heard upgraded components that were suppose to sound better because all the cheap parts were replaced with more expensive parts and guess what... it wasn't musical!!!! You can buy on the theory or you can listen and make up your own mind! Some designers actually listen when they design and build things... Case in point (internal silver wiring YUK! or maybe perfect for that dark, rolled off system that has other problems!!!)...

Why is it that Modded players are worth nothing on the used market (especially after 6-12months? Because people are worried about service and reliability for something that was tweaked! Do you look for a stock car when you buy your everyday transportation or for a 4cylinder with a bottle of NOS strapped on?

The bottom line- If you don't understand it, don't buy it! it's america and you have a choice...

I personally can't justify the difference between the 4k player I have and a 10k or 20k player, but that's the value and limits I have set for myself for a digital front end because technology marches on... on the other hand I value and can hear the difference over my 20k Lamm amps versus a pair of digital hand built amps that people rave about on these forums.. What's the difference? Next year a cheaper better digital chip will make the $1000 player better than the $5000 player (DVD players have been doing this about every 6 months), Amplifiers haven't changed much.. I listened to the digital stuff but still perfer Class A sound even with the Heat!

I love the choices we have here in America!

Cytocycle, I buy the concept of the statement piece, but I don't buy the trickle-down-technology theory in the case of the CD player. I maintain all parts installed into CD players are sourced from common electronics suppliers. Yes, some of the parts are more esoteric than others, but a manufacturer selling a handful of $20,000 players simply doesn't have the economy of scale to have proprietary parts manufactured. Now, I would agree with the trickle down theory if Sony was making such a player...and I suppose that the uber expensive Esoteric players fall into this category since they are made by Teac (yes?).

Tvad: I agree that proprietary parts aren't manufactured but the processor you see in a high end player this year you might see in a lower end player next year.. Most of the high end products spend their money building multiple powersupplies and trying to isolate the digital from the analog ...
Economy of scale would also dictate that the high end players are hand assembled due to the limited quantity sold (wouldn't make sense to tool up a factory to kick out 100-500 units..)

Yup...on all accounts.