You want specs
they are provided...you want full disclosure...well they'll give you that too....
Here are Dave's comments to antoher member asking about cost and overhead...talk about transparency...
----------------------------------------------------------------------------------------
I wanted to further elaborate on this discussion, just to show how far off your relative is with regard to component costs (COGS, costs of goods sold) vs operational expenses. There seems to be some general misunderstandings / stereotypes of the loudspeaker industry with regard to expenses / costs etc.
I certainly can not give out our actual component costs, that would be equivalent to you (or anyone else) publicly releasing their salary. However, I try to run as transparent a business as we can and I am happy to share some info so that you can get a basic idea of just how much something like our ribbon STC costs us to manufacture.
A single 4’ x 8’ sheet of the bamboo we use for the Horizon costs $225 in bulk quantities (not including freight). We use ¾ of a sheet to build just one Horizon. Of course, this does not include the labor costs to perform the actual cabinet assembly, or the costs of the dyes and finishing substrates used. I will say this, the labor costs to build just one of these cabinets exceeds the cabinet material costs.
I will give you a brief rundown of various costs I am willing to share. All prices below are close estimates to give you an overall idea and all prices are in bulk quantities.
Finished bamboo STC loudspeaker cabinet = $500
High quality binding posts we use = $35 per set in 1000 pc quantities
Packaging (box + molded EPE foam) = $45 each (bulk quantities, price does not include the rather high tooling costs and artwork costs that we had to pay just to develop the packaging)
Crossover = est $110 in bulk pricing (includes 4 air-core inductors, 4 metallized polypropylene caps, 4 resistors, 1 electrolytic cap, 8 heavy gauge wires + terminations, epoxy resin custom designed and tooled electronic circuit board + printed artwork and standoffs) Note that the price I quoted does not include tooling costs, layout costs or my design time.
(2) custom designed cast frame woofers = check retailers to estimate costs of a high quality similar featured woofer
(1) custom designed neodymium mid-woofer = check retailers for estimates
(1) Customized RAAL 70-20XR ribbon tweeter with Amorphous core = the lower priced 70-10 model retails for $484 each. The version we use is a step up and is customized for us (which we pay for).
Damping materials / various labels & logos / screws = est $60…
Add up the costs above and we are already at over $1200 and our speaker is wooferless and unassembled
Your relative can come to any conclusions they wish, however, when we come up with our retail pricing – it is strictly based on actual component costs (fixed costs) + a profit margin % (which on many products is now extremely low.) Our labor costs and any operational overhead are not even factored into our retail pricing at all. Instead, we need to sell a specific quantity of each product each month to cover the remaining costs.
Our operational overhead is actually quite low, basically just rent + payroll + utilities + R&D. My salary is purely based on annual profitability. The # 1 expense for loudspeaker manufacturers is usually marketing. It costs a fortune for full page color layouts in magazines etc, renting space at shows, banner ads, sales reps… Our marketing expenses are less than what we pay for drinking water at our office. This combined with excellent products and friendly service is our formula for success and has allowed us to survive and even grow in a poor economy…
I have been a professional in this industry for almost 30 years now; I have yet to come across any loudspeaker where the per unit component costs were less than calculated per unit operational costs. It is certainly possible, but I would never associate myself with a product like this .
A further example, a full years supply of just our tweeters costs us more than a year of our rent. A single container load of Sierra-1 cabinets (just the empty cabinets) costs us more than an entire year of our total operational costs (again, not including my salary – if I should even take a salary). It would be an interesting ratio to determine, but I would estimate that in a typical year, our total component costs would average 5-7 times more than our actual operational costs.
A loudspeaker company simply could not survive if they spent more on operational costs than their component costs. They would be selling garbage products and as soon as the typical slow down occurs during late spring and summer months, when sales are very slow – their operational costs would cripple them. We survive these downturns because during these slower months, we keep less inventory on hand thus dramatically reducing our expenditures on components.
I truly hope this helps to clarify our business model a bit more.
__________________
.
.
.
Good Sound To You!
David Fabrikant
Audiophile Loudspeakers and Subwoofers for Home Theater and Music - Ascend Acoustics, renowned speakers,subs,audio
--------------------------------------------------------------------------------
