My guess - they've done the math and the profit margins just aren't there. They can probably sell a receiver with the same features and internal amps for less than the cost of a pre-pro because of economies of scale. The majority of customers don't want separates, so they make a lot of receivers...which drives down the unit cost.
The issue is not cost at all it is psychology. These products are made at relatively low manufacturing cost, often by the same Chinese outsourcer. The game is about branding, not cost. Also, these manufacturers know full well that most equipment these days is well past the threshold of audible difference. Thats in fact why the assembly job is offloaded to china.
So most people who would buy a pre-pro are buying not for audible difference but for status. Offering it at 399 would actually reduce sales volume. These folks want the veeer of "exclusivity". Jack up the price, they self-identify and open their wallets.
There however, is a small percentage who would want a pre-pro to run their existing high end external amps - and know that most receivers can do this job just fine - and are happy to use a "bargain" receiver. That is also why the Av receiver companies cripple their cheaper AV receiver products by removing the preamp outs. They figure of if you paid for expensive amps then they want their cut too. they dont want to give you any discounts, since they know you have money.
But cost-based pricing? Hell nah.Honestly, you'd fail a college or MBA level course in marketing if you were presented with this as a case study and you chose to price your product based on cost rather than the
customer's preceived value.
