Anybody tired of inflation yet? I sure as hell am, and I bet you are, too. I refinanced my home-equity loan to help get FutureAudiophile.com funded and off the ground. Less than a year later, the cost of the interest on the HELOC loan is over $1,100 more than it was—and that’s just the bank’s interest-rate increases. Ouch. Luxury hotel rooms in Southern California that for 20 years were priced seasonally between, say, $459 and $659 per night now range anywhere from $1,750 to $2,000 per night … plus tax, and resort fees, and $55-per-night parking. You can forget about taking that trip.
The inflationary pressures on nearly every aspect of the economy have slowed in recent months, but prices are still so high that, in many cases, companies must be profiteering because they can get away with it. Today, after a roughly four-mile walk by the beach, I decided to treat myself to a large iced tea and two hash browns from McDonalds. It cost $7.50. Seriously, what is the fixed cost for water, a few tea bags, a cup, and a straw—even factoring in $20-per-hour labor? Not $2.50 for a hash brown or an iced tea. Sorry.
Wanna know the solution to gross profiteering? It is a two-letter word that starts with N and ends with O.
The good news is, nobody is forcing you to buy anything today—excluding products like life-saving pharmaceuticals and commodities that you simply can’t live without. My fat ass doesn’t need a hashbrown from McDonalds, but I was hungry and Jonesing for some caffeine. Still, I should have just kept on driving. I could have said no, but I rewarded McDonalds by paying its absurdly bloated prices … and now I am a little bit bitter.
A few months back, a legendary PR agent in the audio industry told me to “pick any electronics you want for review and we will send it to you.” I looked at some of their products and selected a stereo preamp and power amp designed by an also-legendary audiophile designer with ties running back to the early days of Mark Levinson. What I didn’t look at was the price of those products. The Class-AB amplifier was $10,000. Before COVID, it was $5,000. OMG. I quickly retracted my request. At $5,000, the amp was a solid value; but at $10,000, it had to compete with a whole world of much better, much more compelling products. But that’s inflation, and I get it. Shipping costs, manufacturing inefficiencies, chips, labor, massive dealer profit margins, and so much more factor into the price of audiophile goods.
The Mother’s Day Brunch at my country club here in Southern California is something to behold. I’ll never forget watching my wife and mother-in-law talking with fellow (social) member Tom Hanks (as nice a guy as you think he is and THEN some). In the past, I would invite our close, personal friends and their families to attend this buffet brunch that features every exotic food you can dream of. The price pre-COVID was about $55 per head. Today, other nearby social clubs charge $70 to $75 per head (which is up significantly over their past rates), and my club charges $170 per head! There is no way on God’s green earth that any of the adults in my family could eat the amount of food required to justify that price. We ended up dining at a restaurant in Santa Monica Canyon, and it was absolutely fantastic. Fun drinks for the moms. Red and green chilaquiles. Breakfast nachos that got eaten up in mere minutes. Brunch for six was $220, including a 25 percent tip. We had a great time, and I saved easily $500 by saying “no” to the new prices.
The word NO is a powerful statement.
Why should any company stop raising prices when demand says that people will keep paying? I’m a capitalist at heart, so I get it. But I don’t have to be part of everybody’s crazy price gouging, and neither do you. Never forget that you hold the power. You vote with your wallet, and you can send a message.
Yes, today’s audiophile world is clouded with absurdly high-priced gear at every turn, but there are also great values to be found. Unless you’re a Russian Oligarch, do you really need $400,000 speakers to be happy with your music playback system? Likely not. The rise of Chi-Fi has upped the value factor, and there are other brands delivering high value that aren’t Chinese OEMs like Topping, FiiO, S.M.S.L and others. Younger consumers, even when they have the money to spend, put such a high premium on value that they gravitate toward brands like Schiit, SVS, NAD, Monoprice, and the like.
Concepts like esoterica, scarcity, expensive labor, and beyond-insane build costs make for cool audiophile gear, but they don’t make for high value. And you don’t have to buy any audiophile product unless you want to. “No” is a perfectly reasonable answer if you think the value isn’t there.
2023 might be a year where we all continue to suffer from the effects of inflation, but we’ve got options and power. Put old stereotypes aside and focus on fact and science, and you will be led to the best values in the audiophile world. Some of the best values may still be expensive overall (think: a Bricasti product, which is a fraction of the cost of the uber-high-end gear and often equal or better in terms of performance), while others may be highly affordable. But they are all worth your consideration.
It may not always feel like it, but at the end of the day, the consumer (aka: YOU) always wins. You control the game. You control the price. Enjoy the power, my friends. Money managers and friends who are high up in the world of finance seem to think that The Fed is done raising rates for the rest of the year. Let’s hope that’s true, but we don’t control The Fed. We do control our spending, and that is the special sauce needed to deal with inflation and especially price gouging.
What are some of the worst examples of price gouging that you’ve seen in your world? Where have you found specific value, both in audio world and outside of the audio world? What have you said NO to recently? We want to hear from you in the comments below. Post away!!!
“Yes!” to this article. “No!!!” to inflated high-end prices.
Today I reached within 3.5 pounds of my “modern low” in weight which is really great.
I treated myself to a big iced-tea at McDonalds and a hash brown. (no meal) and when the got past the drive-through menu area I realized that I paid $3.29 for a F**ING HASH BROWN.
This past weekend, my family and I were in Downtown LA. Long story but we needed to kill about 45 minutes so we stopped in this FANCY-ASS Italian bakery. I got an iced tea again. $6. F-ME…
I’ve had it with this. SAY NO. Drink water.
Earlier in the year, speaker prices of some models (Wharfedale Linton) jumped 25% at one time. Inflation was bad, even worse than now, but come on, a 25% increase in one day is ridiculous. I said “no” and now I’m considering some better, but more expensive speakers, the JBL L100 Classic, which is currently on “special” till the end of August. The kicker is a newer L100 model that will be even better (better crossover, better bass driver) will be out soon, but it will be at a premium price. I think I could be satisfied with the current model and be very happy.
Yes to no…agreed. What’s even worse is the used high-end market or even the mid fi market!!! I’ve seen prices twice that of the original retail!!!! Heresy 1’s are being sold between $700 and $1000!!!! That’s crazy! Don’t even try going to thrift stores either, the first thing they do is look the new product up and price their older product close to retail! Gross profiteering is right, company profits lost during COVID are trying to make it all back and more in one fell swoop!
Trift stores are making the most of Millennials trying to buy vinyl and jacking the prices on worn-ass records on our younger listeners.
The solution is to STOP PAYING FOR IT. Just Say No… (like Nancy Reagan) to overpriced stuff be it a Gordon Lightfoot record or my $3.29 McDonald’s hash brown.
Labor, parts (chips especially) and shipping are all up big-time.
Inflation is up 3% this year versus almost 10% last – I agree with you 25% seems above the level needed but who knows. Perhaps the speakers weren’t priced right in the first place.
You know Jerry, your right. Well put.
Jim – I need to you send this comment to my wife!!! 🙂
And F-McDonalds for $3.29 hash browns. I am not paying for that. I am just not.
Rick Caruso, the billionaire developer here in LA, owns a swanky hotel by the beach and 101 freeway in Monticito (maybe the nicest place in the US. Where Oprah lives etc…) and for a mere $2,000 per night you can have a 180 degree view AWAY FROM THE OCEAN thus allowing you to see nothing but the AMTRAK train go by. $2,000 per night, plus resort fee, plus parking. Plus-plus-plus. Too much $$$. We won’t go.
Before all of the changes at Parasound with new ownership, I was offered a pile of their gear. I picked out a John Curl amp and preamp but then realized in the three years of my non-compete that the amp was not $5,000 – it was $10,000. Nope. Put that right back.
Energy Independence was the solution before we turned our back on it! Price gouging has nothing to do with businesses trying to make up for losses during covid! Manufacturers, retailers, small business all have one thing in common that’s forcing them to raise prices and that’s energy! Thanks to the Weekend at Bernie’s crew for taking over our government and turning their back on energy Independence.
Ray,
You know the United States is the number one producer of natural gas, a leader in green technology, electric cars etc…
Respectfully, the audiophile industry follows its own rules about power consumption that are very antiquated. For example, a Class-A amp pulls the MAXIUM POWER from the wall to make sound which actually is notable on one’s electric bill. Believed tube amps use 80% of their power for HEAT – not sound. This all comes when there are products like GaN amps that are 94 percent efficent.
Simply put, we don’t have guardrails like Energy Star that the video, computer and other Consumer Electronics world’s deal with. Perhaps we could use them?
In the end, a factory in the US making high end audio isn’t pricing its products based on energy. They are basing their costs much more on the cost of chips, metal, labor and shipping. But in reality – too man audio companies (I’ve heard this directly) are just trying to rip off as many (mostly Boomers) as they can for as long as they can by pricing products for “what people will pay” versus real world/fair margins.
What do you think a fair profit is for a manufacturer? Remember, if you sell through a dealer network, then they have to make room for them, in the profit model.
Every business I’ve worked with can not make it work on 35% margin. Margin is calculated, by taking your cost, divide it by the opposite of your goal. Example:
Cost – $400
Margin – $400 divided by .65
Price – $615
So, most companies I’ve been around, not just the audio industry, works with a margin around 75% or higher.
Cost – $400
Margin – $400 divided by .25
Price – $1600
So, if you look at the margin dollars, that’s not enough, unless you work on inventory turns (or units sold). This is what makes the Schiit model so compelling. I bet the Moro on great margins; however, they also work on production turns.
Companies HATE when we get into this but WTF…
Here’s a rough example using slightly different metrics:
• A $1,000 pair of speakers sell to a dealer for $500 plus shipping
• The company needs to land the speakers in the country (meaning in the box and ready to ship from Europe, China, Canada, wherever as it doesn’t matter) for about $150 to $175.
• The manufacturer sells volume of these speakers so if they buy things at $150 and sell them for $300 that’s doubling your $$$. $150 to $500 is much more than that.
• International distributors buy the speakers for less than $500 and pay UP FRONT which manufacturers LOVE (who wouldn’t). They also have to warranty, market and distribute the speaker on their own thus they often have higher retail prices for US-based products.
The thing that consumers don’t often get is how expensive it is for a retailer to make a living. Rent, other overhead, workers comp and other insurance, the cost of flooring demo gear as well as inventory, labor, commissions and so much more eat up 50% margins AND QUICKLY.
If you give a client 20% off, there really isn’t much $$$ left when you get to the net-net profit.
If a manufacturer isn’t working on 75% plus margin, they will run out of cash, quickly…
Inflation is real to the consumer; and, it’s real to the manufacturers. I’m sure there are some that take advantage of the conditions; however, I’m not sure which ones.
Look at Decware… those UFO variants are affordable and don’t appear to be inflating too much.
The cost of chips is HUGE to audiophile and AV companies now.
I know of companies who are reverting to using lesser expensive, older chips and then reprograming their gear to work retroactively as the most cutting edge stuff is either too expensive OR impossible to get your hands on.
Shipping is another one. When I send my homemade spaghetti sauce out – it can cost $25 per bottle just for shipping.
The local McDonalds pays over $20 per hour around here for fry cook. Imagine what highly skilled audiophile labor costs in the USA?
And this only scratches the surface.
I agree with you it hits on both sides but there ARE some companies jacking prices FAR HIGHER percentage wise than anything we see in national inflation.
I’m sure some companies are inflating prices, no doubt. That said, I agree with your article! I went to the latest Audio Advice, Live show recently. Some of the prices of things are crazy. I have a hard time believing these prices are warranted, to get good sound, not necessarily because of inflation or margins, just because they can.
The recent Monitor Audio speaker (their new 75K – 90K speaker) is nice; however, the real challenge, is to build a very satisfying system using more affordable equipment.
These cost, no object, systems are out of the price range, for the majority of music lovers. That is why you see a 2 year waiting list, for brands like Decware. That’s where the peak of the bell curve is, regarding the market.
Additionally, I’m sure some of the Chinese brands create good sound; however, I would rather more money be spent with reputable American companies, if possible. We need to keep as much of the supply chain here, as we can.
Nonetheless, I say “No” to the extremely high priced items! What happened to you Audio Research?
What SOME but not ALL audiophile companies are doing is pricing gear for what they THINK they can sell it for (think: HIGH) and then let the chips fall where they may.
With chip shortages and supply chain problems during COVID paired with SKY HIGH consumer demand – this model worked better.
Much like the nice hotels near me that jacked their prices 300% to 400% during COVID, there will need to be a price correction or people will not buy (people like me).
For example, the beloved former PR agent for Parasound, offered me some gear for review and to use in my system. When I checked the prices of the stuff that I wanted, it was DOUBLE from the last time that I looked. Nope. Hard no.
—–
I was invited to go to the Audio Advice show but I passed.
I tried to work with them in the past and they were difficult. They are worse now so I started our affiliate program with Crutchfield. Ultimately, our readers seem to prefer to buy stuff on Amazon thus the links on the site. Amazon pays us PENNIES but good commission on ZERO SALES is still ZERO. I am bad at math but I know that one… 🙂
Paul Wilson passed on the show and he lives in NC. For me, it would have cost me THOUSANDS of dollars to go with no guarantees of any of my clients being there. Not a good value. I’d rather pay for my Pass Labs amp and go to the California Audio Show in Oakland. I did sign up and book flights/hotel for Capital Audio Fest in November. I am going to CEDIA too. That might be a stretch but I’ve gone to like 20 CEDIAs over the years. One day won’t kill me plus I am going to see some prospects in Boulder before.
I own the CHORD Mojo and I’m very happy with it as both a DAC in my system and headphone amp. For years I waited for CHORD to capitalize on their newfound international fame and release a Mojo and Poly combo as a single product. They literally had an eternity to figure it out. (And had they incorporated tubes into that product, fuggetaboutit.) Instead, they came out with the Mojo2 and the price of the Poly skyrocketed to 1000$ CAD, more that the Mojo2 itself! What’s going on, CHORD? Why am I all of a sudden being charged more for a wireless adapter? That stunt was so infuriating. Surely CHORD could’ve used even a fraction of the last decade to come up with a DAC/streamer by simply merging the Mojo and Poly into one product. (And while you’re at it, just stick in some Korg NuTubes like Cayin did on their flagship N8ii DAP.)
Cheers from Montreal.
Go Habs!
Sadly the ever-increasing prices of even mid-level systems, let alone “high end” systems will keep many out of this hobby forever, or they’ll make do with cheap AVRs or Chi-Fi class-D amps, sub-$500 bookshelf speakers, and call it a day. Just as someone thinking of getting into photography sees cameras costing $2000 and lenses just as much thinks, “Hmmm, guess I’ll just use my cellphone”.
Ross – some of that Chi-Fi stuff is scary good for the money.
There are other brands like SVS, NAD, Tekton, Monoprice and others that are killing it with value.
There’s room to grow this hobby.
Absolutely right! I have a salesperson at my local high-end audio store actively pursuing me to buy a $6,500.00 USD McIntosh int. amp. I don’t doubt the amp is great. In addition, other people at the store have commented on the int. amp. I have with condescension and / or derision. But in the demo for the McIntosh I was not floored by anything utterly different from my int amp at home. Moreover, recently I had a conversation with a high-up representative from the company that builds the sub-woofer I have, (REL) and he asked what int amp I had. I immediately felt embarrassed. Just like when nudity is demanded of you, on the spot, in front of everyone. (I am a modest person. I am reasonably fit for a man my age. But I am not inclined to be flashing around my body.). After a few excruciating nano-seconds I managed to utter my int. amp. brand name and model and grinned to bear what would come of it. To my surprise his answer was “ Nothing is wrong with your amp. That is an excellent piece of equipment.” Happiness entered my life. My $2,100.00 USD Japan-built int amp is not chopped liver and I don’t need to buy a $6,500.00 int amp. right now. I might if I needed to exhibit the “bling bling” luxury stuff. But I don’t. I am an audiophile but I am also a music lover. If music had a body I would go to the bedroom with it and never be seen again. My int amp, which is 2 years old, still surprises me with its abilities. I am fine where I am. I am sure the McIntosh is wonderful to a lot of people. But I am not sure I should embark in more debt at this point. As a country we have to learn to leave behind the compulsion to continually improve. Instead we should learn to appreciate what we already have that is quite wonderful. After all we all are mortal.
Thank you.
thanks for your comments!!! Great to see you posting.
The idea that you are being sold on things that are out of your budget isn’t inflation as much as just STONE COLD BAD SALEMANSHIP. A little qualification goes a long way in the sales process. You are clearly into the hobby and want to grow your system but not at an increment of $6,500 and that is 100% perfectly fine.
Did this salesperson bring up any of the new options in that space? Did they talk about Class-A operation amps like Pass Labs’ XA25 (I just finished a review yesterday thus off for more editing). Did they talk about modern Class-D amps like the Pascal Chip-based AMPED 2400 and its hugh power or the AGD Productions Tempo GaN (Gallium Nitride) amp that is 94% efficient (versus say tube amps that lose 80% of their energy from the wall to heat?) If not, then the salesperson is just working you. Keep reading FutureAudiophile.com and you will get the straight scoop. Hell, call me on the posted number and I will help you if I can.
You are going great and you should be proud of the system that you’ve built. I am excited for you that you are happy with what you’ve got not. I saw a sign about how Gratitude = Happiness and have been thinking a lot about it recently. You are a living example and GOOD FOR YOU!
This site and persons story is very awesome and inspiring! (Site owner) I dig the site bro!
I just wanted to say that I experienced a terrific deal from PS Audio. I purchased a P3 A/C Regenerator mid last year for $1500 cuz it was on sale. The current price is rediculous tho, $3000.
I’ve been saying NO so much that saying YES feels negative.
I hear you but being judicious is pretty important these days.
I just stayed at the Park Hyatt Aviara in North County San Diego earlier this summer. I paid $411 per night for the room for Mon-Friday. This place used to be a Four Seasons and still has a lot of that DNA which is great. Its location is awesome. Not on the ocean but they gave me a great room.
During COVID when nobody would fly, they upped the rooms north of $1,000 per night. When they switch to a Hyatt, I could get a SUITE for $319. But at these prices, we stopped going there.
I had a GREAT STAY. Solid food. Upgraded pool. Excellent service, especially at the Valet etc…
I went to book a little weekend getaway and the rooms were 300% more again for most of the summer with nothing close to the $411 that I paid.
That has to be a “hard no” for me.
Will I go back? Yes, if the price their rooms remotely reasonably.
Do I fault them for getting more money in a pure DEMAND oriented business? Nope. You guys get it while the getting is good but I am going to stay here in LA and hold on to my money as I am dedicated to voting with my economic ballot thus they too get a “no” at least for now.
A big chunk of any system are the amps and speakers. That can all be taken care of by buying active speakers. To save even more money, go with pro audio monitors – no fine cabinetry, grills, or marketing hype. You can really get a lot of good sound for your money. I got the Adam Audio S3Vs, and didn’t really know how good they were until I really started listening to them. My next move: upgrading my $400 DAC to an R2R – some huge values in ChiFi, here.
Much like The Jefferson’s – you are “moving on up” and that is a good thing.
I agree with you on pro audio speakers in that they can sound GREAT with less frills.
Some of these Chi-Fi DACs are really good. I like the Schiit stuff too. Very good for the money.
I’ve got my pennies saving for a Bricasti. That might take me a while.
This is interesting to read. I sympathize, speaking as an Australian hifi nut, where prices have always been over inflated because of shipping and Australians historically just put up with what we call an “Australia tax”, which is a company, typically in the car industry, charging whatever it likes just because it can.
In 2001, I remember accidentally seeing the cost price to the store of a pair of B&W 802s. Cost price was AUD $11k and retail was $18k. I was aghast.
Years later I ended up with my forever speakers, a second hand pair of monsters- Polk SDA SRS 1.2s – that I got off eBay and have loved for over 12 years.
Once you go second hand, very hard to go back to paying those ridiculous new prices on hi fi gear you know is just massively marked up. That’s how I’m saying No, Jerry 😊
We all look for the right deal and the best value. That is just being smart and you seem like you’ve got that covered.
AU is a long way from where a lot of this AV stuff is made thus it is a bit expensive versus buying gear in the USA.
My old writer and long-time friend, Dr. Taraszaka, moved to New Zealand and the audio gear there was 200% more than in the US. Ouch.
PS. In 1990, statement speakers from high end manufacturers like Apogee could be bought for under AUD$10k, which was expensive but not impossible on an average wage. 30 years later, a pair of statement speakers from many brands go into hundreds of thousands, eg Focal Grande Utopia is AUD$450k, Wilson is in the same la-la land, and totally unattainable.
What the heck happened?
In 1994 in Southern California every Apogee speaker fell over and broke in the Northridge Earthquake. I remember as I was 20 and working at the store that sold them all.
Today, 30 years later and with Apogee LONG out of business and Jason dead, the audiophile companies are still selling to the same client base. They have more money now in their 70s and 80s and the companies price the gear to what people can/will spend – not always what gear should cost.
Send in the k*ller drones! This is the most subversive thing i’ve read in a while lol.
100% agree