From: DPierce@world.std.com (Richard d Pierce)
Subject: Re: Acoustic studio monitors?
Organization: The World Public Access UNIX, Brookline, MA
Date: Mon, 31 Aug 1992 11:47:21 GMT

WATERS,CLYDE GORDON) writes:
>>bradley@magic.riacs.edu (Brad Christofferson) writes:
>>>I thought the brand name "Acoustic" sounded like one of the popular high 
>>>fideltiy brands.  They told me the speakers regularly sell for $849 each.
>>>I paid $200 for the pair.  I haven't hooked them up yet.
>>>wouldn't buy them but most people end up paying around $200.  They are
>>>probably  worth that much.  The manufacturer is apparently not very
>>>reputable.
>
>No, they are most emphatically NOT worth $200, by any stretch of the
>imagination. I dissected one, and obtained replacement driver cost:
>
>Woofers: could be obtained for $12 each.
>Midranges: could be obtained for $5 each. 
>Tweeters: could ba obtained for $3 each.
>Total: $40.
>Cabinets: A local cabinet maker said he could build something identical
>piece work pricing, (MUCH higher than mass prod) for $40/pr.
>X-overs: could be duplicated for $8.
>This is normal distributor pricing; manufacturers probably pay 1/2 this.
>So, the manufacturer has probably about 88/2 in each pair.
>
>A lousy $44!!!! 
>
>Given normal retail pricing ANYthing over about $129/pr is highway 
>robbery, especially given how unreliable and inaccurate they are.

Careful, here, you're making some assumptions that are quite incorrect. While
indeed these speakers are not worth the $200 paid for them, your estimates of
component cost to "normal retail pricing" are not based on any sound facts.

Typically, if you cost out out the direct component costs of a speaker, you'll
find that it is usually no more than 1/4 of the suggested retail price. No,
nobody is ripping you off, it's just the economic realities of the situation
at play. For example, if your direct component cost is, say, $50 per cabinet,
and that includes drivers, crossovers, cabinets, shipping carton, and so on,
you'll find that you'll have to sell it to a dealer for about twice that to 
cover direct and indirect labor expenses, shipping to the dealer (which the
manufacturer usually picks up for more than trivial orders), warranty expenses,
dealer advertising coop, your own advertising budget, etc.. For most speaker
manufacturers, that's gets them just to the point of break-even, or just
slightly shy of it.

The dealer then has to pay his staff, light his lights, etc., and is expected
to offer a discount, especially when the speakers are incorporated into a
system, and most of the time will never realize the theoretical 50% gross
profit margin that the "suggested retail" allows. At that, everybody's lucky
if they net 5% in the long run. This would suggest then that being in the
loudspeaker business is not the growth industry that one might think (and
the actual evedience supports that hypothesis).

Another mis-guesstimate here is the price of the drivers. The actual drivers
that are in these things are not obtainable by mere mortals, so the component
costs you were quoted are probably bogus guesstimates. Be that as it may, the
Acoustic Monitor | Energy Monitor | Acoustic DBIV | etc. speakers are pretty
awful, never in their life ever were meant to sell for $849 a pair, and are,
pretty much, a rip off.

Gee, Dick, how do you know these things? Well, I was involved as an expert in
a law suite brought by a certain mid Western state against the local 
"distributors" and the manufacturer for consumer fraud. The basis of the
government position was completely bogus, in fact based on somebody's wrong
opinion of how the cost to retail price ratios really work in the industry.

Interstingly enough, it was W. Marshall Leach at GaTech who came up with the
roughly 2-3 to 1 ratio, based on who knows what. More interesting than that,
when we took the real components cost and applied my minimum 4-5 to 1 ratio,
we came up with about the same "suggested retail" price.

Regardless, the speakers are for shit.

.
-- 
|                Dick Pierce                |
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