Monday, November 17, 2008

On-the-shelf price vs DIY price?

I've read a very interesting article from an online audio publication.

How does a DIY product compare to something bought retail? As you know, there are lots of overhead costs involved being a manufacturer. For those who'd been in an OEM line, they would know this very well. Also, the retailer is charging a whole lot on their side. 50% is not very abnormal, not to mention after going through the main distributor (if there is one, or more).

Let's do a litte maths. Say you are considering a U$10,000 amplifier. So, 1/2 of the price goes to the dealer. U$5,000 to the dealer, U$5,000 to the manufacturer. From there, the 1/3 is the actual cost of product. That leaves us with only U$1,666. From this number, almost 40% of the money goes to the miscellaneous components and only 60% of the $$$ are involved in the signal. So, what's left is only U$1,000.

I can only say: "WTF!!!". I went down the path of DIY-ing and never looked back ever since! If we do it the reverse way, if you pay U$2,000 for the component costs, you're actually getting yourself a U$20,000 gear! Who says DIY is not high end?

My manufacturer friend confirmed the same findings. His company is manufacturing cabinets for a few well known audio companies in the U.K.. The cost versus shelf price is at least 10x! So, your U$10,000 will only cost them U$1,000 or maybe less to manufacturer. So, the maths actually calculates.

Go figure.

Ken